EX-10.21: PURCHASE AGREEMENT

EX-10.21 4 y17899exv10w21.txt EX-10.21: PURCHASE AGREEMENT EXHIBIT 10.21 PURCHASE AGREEMENT This Purchase Agreement (this "Agreement") is made as of the 11th day of January, 2006, by and among Arbor Realty Mortgage Securities Series 2005-1, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands (the "Issuer"), Arbor Realty Mortgage Securities Series 2005-1 LLC, a Delaware limited liability company (the "Co-Issuer" and, together with the Issuer, the "Co-Issuers"), and Wachovia Capital Markets, LLC ("Wachovia Securities" or the "Initial Purchaser"). WITNESSETH: WHEREAS, the Co-Issuers intend to co-issue (a) the U.S. $161,500,000 Class A-1 Senior Secured Floating Rate Term Notes, Due 2038 (the "Class A-1 Notes"), (b) the U.S. $40,375,000 Class A-2 Second Priority Senior Secured Floating Rate Term Notes, Due 2038 (the "Class A-2 Notes" and, together with the Class A-1 Notes, the "Class A Notes"), (c) the U.S. $57,000,000 Class B Third Priority Floating Rate Term Notes, Due 2038 (the "Class B Notes"), (d) the U.S. $29,687,500 Class C Fourth Priority Floating Rate Capitalized Interest Term Notes, Due 2038 (the "Class C Notes"), (e) the U.S. $10,212,500 Class D Fifth Priority Floating Rate Capitalized Interest Term Notes, Due 2038 (the "Class D Notes"), (f) the U.S.$9,025,000 Class E Sixth Priority Floating Rate Capitalized Interest Term Notes, Due 2038 (the "Class E Notes"), (g) the U.S.$17,575,000 Class F Seventh Priority Floating Rate Capitalized Interest Term Notes, Due 2038 (the "Class F Notes"), (h) the U.S.$13,062,500 Class G Eighth Priority Floating Rate Capitalized Interest Term Notes, Due 2038 (the "Class G Notes"), and (i) the U.S.$17,812,500 Class H Ninth Priority Floating Rate Capitalized Interest Term Notes, Due 2038 (the "Class H Notes" and, together with the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and the Class G Notes, the "Notes") pursuant to an indenture, dated as of January 11, 2006 (the "Indenture"), by and among the Issuer, the Co-Issuer, LaSalle Bank National Association, as trustee (in such capacity, the "Trustee"), paying agent, calculation agent, transfer agent, custodial securities intermediary, backup advancing agent and notes registrar, and Arbor Realty SR, Inc., as advancing agent (the "Advancing Agent"); WHEREAS, the Issuer intends to issue 118,750,000 preferred shares, with a per share notional amount of U.S. $1.00 (the "Preferred Shares" and, together with the Notes, the "Securities") pursuant to the Governing Documents (as defined in the Indenture) of the Issuer, certain resolutions of the board of directors of the Issuer passed prior to the issuance of the Preferred Shares and the Preferred Shares Paying Agency Agreement, dated as of January 11, 2006 (the "Preferred Shares Paying Agency Agreement"), by and between the Issuer and LaSalle Bank National Association, as preferred shares paying agent (the "Preferred Shares Paying Agent"); WHEREAS, the Initial Purchaser is a securities firm engaged in the business of selling securities directly to purchasers or through other securities dealers; WHEREAS, the Initial Purchaser intends, but is not required, to make a market in the Notes; WHEREAS, Arbor Realty Collateral Management, LLC ("ARCM") shall act as collateral manager (the "Collateral Manager") of the Issuer's assets in accordance with the terms of a collateral management agreement, dated as of January 11, 2006 (the "Collateral Management Agreement"), between the Collateral Manager and the Issuer; WHEREAS, on the Closing Date, the Issuer will purchase or will have committed to purchase a portion of Collateral Debt Securities from Arbor Realty SR, Inc. and Arbor Realty Funding, LLC (together the "Sellers"); and WHEREAS, the Initial Purchaser hereby acknowledges that it has received good and valuable consideration hereunder. NOW, THEREFORE, the parties agree as follows: 1. Defined Terms. All capitalized terms used and not otherwise defined herein shall have the same meanings ascribed to such terms in the Indenture. 2. Sale and Purchase of the Notes; Market-Making. (a) Subject to the terms and conditions herein, on the Closing Date, each of the Issuer and the Co-Issuer hereby agrees to sell all of the Notes to the Initial Purchaser as provided hereinafter, and the Initial Purchaser agrees to purchase from the Issuer and Co-Issuer, as applicable, the Notes in the amount set forth on Schedule A hereto at the price (the "Purchase Price") set forth opposite the respective classes of Notes. (b) The Purchase Price of the Notes shall be payable to the Issuer as it directs by wire transfer in United States Dollars in immediately available funds on the Closing Date. (c) Prior to or at the time that the Notes are first issued or delivered, the conditions precedent in Section 7 herein shall have been satisfied. (d) The Initial Purchaser may, but is not required to, make a market in the Notes and may cease any such activity at any time. 3. Offer of the Notes. Each of the Issuer and the Co-Issuer understands that the Initial Purchaser intends to offer the Notes as soon after this Agreement has become effective as is advisable in the judgment of the Initial Purchaser. The Issuer and Co-Issuer confirm that they have authorized the Initial Purchaser, subject to the restrictions set forth below, to distribute copies of the offering memorandum dated January 6, 2006 (the "Offering Memorandum") in connection with the offering of the Notes or making a market in the Notes, as applicable. 