EXHIBIT 2.1
CONTRIBUTION
AGREEMENT
This CONTRIBUTION AGREEMENT (this "Agreement"), dated as of
July 1, 2003, is by and among Arbor Commercial Mortgage, LLC, a New York limited
liability company ("ACM"), Arbor Realty Trust, Inc., a Maryland corporation
("ART") and Arbor Realty Limited Partnership, a Delaware limited partnership
("ARLP").
W I T N E S S E T H:
WHEREAS, ACM owns (1) the bridge loans relating to
commercial and multifamily properties listed on Schedule A-1 hereto (the "Bridge
Loans"), (2) the mezzanine loans relating to commercial and multifamily
properties listed on Schedule A-2 hereto (the "Mezzanine Loans"), (3) the loans
relating to commercial and multifamily properties listed on Schedule A-3 hereto
(the "Other Loans" and together with the Bridge Loans and the Mezzanine Loans,
the "ACM Initial Assets"), (4) 100% of the membership interests of ANMB Holdings
II, LLC (the "ANMB II Membership Interests") which owns the mezzanine loan
relating to a multifamily property listed on Schedule A-4 hereto (the "Central
Jersey Mezzanine Loan" and together with the ACM Initial Assets, the "Initial
Assets"), and (5) 100% of the membership interests (the "Membership Interests")
of the entities listed on Schedule B hereto (the "Preferred Equity Holders"),
each of which have an equity interest, as listed on Schedule C hereto, in
entities owning commercial or multifamily properties (the "Preferred Equity
Interests");
WHEREAS, ACM desires to contribute all of the ACM
Initial Assets, the ANMB II Membership Interests and the Membership Interests
(together, the "Contributed Assets") to ARLP in exchange for 3,146,724 units of
limited partnership interest in ARLP (the "Partnership Units") and 629,345
warrants, each of which entitles ACM to purchase an additional Partnership Unit
(the "Warrants");
WHEREAS, ARLP desires to issue the Partnership Units
and the Warrants to ACM in exchange for the Contributed Assets; and
WHEREAS, ART will contribute the net proceeds of an
offering of its units, each of which consists of five shares of common stock of
ART (the "Common Stock") and a warrant to purchase an additional share of Common
Stock (the "Units"), pursuant to the Offering Memorandum, dated June 26, 2003,
to Arbor
The material marked [*] has been omitted pursuant to a request for
confidential treatment by Arbor Realty Trust, Inc. and has been filed
separately with the Securities and Exchange Commission.
Realty GPOP, Inc., a Delaware corporation and a wholly owned subsidiary of ART
("GPOP"), and Arbor Realty LPOP, Inc., a Delaware corporation and a wholly owned
subsidiary of ART ("LPOP"); and
WHEREAS, each of GPOP and LPOP will contribute the net
proceeds its receives from ART to ARLP in exchange for units of limited
partnership interest in ARLP, concurrently with ACM's contribution of the
Contributed Assets.
NOW, THEREFORE, in consideration for the foregoing
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Contribution of the Contributed Assets. On the terms and subject to the
conditions of this Agreement, ACM shall transfer, assign, convey and
deliver to ARLP all right, title and interest in and to the Contributed
Assets and ARLP shall issue the Partnership Units and the Warrants to
ACM.
2. Conditions.
a. The obligation of ARLP to issue the Partnership Units and the Warrants
to ACM in exchange for the Contributed Assets is subject to the
following conditions (which may be waived by ARLP in ARLP's sole
discretion): (i) that at the time of the Closing referred to in Section
3, each of the representations and warranties of ACM made in this
Agreement shall be true and correct, (ii) ACM shall have executed and
delivered, and, if applicable, caused to be delivered, to ARLP an
assignment, substantially in the form of Exhibit A (the "Assignment and
Assumption") and such assignments and other instruments of conveyance,
assignment and transfer, all in form satisfactory to ARLP, as shall be
effective to vest in ARLP good title in and to the Contributed Assets,
(iii) all approvals and consents to the transactions contemplated by
this Agreement shall have been obtained from all necessary third
parties, and (iv) to the best of ACM's knowledge, there shall be no
material pending or threatened litigation regarding the Contributed
Assets.
b. The obligation of ACM to contribute the Contributed Assets to ARLP for
the Partnership Units and the Warrants is subject to the following
conditions (which may be waived by ACM in ACM's sole discretion): (i)
that at the time of the Closing each of the representations and
warranties of ARLP made in this Agreement shall be true and correct,
and (ii) ARLP shall have executed and delivered to ACM the Assignment
and Assumption.
3. Closing. The closing (the "Closing") of the transfer of the Contributed
Assets, the Partnership Units and the Warrants shall be held, at such
time and place as the parties may mutually agree upon, on July 1, 2003.
a. ACM shall deliver to ARLP at the Closing (i) the Assignment
and Assumption, (ii) with respect to each ACM Initial Asset,
an endorsement by ACM of the related promissory note or notes,
without recourse, to ARLP, or its designee, (iii) with respect
to ACM's 100% membership interest in ANMB Holdings II, LLC
("ANMB II"), the operating agreement evidencing the equity
interest of ANMB II in the entity owning the underlying
property and an instrument of assignment effecting the
transfer of such membership interests, and (iv) with respect
to each of ACM's 100% Membership Interests in Preferred Equity
Holders, the operating agreement evidencing the equity
interest of the applicable Preferred Equity Holder in the
entity owning the underlying property and an instrument of
assignment effecting the transfer of the Membership Interests,
and (v) such other instruments of transfer executed by ACM as
ARLP shall reasonably request, provided that ARLP shall
prepare any such instruments and deliver the same to ACM at
Closing.
b. ARLP shall deliver to ACM (i) a certificate or other
documentation evidencing 3,146,724 of its Partnership Units
and (ii) a certificate or other documentation evidencing
629,345 Warrants.
4. Representations and Warranties of ACM.
a. ACM hereby represents and warrants to ARLP and ART, as follows:
i. ACM is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of New York;
ii. ACM has the full power and authority to enter into and consummate all
transactions contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement, and has duly
executed and delivered this Agreement;
iii. This Agreement, assuming due authorization, execution and delivery by
ARLP and ART, constitutes a valid, legal and binding obligation of ACM,
enforceable against ACM in accordance with the terms hereof, subject to
(A) applicable bankruptcy insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally,
(B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law and (C)
public
policy considerations underlying the securities laws, to the extent
that such public policy considerations limit the enforceability of the
provisions of this Agreement that purport to provide indemnification
for securities laws liabilities;
iv. The execution and delivery by ACM of this Agreement and its performance
of, and compliance with, the terms of this Agreement will not conflict
with or constitute a breach, violation, or default under (A) its
certificate of formation or operating agreement, (B) any law, any order
or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local government or regulatory authority,
which violation is likely to affect materially and adversely either the
ability of ACM to perform its obligations under this Agreement or the
financial condition of ACM or (C) any indenture, loan or credit
agreement, or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction
or decree to which ACM is a party or by which any Contributed Asset is
bound or affected, except for such conflicts with (1) certain
provisions of (a) the operating agreement of ACM, dated as of January
1, 2003, and (b) the operating agreement of the sole managing member of
ACM, Arbor Management, LLC, each of which have been validly waived by
each of the members thereto, (2) (a) the First Amended and Restated
Warehousing Credit, Term Loan and Security Agreement (Structured
Facility and Servicing Secured Facility), dated as of April 1, 2003
(the "Warehousing Credit Facility"), by and between [*] and ACM, (b)
the Master Repurchase Agreement, dated as of November 18, 2002 (the
"[*] Repurchase Agreement"), by and between [*] and ACM, and (c) the
Master Repurchase Agreement, dated as of November 1, 2002 (the "[*]
Repurchase Agreement"), by and between [*] and ACM, for which each of
[*], respectively, have consented to the transactions contemplated by
this Agreement and (3) the Recognition Agreement, dated as of November
14, 2001, by and between Fremont Investors and Loan ("Fremont") and
ACM, for which Fremont has given its consent with further assurances to
the transactions contemplated by this Agreement; the consummation of
the transactions contemplated by this Agreement will not result in the
cancellation, modification or termination of, or the acceleration of,
or the creation of any charges, claims, conditions, security interests,
hypothecations, encumbrances, mortgages, liens or pledges
(collectively, "Liens") on the Contributed Assets pursuant to any
agreement, license, lease understanding, contract, indenture, mortgage,
instrument, promise, undertaking or other commitment or obligation
("Contracts") under which ACM or any Contributed Asset subject to or
bound, except for (x) the termination of the Liens
The material marked [*] has been omitted pursuant to a request for
confidential treatment by Arbor Realty Trust, Inc. and has been filed
separately with the Securities and Exchange Commission.