4. Representations, Warranties and Covenants of each of the Co-Issuers. Each of the Issuer or the Co-Issuer, as applicable, represents and warrants (with respect to itself only) to the Initial Purchaser as of the Closing Date, and agrees with the Initial Purchaser that: -2- (a) it has not, directly or indirectly, solicited any offer to buy or offered to sell, and shall not, directly or indirectly, solicit any offer to buy or offer to sell, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Securities in a manner that would require the Securities to be registered under the Securities Act of 1933, as amended (the "Securities Act"); (b) the Notes are eligible for resale pursuant to Rule 144A under the Securities Act and shall not be, on the Closing Date, of the same class as securities listed on a national securities exchange registered under Section 6 of the United States Securities Exchange Act, as amended (the "Exchange Act"), or quoted in a United States automated interdealer quotation system; (c) the Offering Memorandum, the marketing materials dated November, 2005 and the related asset summaries (collectively, the "Offering Materials") have been prepared by the Issuer and the Co-Issuer, as applicable, in connection with the offering of the Notes. The Offering Materials and any amendments or supplements thereto did not and shall not, as of their respective dates and, in the case of the Offering Memorandum, as of the Closing Date, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading except that the representations and warranties set forth in this Section 4(c) do not apply to statements or omissions that are made in reliance upon and in conformity with information relating to the Initial Purchaser furnished to the Issuer by the Initial Purchaser expressly for use in the Offering Materials or any amendment or supplement thereto. It is hereby acknowledged that the statements set forth in the second paragraph under the caption "Subscription and Sale" constitute the only written information furnished to the Seller by the Initial Purchasers expressly for use in the Offering Circular (or any amendment or supplement thereto). (d) since the respective dates as of which information is given in the Offering Materials, except as contemplated or set forth in the Offering Memorandum, it has not carried on any business other than as described in the Offering Materials relating to the issue of the Securities; (e) the Issuer does not have any subsidiaries and the Co-Issuer does not have any subsidiaries; (f) the Issuer is an exempted company incorporated with limited liability that has been duly and validly incorporated and is existing and in good standing under the laws of the Cayman Islands; the Issuer is duly licensed and duly qualified to do business as a foreign limited liability company and is in good standing in all jurisdictions in which the ownership of its assets or in which the conduct of its business requires or shall require such qualification; the Issuer has full power and authority to own its assets and conduct its business as described in the Offering Materials and to enter into and perform its obligations under this Agreement, the Indenture, the Preferred Shares Paying Agency Agreement, the Servicing Agreement, each Collateral Debt Securities Purchase Agreement, each Hedge Agreement and the Collateral Management Agreement and to enter into and consummate all the transactions in connection therewith as contemplated by such agreements and in the Offering Materials; -3- (g) the Co-Issuer is a limited liability company that is in good-standing under the laws of the State of Delaware and is duly licensed and duly qualified to do business as a limited liability company and is in good standing in all jurisdictions in which the ownership of its assets or in which the conduct of its business requires or shall require such qualification; the Co-Issuer has full power and authority to own its assets and conduct its business as described in the Offering Materials and to enter into and perform its obligations under this Agreement and the Indenture and to enter into and consummate all the transactions in connection therewith as contemplated by such agreements and in the Offering Materials; (h) the Issuer has the authorized share capital as set forth in the Offering Memorandum and all of the issued Preferred Shares of the Issuer will have been duly and validly authorized and issued and are fully paid and nonassessable, and all of the issued ordinary shares of the Issuer shall be held by ARMS 2005-1 Equity Holdings LLC ("ARMS Equity"); (i) the Co-Issuer has the authorized capitalization as set forth in the Offering Memorandum and all of the issued membership interests of the Co-Issuer have been duly and validly authorized and issued and all of the issued membership interests of the Co-Issuer shall be held by Arbor Realty SR, Inc.; (j) the Notes have been duly authorized by the Co-Issuer, and when issued and delivered and when appropriate entries have been made in the Notes Register pursuant to this Agreement and the Indenture against payment therefor, shall have been duly executed, authenticated, issued and delivered and shall constitute valid and legally binding obligations of the Co-Issuer, enforceable against the Co-Issuer in accordance with their terms and entitled to the benefits provided by the Indenture, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (k) the Notes have been duly authorized by the Issuer and, when issued, authenticated and delivered and when appropriate entries have been made in the Notes Register pursuant to this Agreement and the Indenture against payment therefor, shall have been duly executed, authenticated, issued and delivered and shall constitute valid and legally binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms and entitled to the benefits provided by the Indenture, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (l) each of the Indenture and this Agreement has been duly authorized by the Co-Issuer and, when executed and delivered by the parties thereto and hereto, shall constitute a valid and legally binding instrument, enforceable in accordance with its respective terms, under the laws of the State of New York and all other relevant laws, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (m) each of the Indenture, the Preferred Shares Paying Agency Agreement, the Servicing Agreement, the Collateral Management Agreement, this Agreement, each Collateral Debt Securities Purchase Agreement and each Hedge Agreement has been duly authorized by the -4- Issuer and, when executed and delivered by the parties thereto and hereto, shall constitute a valid and legally binding instrument, enforceable in accordance with its terms under the laws of the State of New York and all other relevant laws, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (n) except as may be required under state securities laws, no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Co-Issuer of its obligations hereunder, in connection with the offering, issuance or sale of the Notes hereunder or the consummation of the transactions contemplated by or for the due execution, delivery or performance of this Agreement, the Indenture, the Notes or any other agreement or instrument entered into or issued or to be entered into or issued by the Co-Issuer in connection with the consummation of the transactions contemplated herein and in the Offering Materials (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Offering Memorandum under the caption "Use of Proceeds"); (o) except as may be required under state securities laws, no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Issuer of its obligations hereunder, in connection with the offering, issuance or sale of the Notes hereunder or the consummation of the transactions contemplated by or for the due execution, delivery or performance of this Agreement, the Indenture, the Preferred Shares Paying Agency Agreement, the Securities, each Collateral Debt Securities Purchase Agreement, the Servicing Agreement, the Collateral Management Agreement, each Hedge Agreement or any other agreement or instrument entered into or issued or to be entered into or issued by the Issuer in connection with the consummation of the transactions contemplated herein and in the Offering Materials (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Offering Memorandum under the caption "Use of Proceeds"); (p) the statements set forth in the Offering Memorandum under the captions "Description of the Securities," "Security for the Notes," "The Collateral Management Agreement," "Hedge Agreements," "The Issuer" and "The Co-Issuer" insofar as they purport to constitute a description of the Issuer or the Co-Issuer or a summary of the terms of the Securities, the Indenture, each Hedge Agreement, the Preferred Shares Paying Agency Agreement, the Servicing Agreement, each Collateral Debt Securities Purchase Agreement and the Collateral Management Agreement and under the captions "Certain U.S. Federal Income Tax Considerations," "Cayman Islands Tax Considerations," "Certain ERISA Considerations" and "Subscription and Sale," insofar as they purport to describe the provisions of the laws and documents referred to therein, are correct in all material respects; (q) the issue and sale of the Securities and the compliance by the Issuer and the Co-Issuer, as applicable, with all of the provisions of the Indenture, the Preferred Shares Paying Agency Agreement, each Collateral Debt Securities Purchase Agreement, the Securities, each Hedge Agreement, the Servicing