of [*] pursuant to the Warehousing Credit Facility, the [*] Repurchase
Agreement and the [*] Repurchase Agreement, respectively, on the
Contributed Assets and (y) the creation of the Liens of [*] on the
Contributed Assets by the execution of the (i) Assignment and
Assumption Agreement, to be dated as of July 1, 2003, by and between
ACM and ARLP with respect to the [*], (ii) Structured Facility
Warehousing Credit and Security Agreement, to be dated as of July 1,
2003, by and between [*] and ARLP, and (iii) the Master Repurchase
Agreement, to be dated as of July 1, 2003, by and between [*] and ARLP,
respectively;
v. In selecting the ACM Initial Assets, the ANMB II Membership Interests
and the Membership Interests for pledge pursuant hereto, no selection
procedure was employed by ACM that was intended to adversely affect the
interests of ARLP;
vi. Except as disclosed by ACM to ARLP and ART in writing and accepted in
writing by ARLP and ART, ACM has not dealt with any person that may be
entitled to any commission or compensation in connection with the
transfer of the Contributed Assets. ACM or Obligor has paid any and all
amounts due to any such person, and ARLP shall have no responsibility
for any payments due any such person;
vii. There are no Contracts, and ACM will not enter into Contracts, with any
other person or entity to sell, transfer, assign or in any manner
create a Lien on, the Contributed Assets, except for the right, title,
interest, lien and security interest of (A) [*] under the Warehousing
Credit Facility, (B) [*] under the [*] Repurchase Agreement, (C) [*]
under the [*] Repurchase Agreement, or to not sell, transfer or assign
the Contributed Assets to ARLP;
viii. No consents, other than those that have been obtained or obtained with
further assurances, are required for the transfer of the Contributed
Assets in accordance with the terms of this Agreement; and
The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
ix. Each Contributed Asset was created in accordance with, and complies
with the requirements of, the internal procedures of ACM, including,
without limitation, ACM's underwriting policies procedures and
standards.
b. With respect to the Bridge Loans listed on Schedule A-1 hereto (except
for the 1025 5th Avenue Bridge Loan), the Mezzanine Loans listed on
Schedule A-2 hereto, the Albion Loan (as defined on Schedule A-3
hereto) and the Central Jersey Mezzanine Loan, ACM represents and
warrants to ART and ARLP that:
i. ACM is in possession of a file relating to each of the Initial Assets
which contains (1) each of the documents required to evidence ACM's
interest in the Initial Asset (including all promissory notes, security
agreements, guarantees and other agreements that evidence or secure
such Initial Assets) and (2) when applicable, certain other documents
relating to the underlying property (the "Initial Asset File");
ii. Immediately prior to the assignment of each Contributed Asset to ARLP,
ACM was the sole legal, beneficial and equitable owner of each
Contributed Asset, except for the right, title, interest, lien and
security interest of (A)[*] under the Warehousing Credit Facility,
(B)[*] under the [*] Repurchase Agreement, (C)[*] under the [*]
Repurchase Agreement; and ACM transferred each Contributed Asset to
ARLP free and clear of any Lien, except for the Liens described in this
Section 4(b)(ii); in the event that ARLP's interest in a Bridge Loan is
deemed to be a security interest, such security interest is valid,
perfected and of first priority; in the event that ARLP's interest in a
Mezzanine Loan is deemed to be a security interest, such security
interest is valid, perfected and is a first priority lien on the
pledged ownership interest related to the Mezzanine Loan;
iii. Neither the notes relating to the Initial Assets (the "Initial Asset
Notes") nor the Initial Assets are subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor
will the operation of any term of the Initial Asset Notes or the
Initial Assets, nor the exercise of any right thereunder, render the
Initial Asset Notes or Initial Assets unenforceable, in whole or in
part, except to the extent enforcement may be limited by (A) applicable
bankruptcy, insolvency, and other similar laws affecting creditor's
rights generally, or (B) general equitable principals, regardless of
whether the issue of enforceability is considered in a proceeding in
equity or at law, or subject to any right of rescission, set-off,
counterclaim or
The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
defense, including the defense of usury and no such right of
rescission, set-off, counterclaim or defense has been asserted;
iv. Up to and including the Closing, all payments required to be made with
respect to an Initial Asset under the terms of the related Initial
Asset Note have been made before the end of any grace or cure period
for such payment. ACM has not advanced funds, or induced, solicited or
received any advance of funds from a party other than the obligor on
the related Initial Asset Note (the "Obligor"), directly or indirectly,
for the payment of any amount required by the Initial Asset Note. There
has been no delinquency beyond the end of any applicable period of
grace in any payment by the Obligor under the terms of any Initial
Asset Note;
v. The Initial Asset Note relating to each Initial Asset has been endorsed
to ARLP in a form and in a manner sufficient to convey to ARLP all
right, title and interest therein of ACM in all relevant jurisdictions,
except to the extent that a recording or other filing is required to
transfer such Initial Asset;
vi. To the best of ACM's knowledge, based upon an opinion of Obligor's
counsel, each Initial Asset at origination did not violate any
applicable federal, state or local law;
vii. With respect to each Initial Asset that relates to a property that is
secured by a mortgage in favor of ACM (each a "Mortgaged Property"), a
title insurance policy insuring the lien created by such mortgage was
effective on the date of ACM's financing of such Initial Asset, such
policy is valid and remains in full force and effect, and, to the best
of ACM's knowledge each such policy was issued by a title insurer
qualified to do business in the jurisdiction where the applicable
Mortgaged Property is located, which policy insures either ACM or the
original holder of the Initial Asset as to the Lien of the Initial
Asset; no claims have been made under such title insurance policy and
no prior holder of the applicable Initial Asset, including ACM, has
done, by act or omission, anything that would impair the coverage of
such title insurance policy;
viii. To the best of ACM's knowledge based upon its review of the related
title insurance policy, each mortgage related to a Mortgaged Property
(A) is properly recorded (or, if the mortgage related to such Mortgaged
Property was created within 30 days prior to the date of this Agreement
and is not yet recorded, the mortgage relating to such Mortgaged
Property has been submitted for recording, is in form and substance
acceptable for recording and, when properly recorded, will be
sufficient under the laws of the jurisdiction wherein the Mortgaged
Property is located to reflect record of the Lien of such Mortgaged
Property) and the mortgage relating to the Mortgaged Property is a
valid, continuing and enforceable lien (subject only to the matters
described in the next sentence) on the Mortgaged Property, including
all improvements on the Mortgaged Property owned by the Obligor, all
other fixtures on the Mortgaged Property owned by the Obligor and all
additions, alterations and replacements made at any time with respect
to the foregoing, and (B) provides for an assignment of leases and
rents from the Mortgaged Property, or, if the related Initial Asset
does not so provide, a separate assignment of mortgage was executed by
the Obligor, was properly recorded (or, if such mortgage was created
within 30 days prior to the date this Agreement and is not yet
recorded, such mortgage has been submitted for recording, is in form
and substance acceptable for recording and, when properly recorded,
will be sufficient under the laws of the jurisdiction wherein the
Mortgaged Property is located to reflect record of the Lien of such
assignment) and creates a valid, existing and enforceable lien and
security interest on the leases and rents from the related Mortgaged
Property and other property described therein. The Lien on each
Mortgaged Property is subject only to (1) the Lien of current real
property taxes not yet due and payable, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording that are acceptable to mortgage
lending institutions generally, are specifically referred to in
lender's title insurance policy delivered to ACM and are taken into
account in determining, or do not materially adversely affect, the
appraisal value of the Mortgaged Property, and (3) other matters to
which like properties are commonly subject that do not materially
interfere with the benefits of the security intended to be provided by
such Initial Asset or the use, enjoyment, value or marketability of the
related Mortgaged Property;
ix. In the case of a Mortgaged Property, the security agreement, chattel
mortgage or equivalent document delivered in connection with the
Mortgaged Property establishes and creates a valid, continuing and
enforceable Lien and security interest in all furniture, fixtures and
equipment on or used in connection with the related Mortgaged Property
and other property described therein. Either a Uniform Commercial Code
financing statement has been filed and/or recorded in all places
necessary to perfect a valid security interest in the personal property
subject to the Lien of the Mortgaged Property or any separate security
agreement, chattel mortgage or equivalent document or, in the case of a
Mortgaged Property created within 30 days prior to the date of this
Agreement, ACM has a right to file a Uniform Commercial Code financing
statement with respect to the personal property subject to the Lien of
such Mortgaged Property or any separate security agreement, chattel
mortgage or equivalent document and upon such recordation and/or filing
thereof in all necessary places, ACM will have a perfected and valid
security interest in such personal property;
x. There are no delinquent taxes or assessment liens against any Mortgaged
Property;
xi. There are no mechanics' liens or initiation of a mechanics' lien
affecting any Mortgaged Property, except those (A) that are insured
against by a title insurance policy, (B) that are subordinate to the
Lien of the related Initial Asset, if applicable or (C) the payments
required for such work, labor or materials are not yet due and payable,
or if due and payable and unpaid are the subject of a good faith
contest;
xii. To the best of ACM's knowledge based on the appraisal or engineering
report produced at the origination of the Initial Asset, except to the
extent that it was contemplated at the time of the origination of the
Initial Asset that repairs, restorations and improvements would be made
to the underlying property, each related property is in good repair and
free of structural defects, damage, waste and defects in any
mechanical, electrical, plumbing and safety systems therein that would
materially and adversely affect the value of such related property, and
there is no proceeding pending for the total or partial condemnation
thereof. Except to the extent that it was contemplated at the time of
the origination of the Initial Asset that repairs, renovations and