Agreement, the Collateral Management Agreement and this Agreement and the consummation of the transactions herein and therein contemplated shall not conflict with or result in a breach or violation of any of the terms or provisions of, or -5- constitute a default under, any other agreement or instrument to which the Issuer or the Co-Issuer is a party or by which the Issuer or the Co-Issuer is bound, nor shall such action result in any violation of the provisions of the Governing Documents of each of the Issuer or the Co-Issuer or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Issuer or the Co-Issuer or each of their assets; and, no consent, approval, authorization, order, registration or qualification of or with any court or governmental agency or body is required for the issue and sale of the Securities or the consummation of the transactions by the Issuer and the Co-Issuer contemplated by this Agreement, the Indenture, the Preferred Shares Paying Agency Agreement, each Collateral Debt Securities Purchase Agreement, each Hedge Agreement or the Collateral Management Agreement, (other than any governmental or other consents that have already been obtained by either the Issuer or the Co-Issuer and that were in full force and effect); (r) the Trustee shall have a perfected security interest in the Pledged Obligations and the Issuer's rights under the Servicing Agreement, the Collateral Management Agreement, each Hedge Agreement and each Collateral Debt Securities Purchase Agreement for the benefit and security of the holders of the Notes subject to the priorities set forth in the Indenture; (s) there are no legal or governmental proceedings, inquiries or investigations pending to which the Issuer or the Co-Issuer is a party or of which any property of the Issuer or Co-Issuer is the subject and no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (t) on the Closing Date, there shall not exist any default by any of the Issuer or the Co-Issuer or any condition, event or act, which, with notice or lapse of time or both, would constitute an Event of Default by the Issuer or the Co-Issuer under the Indenture; (u) none of the Issuer, the Co-Issuer or any persons acting on their behalf (other than the Initial Purchaser as to whom the Co-Issuers make no representation) has engaged or shall engage in any directed selling efforts as defined in Rule 902 of Regulation S under the Securities Act with respect to the Securities, and none of the foregoing persons has offered or sold any of the Securities, except for the sale of the Notes to the Initial Purchaser pursuant to this Agreement and the sale of the Preferred Shares to ARMS Equity; (v) neither the Issuer nor the Co-Issuer has entered into contractual arrangements with any person respect to the distribution of (A) the Notes, other than the Initial Purchaser pursuant to this Agreement, and (B) the Preferred Shares, other than pursuant to the Subscription Agreement dated as of the date hereof and signed by ARMS Equity (the "Subscription Agreement"); (w) no stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes are payable by or on behalf of the Initial Purchaser to the government of the Cayman Islands or any political subdivision or taxing authority thereof or therein in connection with the issuance, sale and delivery by the Issuer and the Co-Issuer or the sale and delivery by the Initial Purchaser outside the Cayman Islands of the Notes to the -6- investors thereof; provided, that Cayman Islands stamp duty will be payable if any of the Notes or Transaction Documents are executed in, or after execution, brought into the Cayman Islands; (x) neither the Issuer nor the Co-Issuer has offered or sold any Securities by means of any form of general solicitation or general advertising and none of the foregoing persons shall offer to sell, offer for sale or sell Securities by means of any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising; (y) assuming compliance by the Initial Purchaser with the offer and sale restrictions set forth herein and compliance by ARMS Equity with the restrictions set forth in the Preferred Shares Paying Agency Agreement, neither the Issuer nor the Co-Issuer is required to be registered as an "investment company" and neither the Issuer nor the Co-Issuer shall be required to register as an "investment company" under the Investment Company Act as a result of the conduct of its business in the manner contemplated by the Offering Memorandum; (z) assuming compliance by the Initial Purchaser with the offer and sale restrictions set forth herein and ARMS Equity with the restrictions set forth in the Preferred Shares Paying Agency Agreement, no registration of the Securities under the Securities Act is required for the offer and sale of the Notes in the manner contemplated by this Agreement and the Offering Memorandum or the sale of the Preferred Shares under the Subscription Agreement and no qualification of an indenture under the Trust Indenture Act of 1939, as amended, is required for the offer and sale of the Securities in the manner contemplated by this Agreement, the Subscription Agreement and the Offering Memorandum; (aa) each of the Issuer and the Co-Issuer shall make available to the Initial Purchaser such number of copies of the Offering Memorandum and any amendment or supplement thereto as the Initial Purchaser shall reasonably request; (bb) neither the Issuer nor the Co-Issuer has offered and neither the Issuer nor the Co-Issuer shall offer (A) the Notes, except pursuant to this Agreement, and (B) the Preferred Shares, except pursuant to the Subscription Agreement; (cc) the Co-Issuers shall offer and sell the Notes and the Issuer shall offer and sell the Preferred Shares, only to persons (i) who are "qualified purchasers" as defined in Section 2(a)(51) of the Investment Company Act ("Qualified Purchasers") that the Co-Issuers reasonably believe are "qualified institutional buyers" (except with respect to the sale of the Preferred Shares to ARMS Equity) as defined in Rule 144A under the Securities Act ("Rule 144A") and whom the seller has informed that the reoffer, resale, pledge or other transfer is being made in reliance on Rule 144A or (ii) the Co-Issuers reasonably believe are not "U.S. persons" or U.S. residents for purposes of the Investment Company Act and that the sale, reoffer, resale, pledge or other transfer is being made in compliance with Regulation S under the Securities Act; terms used in this paragraph have the meanings given to them by Regulation S or Rule 144A, as applicable; -7- (dd) each of the Issuer and the Co-Issuer shall immediately notify the Initial Purchaser, and confirm such notice in writing, of (A) any filing made by the Co-Issuers of information relating to the offering of the Securities with any securities exchange or any other regulatory body in the United States or any other jurisdiction, and (B) prior to the completion of the purchase of the Notes by the Initial Purchaser, any material changes in or affecting the earnings, business affairs or business prospects of either the Issuer or the Co-Issuer which (i) make any statement in the Offering Materials false or misleading in any material respect or (ii) are not disclosed in the Offering Memorandum. In such event or if during such time any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of any of the Issuer, the Co-Issuer, their counsel, the Initial Purchaser or its counsel, to amend or supplement the Offering Materials in order that the final Offering Materials not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances then existing, each of the Issuer and the Co-Issuer shall forthwith amend or supplement the final Offering Materials by preparing and furnishing to the Initial Purchaser an amendment or amendments of, or a supplement or supplements to, the final Offering Materials (in form and in substance satisfactory in the opinion of counsel for the Initial Purchaser) so that, as so amended or supplemented, the final Offering Materials shall not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time it is delivered to an investor, not misleading; (ee) each of the Issuer and the Co-Issuer shall advise the Initial Purchaser promptly of any proposal to amend or supplement the Offering Materials and shall not effect such amendment or supplement without the consent of the Initial Purchaser, which shall not be unreasonably withheld or delayed. Neither the consent of the Initial Purchaser to, nor the Initial Purchaser's delivery of, any such amendment or supplement, shall constitute a waiver of any of the conditions set forth in Section 7 hereof; (ff) each of the Issuer and the Co-Issuer agrees that it shall not make any offer or sale of Securities of any class if, as a result of the doctrine of "integration" referred to in Rule 502 promulgated under the Securities Act, such offer or sale would render invalid (for the purpose of (i) the sale of the Notes to the Initial Purchaser, (ii) the resale of the Notes by the initial investors to others or (iii) the initial sale of the Preferred Shares) the exemption from the registration requirements of the Securities Act provided by Section 4(2) thereof or by Rule 144A or by Regulation S thereunder or otherwise; (gg) each of the Issuer and the Co-Issuer agrees that, in order to render the Notes eligible for resale pursuant to Rule 144A under the Securities Act, while any of the Notes remain outstanding, they shall make available, upon request, to any holder of the Notes or prospective purchasers of the Notes designated by any Holder the information specified in Rule 144A(d)(4), unless each of the Issuer and the Co-Issuer furnishes information to the United States Securities and Exchange Commission (the "Commission") pursuant to Section 13 or 15(d) of the Exchange Act (such information, whether made available to holders or prospective purchasers or furnished to the Commission, is hereinafter referred to as "Additional Information"); -8- (hh) until the expiration of two years after the original issuance of the Securities, each of the Issuer