improvements would be made to the building system and the related
property, as applicable all building systems are in good working order
subject to ordinary wear and tear. ACM inspected the related property
in connection with the origination of the related to the Initial
Assets;
xiii. There is no material default, breach, violation or event of
acceleration existing under the Initial Asset or the Initial Asset Note
and no event that, with the passage of time, or with notice and the
expiration of any grace or cure period, would constitute a material
default, breach, violation or event of acceleration thereunder;
xiv. Each Initial Asset and related Initial Asset Note is the legal, valid
and binding obligation of the maker thereof, enforceable in accordance
with its terms, subject to (A) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally, and (B) general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law. All parties to each Initial Asset had legal capacity
to execute such Initial Asset and related Initial Asset Note, and each
Initial Asset has been duly and properly executed by such parties and
constitutes a legal, valid and binding obligation of each party
thereto, subject to (A) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally, and (B) general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law;
xv. Each Initial Asset contains customary and enforceable provisions that
render the rights and remedies of the holder thereof adequate for the
practical realization
against the applicable collateral securing the Initial Asset (the
"Collateral") of the benefits of the security intended to be provided
thereby;
xvi. With respect to each Initial Asset constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such
Initial Asset, and no fees or expenses are or will become payable to
the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Obligor;
xvii. The improvements upon each property related to an Initial Asset are
covered by a valid and existing hazard insurance policy with a
generally acceptable carrier, which policy provides for fire, extended
coverage and such other hazards as are customary in the area where the
property related to an Initial Asset is located representing coverage
not less than the outstanding principal balance of the related Initial
Asset or the minimum amount required to compensate for damage or loss
of the improvements thereon on a replacement cost basis, whichever is
less. Such insurance policies contain a standard mortgagee clause
naming, in the case of an Initial Asset, ACM and its successors in
interest as mortgagee, and ACM has received no notice that any premiums
due and payable thereon have not been paid; the related Initial Asset
obligates the Obligor to maintain all such insurance at the Obligor's
cost and expense, and upon the Obligor's failure to do so, authorizes
the holder of such Initial Asset to obtain and maintain such insurance
at the Obligor's cost and expense and to seek reimbursement therefor
from the Obligor;
xviii. If a property related to an Initial Asset is in an area identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards and if required by law, a flood insurance
policy in a form meeting the requirements of the current guidelines of
the Flood Insurance Administration is in effect with respect to such
property with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the outstanding principal
balance of the related Initial Asset, (B) the minimum amount required
to compensate for damages or loss on a replacement cost basis or (C)
the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973;
xix. When applicable, the Initial Asset File contains an appraisal of the
property relating to the Initial Asset made and signed, prior to the
approval of the application for the Initial Asset, by an appraiser,
duly appointed by ACM, who had no interest, direct or indirect, in the
property or in any Initial Asset made by the approval or disapproval of
the Initial Asset, who, based on a review of the appraisal, was
state-licensed or state certified (if required under the laws of the
state in which the related property is located) at the time the
appraisal was conducted and signed, who, to the knowledge
of ACM, is a member of and has a professional designation from a
nationally recognized appraisal organization. Such appraisal states
that the appraiser examined the property;
xx. To the best of ACM's knowledge, no material misrepresentation, fraud or
similar occurrence with respect to an Initial Asset has taken place on
the part of any person involved in the origination of the Initial Asset
or in the application of any insurance in relation to such Initial
Asset;
xxi. To the best of ACM's knowledge, if one or more commercial tenants lease
a portion of a property related to a Initial Asset, each such tenant is
conducting business only in that portion of such property covered by
its space lease, except where improvements are being made to such
space, all tenant improvements to be completed by Obligor under a lease
have been completed, and the payment of rent under each lease has
commenced. To the best of ACM's knowledge, no residential space lease,
occupancy agreement or license agreement contains an option to
purchase, right of first refusal to purchase, or any other similar
provision that adversely affects the Initial Asset or that might
adversely affect the rights of ARLP. Except as set forth on Schedule
4(b)(xxi) hereto, no commercial space lease, occupancy agreement or
license agreement contains an option to purchase, right of first
refusal to purchase, or any other similar provision that adversely
affects the Initial Asset or that might adversely affect the rights of
ARLP. To ACM's actual knowledge, each property related to an Initial
Asset is not subject to any lease other than the space leases described
in the rent roll related to the Initial Asset, and no person has any
possessory interest in, or right to occupy, such property except under
and pursuant to such a space lease. Each such material space lease,
occupancy agreement or license agreement is subordinate to the Initial
Asset either pursuant to its terms or a recorded subordination
agreement and contains a customary provision for termination for cause;
xxii. To the best of ACM's knowledge, each property related to an Initial
Asset is in all material respects in material compliance with and
lawfully used, operated and occupied under applicable zoning and
building laws or regulations, and ACM has not received notification
from any governmental authority that any such property fails to comply
with such laws or regulations, is being used, operated or occupied
unlawfully or has failed to obtain or maintain any inspection, license
or certificates material to the operation of such property;
xxiii. To the best of ACM's knowledge, all material inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of the property related to an Initial Asset, with respect to
the use and occupancy of the same,
including, but not limited to, certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities and the property is lawfully occupied under
applicable law;
xxiv. All of the material improvements that were included for the purpose of
determining the appraisal value of a Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property,
and no significant improvements on adjoining properties encroach upon
the Mortgaged Property;
xxv. When applicable, the related Initial Asset File contains a report (the
"Assessment Report") of an environmental assessment made with respect
to each property related to an Initial Asset by an independent
qualified environmental professional who had no interest, direct or
indirect, in such property or in any Initial Asset secured thereby, and
whose compensation was not affected by the approval or disapproval of
the Initial Asset. To the best of ACM's knowledge and except as
disclosed in the Assessment Report in the Initial Asset File, each
related property is in material compliance with all environmental laws,
ordinances, rules, regulations and orders of federal, state or
governmental authorities relating thereto.
xxvi. To the best of ACM's knowledge and except as disclosed in the
Assessment Report in the Initial Asset File, each related property of
an Initial Asset is free from contamination from any hazardous
materials and no hazardous materials have been used, stored or
otherwise handled in any manner on, in from or affecting any related
property except in compliance with all environmental laws. Neither ACM
nor, to the best knowledge of ACM, any Obligor has received
notification from any federal, state or other governmental authority
relating to any hazardous materials on or affecting the related
property or to any potential or known liability under any environmental
law arising from the ownership or operation of a related property. For
the purposes of this subsection, the term "hazardous materials" shall
include, without limitation, gasoline, petroleum products, explosives,
radioactive materials, polychlorinated biphenyls or related or similar
materials, asbestos or any material containing asbestos, lead,
lead-based paint, area formaldehyde insulation and any other substance
or material as may be defined as a hazardous or toxic substance by any
federal, state or local environmental law, ordinance, rule, regulation
or order, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Air
Act, the Clean Water Act, the Resource Conservation and Recovery Act,
the Toxic Substances Control Act and any regulations promulgated
pursuant thereto;
xxvii. To the best of ACM's knowledge, there are no actions, suits or
proceedings before any court, administrative agency or arbitrator
concerning an Initial Asset or the
related Collateral that might materially and adversely affect (1) title
to such Initial Asset, (2) the validity or enforceability thereof, (3)
the value of the Collateral as security for the Initial Asset or (4)
the marketability of such Collateral;
xxviii. Except for Partners Portfolio Mezzanine Loan (as defined on Schedule
A-2 hereto), none of the Initial Assets is cross-collateralized with
any Initial Asset other than another Initial Asset;
xxix. Each Initial Asset does not by its terms permit the repayment thereof
for an amount less than the outstanding principal balance thereof plus
accrued interest;
xxx. No Obligor is, to ACM's actual knowledge, a debtor in any state or
federal bankruptcy or insolvency proceeding;
xxxi. With respect to each Initial Asset that is a Mezzanine Loan:
(1) The first mortgage related to the Initial Asset permits such Mezzanine
Loan and the related first mortgage lender has consented to the rights
of the lender under the Mezzanine Loan, if such consent is required to
be obtained pursuant to the documents securing the loan;
(2) With the exception of 333 East 34th Street Mezzanine Loan and Partners
Portfolio Mezzanine Loan (each as defined on Schedule A-2 hereto), each
Mezzanine Loan is directly secured by the pledge (the "Pledge
Agreement") of all of the equity interest in the related Obligor. Each
Pledge Agreement has been duly authorized, executed and delivered by
each of the parties thereto and is a legal, valid and binding
obligation of each of the parties thereto, subject to (A) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally and (B)
general principles of equity, regardless of whether such enforcement is
considered a proceeding in equity or at law; and
(3) Each related Pledge Agreement creates a valid, first priority security
interest in the entire equity interest in the related mortgagor.