and the Co-Issuer shall not resell any Securities which are "restricted securities" (as such term is defined under Rule 144(a)(3) under the Securities Act) that have been re-acquired by any of them and shall immediately upon any purchase of any such Securities submit such Securities to the Trustee or the Preferred Shares Paying Agency, as applicable, for cancellation; (ii) each of the Issuer and the Co-Issuer shall use the net proceeds received by them from the sale of the Securities in the manner specified in the Offering Memorandum under "Use of Proceeds"; (jj) during a period of 180 days from the date of the Offering Memorandum, neither the Issuer nor the Co-Issuer shall, directly or indirectly, issue, sell, offer to sell, grant any option for the sale of, or otherwise dispose of, any debt securities or guarantees of debt securities of the Issuer or the Co-Issuer, as applicable, or any securities convertible or exchangeable into or exercisable for any debt securities or guarantees of debt securities of the Issuer or the Co-Issuer, as applicable, or any securities convertible or exchangeable into or exercisable for any debt security or guarantee of debt securities of the Issuer or Co-Issuer, except as described in the Offering Memorandum; (kk) the Co-Issuers shall use all reasonable efforts in cooperation with the Initial Purchaser to permit the Notes to be eligible for clearance and settlement through DTC; (ll) each certificate representing a Note shall bear the legend contained in the Indenture for the time period and upon the other terms stated in the Indenture; (mm) each certificate representing a Preferred Share shall bear the legend contained in the Preferred Shares Paying Agency Agreement for the time period and upon the other terms stated in the Preferred Shares Paying Agency Agreement; (nn) the Co-Issuers shall have no debt other than as indicated in or contemplated by the Offering Memorandum (including, without limitation, expenses incurred in connection with the offering of the Notes); (oo) the application of the proceeds of the sale of the Securities shall not be in violation of Regulations T, U or X of the Board of Governors of the Federal Reserve System, as amended and in effect on the Closing Date; (pp) The Co-Issuers have taken all necessary steps to ensure that any Bloomberg screen containing information about the Notes represented by Rule 144A Global Notes includes the following (or similar) language: (i) the "Note Box" on the bottom of the "Security Display" page describing the Rule 144A Global Notes shall state: "Iss'd Under 144A/3c7"; (ii) the "Security Display" page shall have flashing red indicator "See Other Available Information"; and -9- (iii) the indicator shall link to the "Additional Security Information" page, which shall state that the securities "are being offered in reliance on the exemption from registration under Rule 144A of the Securities Act to persons who are both (i) qualified institutional buyers (as defined in Rule 144A under the Securities Act) and (ii) qualified purchasers (as defined under Section 3(c)(7) under the 1940 Act)." (qq) The Co-Issuers shall instruct The Depository Trust Company ("DTC") to take these or similar steps with respect to the Notes represented by Rule 144A Global Notes: (i) the DTC 20-character security descriptor and 48-character additional descriptor shall indicate with marker "3c7" that sales are limited to Qualified Institutional Buyers/Qualified Purchasers; (ii) where the DTC deliver order ticket sent to purchasers by DTC after settlement is physical, it shall have the 20-character security descriptor printed on it. Where the DTC deliver order ticket is electronic, it shall have a "3c7" indicator and a related user manual for participants, which shall contain a description of the relevant restriction; (iii) DTC shall send an "Important Notice" outlining the 3(c)(7) restrictions applicable to the Rule 144A Global Notes to all DTC participants in connection with the initial offering; and (iv) DTC shall include the Co-Issuers in the Reference Directory which is distributed by DTC to its participants on the list of all issuers who have advised DTC that they are 3(c)(7) issuers; and (rr) The Co-Issuers, have confirmed that CUSIP has established a "fixed field" attached to the CUSIP numbers for the Notes represented by Rule 144A Global Notes containing "3c7" and "144A" indicators. 