xxxii. With respect to each Preferred Equity Holder:
(1) Each Preferred Equity Holder is duly formed, validity existing and in
good standing under the laws of their respective jurisdiction of
formation;
(2) Each Preferred Equity Interest owned by each Preferred Equity Holder is
owned by such Preferred Equity Holder free and clear of any and all
Liens, except for the right, title, interest, lien and security
interest of (A) [*]
The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
under the Warehousing Credit Facility, (B) [*] under the [*] Repurchase
Agreement, and (C) [*] under the [*] Repurchase Agreement; and
(3) Each Preferred Equity Holder is entitled to receive preferred
distributions under and in accordance with the terms of the operating
agreement for the entity in which such Preferred Equity Holder holds
such Preferred Equity Interest.
xxxiii. No Preferred Equity Holder has (A) made a general assignment for the
benefit of creditors, (B) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by its creditors, (C)
suffered the appointment of a receiver to take possession of all, or
substantially all, of its assets, (D) suffered the attachment or other
judicial seizure of all, or substantially all, of its assets, (E)
admitted in writing its inability to pay its debts as they come due, or
(F) made an offer of settlement, extension or composition to its
creditors generally.
xxxiv. Each Preferred Equity Holder and each entity controlled directly or
indirectly by a Preferred Equity Holder (collectively the "Entities")
is, and at all times during its existence has been, a partnership or
limited liability company classified as a partnership (rather than an
association or a publicly traded partnership taxable as a corporation)
for federal income tax purposes, except for any Entity with respect to
which an election to be treated as a taxable REIT subsidiary ("TRS")
has been or will be made effective for all periods following the
Closing, or which has been or will be contributed to a TRS. To the best
of ACM's knowledge, each Entity has timely, including extensions, filed
all material tax returns required to be filed by it and has timely,
including extensions, paid all material taxes required to be paid by it
and none of the tax returns filed by any of the Entities is the subject
of a pending or ongoing audit, and no federal, state, location or
foreign taxing authority has asserted any material tax deficiency or
other assessment in writing against any Entity or any property of any
Entity.
5. Representations and Warranties of ARLP. ARLP hereby represents and
warrants to ACM as follows:
a. ARLP is duly organized, validly existing and in good standing under the
laws of the State of Delaware;
The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
b. ARLP has the full power and authority to enter into and consummate all
transactions contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement and has duly
executed and delivered this Agreement;
c. This Agreement, assuming due authorization, execution and delivery by
ACM, constitutes a valid, legal and binding obligation of ARLP,
enforceable against ARLP in accordance with the terms hereof, subject
to (A) applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement of creditors' rights
generally, (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law and (C)
public policy considerations underlying the securities laws, to the
extent that such public policy considerations limit the enforceability
of the provisions of this Agreement that purport to provide
indemnification for securities laws liabilities; and
d. ARLP is not in violation of, and its execution and delivery of this
Agreement and its performance of, and compliance with, the terms of
this Agreement will not constitute a violation of, any law, any order
or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority,
which violation, in ARLP 's good faith and reasonable judgment, is
likely to affect materially and adversely either the ability of ARLP to
perform its obligations under this Agreement or the financial condition
of ARLP.
6. Investment Representations and Warranties. ACM hereby represents and
warrants to ART and ARLP as follows:
a. The Partnership Units and the Warrants to be acquired by ACM are being
acquired for ACM's own account with the present intention of holding
such interests for purposes of investment, and ACM has no intention of
selling such interests in a public distribution, and the Partnership
Units and the Warrants will not be disposed of in contravention of the
Securities Act of 1933, as amended (the "Act"), or any applicable state
securities laws. No other person will have any direct or indirect
(other than through the ownership of a direct or indirect interest in
ACM) beneficial interest in or right to the Partnership Units or
Warrants purchased hereunder;
b. ACM understands that the Partnership Units and Warrants have not been
registered under the Act or any state securities laws by reason of
specific exemptions under the provisions thereof, the availability of
which depend in part upon the bona fide nature of ACM's investment
intent and upon the accuracy of ACM's representations made in this
Section 6. ACM understands that the Partnership Units and the Warrants
have not been approved or disapproved by the Securities and Exchange
Commission or by any other federal or state agency. ACM understands
that ARLP is relying upon the
representations and agreements contained in this Section 6 for the
purpose of determining whether this transaction meets the requirements
for such exemptions under the Act and any state securities laws;
c. ACM understands that the Partnership Units and Warrants are "restricted
securities" under the applicable federal securities laws and that the
Securities Act and the rules of the Securities and Exchange Commission
provide in substance that ACM may dispose of the Partnership Units and
the Warrants only pursuant to an effective registration statement under
the Securities Act or an exemption therefrom, and ACM understands that
ARLP has no current obligation or intention to register the Partnership
Units or the Warrants. ACM also understands that no public market
exists for any of the securities issued by ARLP and that ARLP has no
obligation to ensure that a broad public market will exist for
securities of ARLP. Accordingly, ACM understands that under the rules
of the Securities and Exchange Commission, ACM may only dispose of the
Partnership Units and the Warrants in transactions that are exempt from
registration under the Act. As a consequence of all of the foregoing,
ACM understands that it must bear the economic risk of the investment
in the Partnership Units and the Warrants for an indefinite period of
time;
d. ACM is an "accredited investor "as that term is defined in Rule 501(a)
under the Act. ACM was not formed solely for making an investment in
the Partnership Units or Warrants. ACM acknowledges that an investment
in the Partnership Units and the Warrants is not recommended for
investors who have any need for a current return on this investment or
who cannot bear the risk of losing their entire investment. ACM
acknowledges that: (i) it has adequate means of providing for its
current needs and has no need for liquidity in this investment; (ii) it
is able to bear the economic risk of this investment; (iii) it is able
to hold the Partnership Units and the Warrants indefinitely; and (iv)
it is able to afford a complete loss of this investment;
e. ACM either (i) has a preexisting personal or business relationship with
ARLP or (ii) by reason of its business or financial experience, or by
reason of the business or financial experience of its financial advisor
who is unaffiliated with and who is not compensated, directly or
indirectly, by ARLP or any affiliate or selling agent of ARLP, ACM is
capable of evaluating the risks and merits of an investment in the
Partnership Units and the Warrants and of protecting its own interests
in connection with the investment and investment commitment pursuant to
this Agreement; and
f. ACM has been given the opportunity to perform its own due diligence,
investigation of the business, operations, assets, liabilities and
financial condition of ARLP, including access to the records and books
of ARLP. ACM has had an opportunity to
ask questions of and receive answers from ARLP concerning the business
and assets of ARLP in a manner deemed appropriate by ACM.
7. Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants contained in this Agreement
shall survive the Closing. Upon discovery by any of the parties hereto
of a breach of any of the representations and warranties set forth in
Sections 4, 5 and 6 that materially and adversely affects the interests
of the other parties hereto, the party discovering such breach shall
give prompt written notice to the other party hereto.
8. Indemnity.
a. ACM hereby agrees to indemnify and hold ART and ARLP harmless from and
against any and all damage, expense, loss, cost, claim or liability
(each a "Claim") suffered or incurred by ART and ARLP as a result of
any untruth or inaccuracy in any of the representations or warranties
made by ACM in Sections 4 and 6 of this Agreement;
b. Scope of Indemnity. Notwithstanding anything to the contrary otherwise
provided in this Agreement:
i. No indemnity shall be available under Section 8(a) until the
indemnifiable Claims against ACM exceed the total amount of $200,000,
except in the case of Claims arising under breaches of any
representations or warranties in Section 4(a)(ii), Section 4(b)(ii),
Section 4(b)(x), Section 4(b)(xxxii), Section 4(b)(xxxiv) or Section 6
(for purposes of determining whether the $200,000 threshold amount has
been met, any qualification or limitation of a representation or
warranty by reference to the materiality of matters stated herein
having or not having a material adverse effect or words of similar
effect shall be disregarded);
ii. Except in the case of fraud, the indemnification set forth in Section
8(a) shall be limited to an amount equal to the value of the
Partnership Units received by ACM on the date hereof;
iii. The indemnification set forth in Section 8(a) shall only extend to any
Claim of which written notice has been given within twelve months
following the Closing, except with respect to Claims arising under (A)
Section 4(b)(xxv) and Section 4(b)(xxvi), for which written notice has
been given within thirty-six months following the Closing, (B) Section
4(b)(x) and Section 4(b)(xxxiv), for which written notice has been
given within the applicable statute of limitations following the
Closing, and (C) Section 4b(ii), Section 4(b)(xxxii) and Section 6; and
c. Notice to ACM. Each of ART and ARLP shall give prompt written notice to
ACM as to the assertion of any Claim, or the commencement of any Claim.
The omission of either of ART or ARLP to notify ACM of any such Claim
shall not relieve ACM from any liability in respect of such Claim that
it may have to either of ART or ARLP on account of this Agreement nor
shall it relieve ACM from any other liability that it may have to
either of ART or ARLP, provided, however, that ACM shall be relieved of
liability to the extent that the failure so to notify (a) shall have
caused prejudice to the defense of such claim, or (b) shall have
increased the costs or liability of ACM by reason of the inability or
failure of ACM (because of the lack of prompt notice from either of ART
or ARLP) to be involved in any investigations or negotiations regarding
any such claim. In case any such claim shall be asserted or commenced
against either of ART or ARLP and it shall notify ACM thereof, ACM
shall be entitled to participate in the negotiation or administration
thereof and, to the extent it may wish, to assume the defense thereof
with counsel reasonably satisfactory to the party against which such
Claim was initially asserted or commenced, and, after notice from ACM
to the party against which such Claim was initially asserted or
commenced of its election so to assume the defense thereof, which
notice shall be given within 15 days of its receipt of such notice from
the party against which such Claim was initially asserted or commenced,
ACM will not be liable to the party against which such Claim was
initially asserted or commenced hereunder for any legal or other
expenses subsequently incurred by the party against which such Claim
was initially asserted or commenced in connection with the defense
thereof other than reasonable costs of investigation. ACM shall not
settle any claim without the written consent of the party against which
such Claim was initially asserted or commenced, which consent shall not
be unreasonably withheld or delayed.
9. Covenants.
ACM hereby agrees to provide ARLP with a limited guaranty with respect
to the 130 West 30th Street Bridge Loan (as defined on Schedule A-1
hereto), 333 East 34th Street Mezzanine Loan and the Central Jersey
Mezzanine Loan (each as defined on Schedule A-2 hereto) and the
Preferred Equity Interest held by ANMB Holdings, LLC (as described on
Schedule C hereto), pursuant to a Guaranty, made by ACM in favor of
ARLP, substantially in the form of Exhibit B;
10. Specific Performance. ACM and ARLP acknowledge that damages would be an
inadequate remedy for any breach of the provisions of this Agreement
and agree that the obligations of the parties hereunder shall be
specifically enforceable.
11. Expenses. Whether or not the Closing occurs, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by ACM.
12. Further Assurances. From time to time following the Closing, ACM shall
execute and deliver, or cause to be executed and delivered, to ARLP
such other documents or instruments of conveyance and transfer as ARLP
may reasonably request or as may be otherwise necessary to more
effectively convey and transfer to, and vest in, ARLP, the ACM Initial
Assets, the ANMB II Membership Interests, the Membership Interests and
the Liabilities, or in order to fully effectuate and to implement the
purposes, terms and provisions of this Agreement. To the extent that
hereafter ACM receives any payments in respect of the Initial Assets or
the Membership Interests on or after the date of the Closing, ACM shall
forward the same to ARLP within five (5) business days.
13. Entire Agreement: No Other Representations. Except as expressly agreed
in a separate writing signed by the parties hereto on or after the date
of this Agreement, this Agreement constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written
and oral, between the parties, with respect to the subject matter
hereof. Except as set forth herein, ACM makes no representation,
express or implied, with respect to the Initial Assets or the
Membership Interests or the enforceability, collectability, suitability
or value thereof.
14. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof
to any person or entity or any circumstance, is invalid or
unenforceable (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application
of such provision to other persons or entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of
such provision, or the application thereof, in any other jurisdiction.
15. Interpretation. The section references and headings herein are for
convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
16. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their successors and assigns.
ARLP shall have the
right to assign its rights under this agreement as respects any ACM
Initial Asset, the ANMB II Membership Interests or any of the
Membership Interests to any purchaser of such ACM Initial Asset the
ANMB II Membership Interests or any of the Membership Interests Nothing
in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any person or entity other than the parties
and their successors and assigns any right, remedy or claim under or by
reason of this Agreement.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which shall constitute one instrument.
18. Choice of Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES GOVERNING CONFLICTS OF
LAWS.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
ARBOR COMMERCIAL MORTGAGE, LLC
By: /s/ Frederick C. Herbst
---------------------------
Name: Frederick C. Herbst
Title: Chief Financial Officer
ARBOR REALTY TRUST, INC.
By: /s/ Frederick C. Herbst
---------------------------
Name: Frederick C. Herbst
Title: Chief Financial Officer
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
SCHEDULE A-1
BRIDGE LOANS
"1025 5th Avenue Bridge Loan" means the bridge loan evidenced by the Promissory
Note, dated as of October 10, 2002, by Adam C. Hochfelder and Amy M. Hochfelder
in favor of Arbor Commercial Mortgage, LLC.
"130 West 30th Street Bridge Loan" means the bridge loan evidenced by the
Amended, Consolidated and Restated Promissory Note, dated as of September 20,
2001 by 130 West 30th, LLC in favor of Arbor Commercial Mortgage, LLC.
"Concord and Henry Bridge Loan" means the bridge loan evidenced by the
Promissory Note, dated April 3, 2003, by Henry Terrace, LLC and 100 Concord St.,
LLC in favor of Arbor Commercial Mortgage, LLC.
"Dylan Hotel Bridge Loan" means the bridge loan evidenced by the Amended and
Restated Mortgage Note, dated as of March 31, 2003, by Grand Palace Hotel at the
Park LLC in favor of Arbor Commercial Mortgage, LLC, subject to all right, title
and interest of BD Hotels, LLC ("BD") to a certain amount of the principal and
interest payments due on Dylan Hotel Bridge Loan and such other rights, title
and interests of BD with respect to the Dylan Hotel Bridge Loan, each as granted
by ACM to BD pursuant to the Participation Agreement, dated as of April 8, 2003
between Arbor Commercial Mortgage, LLC and BD.
"Emerald Bay Bridge Loan" means the bridge loan evidenced by the Promissory
Note, dated as of May 14, 2003, by Empirian Bay LLC in favor of Arbor Commercial
Mortgage, LLC, subject to all right, title and interest of RFC to a certain
amount of the principal and interest payments due on Emerald Bay Bridge Loan and
such other rights, title and interests of [*] with respect to the Emerald Bay
Bridge Loan, each as granted by ACM to [*] pursuant to the Participation
Agreement, dated as of May 14, 2003 between Arbor Commercial Mortgage, LLC and
[*].
"Grand Plaza Bridge Loan" means the bridge loan evidenced by the Promissory
Note, dated as of November 27, 2002, by Grand Plaza Limited Partnership in favor
of Arbor Commercial Mortgage, LLC.
"Holiday Inn - Deland Bridge Loan" means the bridge loan evidenced by the
Promissory Note, dated as of March 31, 2000 by Hospitality Associates of Deland
Florida, Ltd., in favor of Arbor National Commercial Mortgage, LLC.
The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
"NHP Bridge Loan" means the bridge loan evidenced by the Promissory Note, dated
as of February 27, 2003, by NSH Affordable Housing of Indiana, Inc. in favor of
Arbor Commercial Mortgage, LLC.
"Palmetto Villas Bridge Loan" means the bridge loan evidence by the Promissory
Note, dated as of May 7, 2003, by Palmetto Villas Investors, LLC in favor of
Arbor Commercial Mortgage, LLC.
"Partners Portfolio Bridge Loan" means the bridge loan evidenced by the
Promissory Note with respect to Tranch A, dated as of April 30, 2003, by SRH/LA
Chesapeake Apartments, L.P., SRH/LA Nottingham, LLC, SRH/LA Hunter, LLC, SRH/LA
Melvin, LLC in favor of Arbor Commercial Mortgage, LLC.
"Tropical Gardens Bridge Loan" means the bridge loan evidenced by the Promissory
Note, dated as of December 20, 2002, by NHP Tropical Gardens Limited Partnership
in favor of Arbor Commercial Mortgage, LLC.
"Vermillion Apartments Bridge Loan" means the bridge loan evidenced by the
Promissory Note, dated as of September 24, 2002, by SRH Vermillion Limited
Partnership in favor of Arbor Commercial Mortgage, LLC.
SCHEDULE A-2
MEZZANINE LOANS
"333 East 34th Street Mezzanine Loan" means the mezzanine loan evidenced by the
Promissory Note by 333 East 34th, LLC, dated as of January 9, 2002, in favor of
Arbor Commercial Mortgage, LLC.
"Carlton Arms Mezzanine Loan" means the mezzanine loan evidenced by the
Promissory Note, dated as of November 14, 2001, by Carlton Arms, LLC and HRA
Egypt Lake, Inc. in favor of Arbor Commercial Mortgage, LLC.
"Partners Portfolio Mezzanine Loan" means the mezzanine loan evidenced by the
Promissory Note with respect to Tranch B, dated as of April 30, 2003, by SRH/LA
Chesapeake Apartments, L.P., SRH/LA Nottingham, LLC, SRH/LA Hunter, LLC, SRH/LA
Melvin, LLC in favor of Arbor Commercial Mortgage, LLC.
"Turtle Creek Apartments Mezzanine Loan" means the mezzanine loan evidenced by
the Promissory Note, dated as of October 7, 2002, by Turtle Creek Development,
L.P. in favor of Arbor Commercial Mortgage, LLC.
SCHEDULE A-3
OTHER LOANS
"Albion Loan" means the loan evidenced by the Severed Promissory Note B, dated
as of March 14, 2001, by Albion Associates, Ltd. in favor of Mezzobridge Funding
LLC, and assigned to Arbor Commercial Mortgage LLC as of July 31, 2001.
"Ornstein Loan" means the loan evidenced by the Multifamily Note, dated as of
August 31, 1995, by and between Ornstein 215-217 East 86 LLC and Arbor National
Commercial Mortgage Corporation.
SCHEDULE A-4
"Central Jersey Mezzanine Loan" means the mezzanine loan evidenced by the
Promissory Note made as of August 1, 2002 by Central Jersey Sub VI LLC and
Central Jersey Sub VII LLC in favor of ANMB II, as amended by (1) the
Modification of Promissory Note and Other Loan Documents and Assumption and
Reaffirmation, made as of October 31, 2002, by and among Central Jersey Sub VII
LLC, Central Jersey Sub VIII LLC, Central Jersey Prime III LLC, Livingston
Terrace L.L.C., Highland Montgomery L.L.C., Rubin Schron, David Lichtenstein,
Joseph Tabak and Jersey Central Management, L.L.C. and ANMB II and (2) the
Second Modification of Promissory Note and Other Loan Documents and
Reaffirmation, dated as of May 9, 2003, by and among Central Jersey Sub VII LLC,
Central Jersey Sub VIII LLC, Central Jersey Prime III LLC, Livingston Terrace
L.L.C., Highland Montgomery L.L.C., Rubin Schron, David Lichtenstein, Joseph
Tabak and Jersey Central Management, L.L.C. and ANMB II.
SCHEDULE B
PREFERRED EQUITY HOLDERS
1. ANMB Holdings, LLC, a wholly-owned subsidiary of ACM and the holder of
100% of the preferred interests in Central Jersey Prime Holdings LLC,
pursuant to the Limited Liability Company Agreement of Central Jersey
Prime Holdings LLC, dated as of May 9, 2003, by and among Central
Jersey LLC, ANMB Holdings, LLC, Arbor National CJ LLC, TRAC Central
Jersey LLC and CAM Jersey LLC.
2. Arbor Park Place LLC, a wholly-owned subsidiary of ACM and holder of
18% of the membership interest in Santa Ana Park Place Associates LLC,
pursuant to the Operating Agreement of Santa Ana Park Place Associates
LLC, dated as of January 8, 2002, by and among Santa Ana Park Place
Corp., Hanover Financial Company and Arbor Park Place LLC.
3. Arbor Devonshire, LLC, a wholly-owned subsidiary of ACM and holder of
100% of the preferred interests of Merchant Devonshire Limited
Partnership, pursuant to the Amended and Restated Limited Partnership
Agreement of Merchant Devonshire Limited Partnership, dated as of
December 23, 1998 (the "Devonshire LP Agreement"), by and among Third
Merchant Investors Corp., Arbor Devonshire, LLC and First Merchants
Group Limited Partnership, as amended by Amendment No. 1 to the
Devonshire LP Agreement, dated as of May 30, 2000, Amendment No. 2 to
the Devonshire LP Agreement, dated as of January 1, 2002 and Amendment
No. 3 to the Devonshire LP Agreement, dated as of January 1, 2003.
4. Arbor Texas CDS, LLC, a wholly-owned subsidiary of ACM and holder of
100% of the Class C Partnership Units of CDS-Texas Investors, L.P.,
pursuant to the Amended and Restated Agreement of Limited Partnership
of CDS-Texas Investors, L.P., dated as of January 1, 2003, by and among
Daniel R. Stanger, Christian V. Young, Dean A. Allara, Skyline Property
Associates II, L.P. and Arbor Texas CDS, LLC.
5. ACM Gateway, LLC, a wholly-owned subsidiary of ACM and holder of 100%
of the preferred interests of BP-CO 4 Property Associates, LLC,
pursuant to the Limited Liability Company Agreement of BP-CO 4 Property
Associates, LLC, dated as of February 8, 2002, by and among BP Villages
Management, Inc, ACM Gateway, LLC and other junior members.
SCHEDULE C
PREFERRED EQUITY INTERESTS
1. 100% of the preferred interests, held by Arbor Devonshire, LLC, a
wholly owned subsidiary, of Merchant Devonshire Limited Partnership as
evidenced by the Amended and Restated Limited Partnership Agreement of
Merchant Devonshire Limited Partnership, entered into as of January 17,
2002, by and among Third Merchant Investors Corp., Arbor Devonshire LLC
and First Merchants Group Limited Partnership.
2. 100% of the Class C Partnership Units of CDS-Texas Investors, L.P.,
held by Arbor Texas CDS, LLC, a wholly owned subsidiary, as evidenced
by the Amended and Restated Agreement of Limited Partnership of
CDS-Texas Investors, L.P., by and among Daniel R. Stanger, Christian V.
Young, Dean A. Allara, Skyline Property Associates II, L.P. and Arbor
Texas CDS, LLC.
3. 100% of the preferred interests of Central Jersey Prime Holdings, LLC,
held by ANMB Holdings, LLC, as evidenced by the Limited Liability
Company Agreement of Central Jersey Prime Holdings, LLC, dated as of
May 9, 2003, by and among Central Jersey LLC, ANMB Holdings, LLC, Arbor
National CJ LLC, TRAC Central Jersey LLC and CAM Jersey LLC.
4. 18% of the membership interests in Santa Ana Park Place Associates LLC,
held by Arbor Park Place, LLC, and evidenced by the Operating Agreement
of Santa Ana Park Place Associates LLC, dated as of January 8, 2002, by
and among Santa Ana Park Place Corp., Hanover Financial Company and
Arbor Park Place LLC;
5. 100% of the preferred interests of BP-CO 4 Property Associates, LLC
held by ACM Gateway, LLC and evidenced by the Limited Liability Company
Agreement of BP-CO 4 Property Associates, LLC, effective as of February
8, 2002, by and among BP Villages Management, Inc, ACM Gateway, LLC and
other junior members.
SCHEDULE 4(b)(XXI)
None.
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as July 1, 2003, is
executed and delivered, by and between Arbor Commercial Mortgage, LLC, a
Delaware limited liability company ("ACM") and Arbor Realty Limited Partnership,
a Delaware limited partnership ("ARLP"), pursuant to that certain Contribution
Agreement dated as of July 1, 2003 (the "Contribution Agreement"), by and among
ACM, Arbor Realty Trust, Inc., a Maryland corporation ("ART") and ARLP.
RECITALS
WHEREAS, pursuant to the Contribution Agreement, ARLP has agreed to
transfer the Partnership Units and the Warrants to ACM in exchange for the
Contributed Assets, upon the terms and conditions specified in the Contribution
Agreement.
Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed thereto in the Contribution Agreement.
NOW, THEREFORE, in consideration of the promises contained in the
Contribution Agreement and for other good and valuable consideration, ARLP and
ACM agree as follows:
1. ACM does hereby transfer, convey, assign and deliver to ARLP, and ARLP
hereby accepts from ACM, all of the rights, title and interests of ACM in,
to and under the ACM Initial Assets (including all promissory notes,
security agreements, guarantees and other agreements that evidence or
secure such ACM Initial Assets), in each case to have and hold unto ARLP,
its successors and assigns forever.
2. ACM does hereby transfer, convey, assign and deliver to ARLP, and ARLP
hereby accepts from ACM, (a) 100% of the Membership Interests of each of
the Preferred Equity Holders of the Preferred Equity Interests and (b) 100%
of the ANMB II Membership Interests, in each case to have and hold unto
ARLP, its successors and assigns forever.
3. ARLP hereby assumes all of the liabilities and agrees to perform any and
all duties and obligations of ACM under the documents that evidence or
otherwise
govern the rights and obligations of ACM with respect to the liabilities
and under any agreement referred to paragraph 1, with respect to the ACM
Initial Assets.
4. The terms and provisions of this Assignment and Assumption Agreement shall
be binding upon and inure to the benefit of the parties and their
respective successors and assigns.
5. This Assignment and Assumption Agreement shall be governed by and construed
in accordance with the laws of the State of New York without giving effect
to principles governing conflicts of laws.
IN WITNESS WHEREOF, each of ARLP and ACM have caused this Assignment and
Assumption Agreement to be duly executed and attested to by its officer hereunto
duly authorized as of the day and year first above written.
ARBOR COMMERCIAL MORTGAGE, LLC
By: _________________________
Name: Frederick C. Herbst
Title: Chief Financial Officer
ARBOR REALTY LIMITED PARTNERSHIP
By: Arbor Realty GPOP, Inc.,
its General Partner
By: _________________________
Name: Frederick C. Herbst
Title: Secretary and Treasurer
EXHIBIT B
GUARANTY
This GUARANTY (this "Guaranty"), dated as of July 1, 2003, is
by Arbor Commercial Mortgage, LLC, a New York limited liability company ("ACM"),
ACM 34th Street, LLC, a Delaware limited liability company and a wholly-owned
subsidiary of ACM ("ACM 34th"), Arbor 30th LLC, a New York limited liability
company and a wholly-owned subsidiary of ACM ("Arbor 30th"), Arbor National CJ
LLC, a New York limited liability company and a wholly-owned subsidiary of ACM
("CJ") and Arbor National CJ II, LLC, a New York limited liability company and a
wholly-owned subsidiary of ACM ("CJ II", and together with ACM 34th, Arbor 30th
and CJ, the "Subsidiary Guarantors"), in favor of Arbor Realty Limited
Partnership, a Delaware limited partnership ("ARLP"), ANMB Holdings, LLC, a New
York limited liability company ("ANMB") and ANMB Holdings II, LLC, a New York
limited liability company ("ANMB II").
W I T N E S S E T H
WHEREAS, pursuant to the terms of that certain contribution
agreement (the "Contribution Agreement"), dated as of July 1, 2003 (the
"Contribution Date"), by and among ACM, Arbor Realty Trust, Inc., a Maryland
corporation ("ART") and ARLP (capitalized terms used but not defined herein have
the meanings assigned to them in the Contribution Agreement), ACM has agreed to
contribute (i) the ACM Initial Assets, (ii) ACM's membership interests in ANMB
II, the original lender under the Central Jersey Mezzanine Loan, and (iii) the
Membership Interests of the Preferred Equity Holders of the Preferred Equity
Investments to ARLP, collectively, in exchange for the Partnership Units and the
Warrants;
WHEREAS, each of the 333 East 34th Street Mezzanine Loan, the 130 West
30th Street Bridge Loan and the Central Jersey Mezzanine Loan (collectively, the
"Guaranteed Loans") are Initial Assets;
WHEREAS, ANMB is a Preferred Equity Holder in that it holds 100% of the
preferred interests of Central Jersey Prime Holdings, LLC (the "Guaranteed
Preferred Equity Investment" and together with the Guaranteed Loans, the
"Guaranteed Investments");
WHEREAS, ACM 34th holds a 15% Percentage Interest (as defined in the
Operating Agreement of 333 East 34th, LLC) in 333 East 34th, LLC, the borrower
under the 333 East 34th Street Mezzanine Loan;
WHEREAS, Arbor 30th holds a 50% Percentage Interest (as defined in the
Operating Agreement of 130 West 30th, LLC) in 130 West 30th, LLC, the borrower
under the 130 West 30th Street Bridge Loan;
WHEREAS, CJ II holds a 18% Sharing Percentage (as defined in the
Operating Agreement of Central Jersey Prime III LLC) in Central Jersey Prime III
LLC, the managing member of the borrower under the Central Jersey Mezzanine
Loan;
WHEREAS, CJ holds a 18% Junior Interest (as defined in the Operating
Agreement of Central Jersey Prime Holdings LLC) in Central Jersey Prime Holdings
LLC; and
WHEREAS, ACM and the Subsidiary Guarantors (together, the
"Guarantors") desire to provide ARLP, ANMB and ANMB II with a limited guaranty
of (i) the repayment of a certain portion of the principal balance of each of
the Guaranteed Loans and (ii) the repurchase of a certain portion of the
preferred capital contribution of ANMB in Central Jersey Prime Holdings LLC.
NOW, THEREFORE, in consideration of the foregoing and the
covenants and obligations set forth in this Guaranty, the parties hereto agree
as follows:
1. Definitions. The following terms, as used in this Guaranty, shall have
the following meanings (unless otherwise expressly provided herein):
"130 West 30th Street Note" means the Amended, Consolidated and
Restated Promissory Note made as of September 20, 2001 by 130 West
30th, LLC in favor of ACM.
"130 West 30th Operating Agreement" means the Operating Agreement of
130 West 30th, LLC, dated as of September 20, 2001, by and between H.J.
Development, LLC and Arbor 30th.
"333 East 34th Street Note" means the Promissory Note made as of
January 9, 2002 by 333 East 34th, LLC in favor of ACM.
"333 East 34th Operating Agreement" means the Operating Agreement of
333 East 34th, LLC, dated as of June 19, 2001, by and among ACM 34th,
East 34th Street Management, LLC and 333 East 34th Street, LLC.
"Central Jersey Mezzanine Operating Agreement" means the Operating
Agreement of Central Jersey Prime III LLC, dated as of July 12, 2000,
by and among Central Jersey LLC, ANMB II, TRAC Central Jersey II LLC
and CJ II, as amended by the Amendment to Operating Agreement, dated as
of August 1, 2002 and the Amendment to Operating Agreement, dated as of
May 9, 2003.
"Central Jersey Note" means the Promissory Note made as of August 1,
2002 by Central Jersey Sub VI LLC and Central Jersey Sub VII LLC in
favor of ANMB II, as amended by (1) the Modification of Promissory Note
and Other Loan Documents and Assumption and Reaffirmation, made as of
October 31, 2002, by and among Central Jersey Sub VII LLC, ANMB II and
the other parties thereto and (2) the Second Modification of Promissory
Note and Other Loan Documents and Reaffirmation, made as of May 9,
2003, by and among Central Jersey Sub VII LLC, ANMB II and the other
parties thereto.
"Central Jersey Preferred Operating Agreement" means the Limited
Liability Company Agreement of Central Jersey Prime Holdings LLC, dated
as of May 9, 2003, by and among Central Jersey LLC, ANMB, CJ and TRAC
Central Jersey LLC.
"Guaranteed Loan Principal Balance" means:
(a) with respect to the 130 West 30th Street Bridge Loan, the
outstanding principal balance of the 130 West 30th Street Bridge Loan
as of the Contribution Date, namely $16,000,000.00, plus (a) any
Interest Expense relating to the 130 West 30th Street Bridge Loan paid
by ARLP subsequent to the Contribution Date, minus (b) the aggregate of
the following amounts received by ARLP subsequent to the Contribution
Date in accordance with the terms of the 130 West 30th Street Note: (i)
interest payments on the unpaid principal balance of the 130 West 30th
Street Bridge Loan, and (ii) Late Charges (as defined Section 1.3 of
the 130 West 30th Street Note);
(b) with respect to the 333 East 34th Street Mezzanine Loan, the
outstanding principal balance of the 333 East 34th Street Mezzanine
Loan as of the Contribution Date, namely $10,000,000.00, plus (a) any
Interest Expense relating to the 333 East 34th Street Mezzanine Loan
paid by ARLP
subsequent to the Contribution Date, minus (b) the aggregate of the
following amounts received by ARLP subsequent to the Contribution Date
in accordance with the terms of the 333 East 34th Street Note: (i)
interest payments on the unpaid principal balance of the 333 East 34th
Street Mezzanine Loan, (ii) Late Charges (as defined Section 1.9 of the
333 East 34th Street Note), and (iii) Extension Fees (as defined
Section 2.7 of the 130 West 30th Street Note); and
(c) with respect to the Central Jersey Mezzanine Loan, the
outstanding principal balance of the Central Jersey Mezzanine Loan as
of the Contribution Date, namely $3,000,000.00, plus (a) any Interest
Expense relating to the Central Jersey Mezzanine Loan paid by ANMB II
(or ARLP, if applicable) subsequent to the Contribution Date, minus (b)
the aggregate of the following amounts received by ANMB II (or ARLP, if
applicable) subsequent to the Contribution Date in accordance with the
terms of the Central Jersey Note: (i) interest payments on the unpaid
principal balance of the Central Jersey Mezzanine Loan, and (ii) any
Exit Fees (as defined in the Central Jersey Note).
"Guaranteed Preferred Capital Contribution" means the Unreturned
Preferred Capital Contribution (as defined in the Central Jersey
Preferred Operating Agreement) as of the Contribution Date, namely
$19,300,000.00, plus (a) any Interest Expense relating to the Central
Jersey Preferred Equity Investment paid by ARLP (or ANMB, if
applicable) subsequent to the Contribution Date, minus (b) the
aggregate of the following amounts received by ANMB subsequent to the
Contribution Date: (i) any Capital Proceeds or Net Cash Receipts (as
each such term is defined in the Central Jersey Preferred Operating
Agreement) and (ii) any Preferred Return (as defined in the Central
Jersey Preferred Operating Agreement).
"Interest Expense" means any interest payments made by ARLP after the
Contribution Date with respect to any of the Guaranteed Investments
pursuant to (a) the Assignment and Assumption Agreement, dated as of
July 1, 2003, by and between ACM and ARLP relating to the [*]
Repurchase Agreement, (b) the Structured Facility Warehousing Credit
and Security Agreement, dated as of July 1, 2003, by and between [*]
and ARLP, (c) the Master Repurchase Agreement, dated as of July 1,
2003, by and between [*] and ARLP, or (d) any other warehouse facility,
repurchase agreement, credit agreement or other
The material marked [*] has been omitted pursuant to a request for confidential
treatment by Arbor Realty Trust, Inc. and has been filed separately with the
Securities and Exchange Commission.
agreement entered into by ARLP which provides financing for the
Guaranteed Investments.
"Subsidiary Guarantors' Aggregate Return" means the total of the
following amounts received prior to and including the Termination Date:
(a) any "net cash flow" (as such term is defined in the 130 West
30th Operating Agreement) distributed to Arbor 30th pursuant to Section
8 of the 130 West 30th Operating Agreement, subject to the terms and
provisions of the 130 West 30th Operating Agreement, plus
(b) any Cash Available for Distribution (as defined in the 333
East 34th Operating Agreement) distributed to ACM 34th pursuant to
Article IV of the 333 East 34th Operating Agreement, subject to the
terms and provisions of the 333 East 34th Operating Agreement, plus
(c) any Capital Proceeds and Net Cash Receipts (as each such term
is defined in the Central Jersey Preferred Operating Agreement)
distributed to CJ pursuant to Article 5 of the Central Jersey Preferred
Operating Agreement, subject to the terms and provisions of the Central
Jersey Preferred Operating Agreement, plus
(d) any Available Cash or Capital Proceeds (as each such term is
defined in the Central Jersey Mezzanine Operating Agreement) or Special
Tax Distributions (as described in Section 8.9 of the Central Jersey
Mezzanine Operating Agreement) distributed to CJ II pursuant to Article
8 of the Central Jersey Mezzanine Operating Agreement, subject to the
terms and provisions of the Central Jersey Mezzanine Operating
Agreement.
2. Guaranty.
(a) Subject to the limitations set forth in Section 3 hereof, if
any portion of the Guaranteed Loan Principal Balance of any of the
Guaranteed Loans is not paid to ARLP or ANMB II, as applicable, at the
applicable Guaranteed Loan's maturity date in accordance with the terms
of the note and other loan documents relating to such Guaranteed Loan
(the "Unpaid Guaranteed Loan Principal Balance"), the Guarantors,
jointly and severally, hereby agree to pay to ARLP or ANMB II, as
applicable, the portion of the Unpaid Guaranteed Loan Principal Balance
of such Guaranteed Loan that is equal to or less than the Subsidiary
Guarantors' Aggregate Return.
(b) Subject to the limitations set forth in Section 3 hereof, if
any portion of the Guaranteed Preferred Capital Contribution is not
paid to ANMB (or ARLP, if applicable) at the Required Purchase Date (as
defined in the Central Jersey Preferred Operating Agreement) in
accordance with Section 11.3 of the Central Jersey Preferred Operating
Agreement (the "Unpaid Guaranteed Preferred Capital Contribution"), the
Guarantors, jointly and severally, hereby agree to pay to ANMB (or
ARLP, if applicable) the portion of the Unpaid Guaranteed Preferred
Capital Contribution that is equal to or less than the Subsidiary
Guarantors' Aggregate Return.
(c) As an Unpaid Guaranteed Loan Principal Balance or the Unpaid
Guaranteed Preferred Capital Contribution becomes due and payable from
time to time by the Guarantors pursuant to Section 2(a) and Section
2(b), respectively, ARLP shall deliver to ACM, within 10 business days
of such amounts becoming due, written notice stating the amount of such
Unpaid Guaranteed Loan Principal Balance or Unpaid Guaranteed Preferred
Capital Contribution, as applicable. To the extent that the Subsidiary
Guarantors' Aggregate Return as of the date such notice is received is
greater than or equal to the amount stated in such notice, the
Guarantors shall disburse the Unpaid Guaranteed Loan Principal Balance
or Unpaid Guaranteed Preferred Capital Contribution, as applicable, to
ARLP, ANMB II or ANMB, as applicable, within 10 business days of
receipt of such notice. To the extent that the Subsidiary Guarantors'
Aggregate Return as of the date such notice is received is less than
the amount stated in such notice, such Unpaid Guaranteed Loan Principal
Balance or Unpaid Guaranteed Preferred Capital Contribution, as
applicable, shall remain due and payable by the Guarantors, and, as
amounts constituting Subsidiary Guarantors' Aggregate Return are
received by the Guarantors, such amounts shall be disbursed to ARLP,
ANMB II or ANMB, as applicable, within five business days following
their receipt, until all Unpaid Guaranteed Loan Principal Balances or
the Unpaid Guaranteed Preferred Capital Contribution, as applicable,
has been fully paid.
3. Termination. This Guaranty will be terminated and the Guarantors will
no longer be obligated to pay any further amounts to ARLP or ANMB II,
as applicable, in respect of any of the Guaranteed Loans or to pay any
further amounts to ANMB in respect of the Guaranteed Preferred Equity
Investment on the date on which all of the following conditions are met
(the "Termination Date"):
(a) the remaining aggregate Unpaid Guaranteed Loan Principal Balance of
the Guaranteed Loans, plus the remaining Unpaid Guaranteed
Preferred Capital Contribution, is less than $5,000,000,
(b) no Event of Default (as such term is defined in note and the loan
documents relating to each of the Guaranteed Loans) with respect to
any Guaranteed Loan has occurred and is continuing, and
(c) no Trigger Event (as defined in the Central Jersey Preferred
Operating Agreement) has occurred and is continuing.
4. Notice of Receipt of Returns. ACM shall provide written notice to ARLP
within 15 business days of the end of each fiscal quarter of all
amounts that constitute Subsidiary Guarantors' Aggregate Return
received by the Guarantors during the preceding quarter.
5. Governing Law. This Guaranty shall be governed by and construed in
accordance with the laws of the State of New York.
6. Severability. If any provision of this Guaranty or the application of
any such provision to any person or circumstances shall be held invalid
by a court of competent jurisdiction, the remainder of this Guaranty,
including the remainder of the provision held invalid, or the
application of such provision to persons or circumstances other than
those as to which it is held invalid, shall not be affected thereby.
7. Counterparts. This Guaranty may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
8. Headings. All section headings herein are for convenience of reference
and are not part of this Guaranty, and no construction or interference
shall be derived therefrom.
IN WITNESS WHEREOF, the parties hereto has executed this
Guaranty as of the date first above written.
ARBOR COMMERCIAL MORTGAGE, LLC
By: _____________________________
Name: Frederick C. Herbst
Title: Chief Financial Officer
ARBOR 30th, LLC
By: _____________________________
Name:
Title:
ACM 34th STREET LLC
By: _____________________________
Name:
Title:
ARBOR NATIONAL CJ LLC
By: _____________________________
Name:
Title:
ARBOR NATIONAL CJ II, LLC
By: _____________________________
Name:
Title:
Acknowledged and Accepted by:
ARBOR REALTY LIMITED PARTNERSHIP
By: ARBOR REALTY GPOP, INC.,
its General Partner
By: _______________________________
Name: Frederick C. Herbst
Title: Treasurer and Secretary
ANMB HOLDINGS, LLC
By: ARBOR REALTY LIMITED PARTNERSHIP,
its sole member
By: ARBOR REALTY GPOP, INC.,
its General Partner
By: ________________________
Name: Frederick C. Herbst
Title: Treasurer and Secretary
ANMB HOLDINGS II, LLC
By: ARBOR REALTY LIMITED PARTNERSHIP,
its sole member
By: ARBOR REALTY GPOP, INC.,
its General Partner
By: ________________________
Name: Frederick C. Herbst
Title: Treasurer and Secretary