5. Representations, Warranties and Covenants of the Initial Purchaser. The Initial Purchaser hereby represents and warrants to the Issuer and the Co-Issuer as of the Closing Date, and agrees with the Issuer and the Co-Issuer that: (a) it is a QIB and a Qualified Purchaser (as defined below), with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Notes; (b) it understands that (i) the Notes have not been and shall not be registered under the Securities Act, and (ii) neither the Issuer nor the Co-Issuer are, and neither shall be, registered as an "investment company" under the Investment Company Act; (c) it shall offer and sell the Notes only to persons (i) who are "qualified purchasers" as defined in Section 2(a)(51) of the Investment Company Act ("Qualified Purchasers") that it reasonably believes are "qualified institutional buyers" as defined in Rule 144A under the Securities Act ("Rule 144A") and whom the seller has informed that the reoffer, resale, pledge or other transfer is being made in reliance on Rule 144A, or (ii) it reasonably -10- believes are not "U.S. persons" or U.S. residents for purposes of the Investment Company Act and that the sale, reoffer, resale, pledge or other transfer is being made in compliance with Regulation S under the Securities Act; terms used in this paragraph have the meanings given to them by Regulation S or Rule 144A, as applicable; (d) it shall not invite the public in the Cayman Islands to subscribe for the Notes; (e) it acknowledges that purchases and resales of the Notes are restricted as described under "Transfer Restrictions" in the Offering Memorandum; (f) (i) it has not offered or sold and will not offer or sell any Notes to persons in the United Kingdom prior to the expiry of the period of six months from the Closing Date except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 (as amended); (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the "FSMA") received by it in connection with the issue or sale of any Securities in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom; (g) it represents and agrees that the Notes offered and sold in reliance on Regulation S have been and will be offered and sold only in offshore transactions. In connection therewith, it agrees that it has not offered or sold and will not offer or sell the Notes in the United States or to, or for the benefit or account of, a U.S. Person (other than a distributor), in each case, as defined in Rule 902 under the Securities Act (i) as part of its distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering of the Notes pursuant hereto and the Closing Date, other than in accordance with Regulation S of the Securities Act or another exemption from the registration requirements of the Securities Act; and (h) no form of general solicitation or general advertising has been or will be used by it or any of its representatives in connection with the offer and sale of any of the Securities, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Terms used in this Section 5 that have meanings assigned to them in Regulation S are used herein as so defined. 6. Fees and Expenses. The proceeds of the offering of the Securities shall be used to pay all expenses incurred in connection with the offering of the Securities, including the preparation and printing of the preliminary and final offering memorandum, the preparation, -11- issuance and delivery of the Notes to the Initial Purchaser, any fees charged by the Rating Agencies in rating the Notes and the fees of counsel to the Issuer and Co-Issuer, the Initial Purchaser, the Preferred Shares Paying Agent, the fees of the Collateral Manager, the Trustee and all reasonable out-of-pocket expenses of the Initial Purchaser. 7. Conditions Precedent to the Purchase of the Notes. The obligations of the Initial Purchaser hereunder are subject to the accuracy of the representations and warranties of each of either the Issuer or the Co-Issuer contained in Section 4 hereof or in certificates of any of the respective officers of the Issuer or Co-Issuer delivered pursuant to the provisions hereof, to the performance by the Issuer and the Co-Issuer of their covenants and other obligations hereunder, and to the following further conditions precedent: (a) On the Closing Date, the Initial Purchaser shall have received the opinions, dated as of the Closing Date of Cadwalader, Wickersham & Taft LLP, special counsel to the Co-Issuers, and of Maples and Calder, Cayman Islands counsel to the Issuer. (b) On the Closing Date, (i) the Offering Materials, as amended or supplemented, shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) there shall not have been, since the date hereof or since the respective dates as of which information is given in the Offering Materials, any material adverse change or prospective material adverse change with respect to the Issuer, the Co-Issuer or the Collateral; (iii) each of the Issuer and the Co-Issuer shall have complied with all agreements and satisfied all conditions on their part to be performed or satisfied pursuant to this Agreement on or prior to Closing Date; and (iv) the representations and warranties of the Issuer and Co-Issuer in Section 4 shall be accurate and true and correct as though expressly made on and as of the Closing Date except as specifically set forth therein. (c) On the Closing Date, the Initial Purchaser shall have received a certificate of an authorized officer of ARCM, dated as of the Closing Date, substantially in the form attached hereto as Exhibit A. (d) On the Closing Date, the Initial Purchaser shall have received certificates of authorized officers of Arbor Realty SR, Inc. and Arbor Realty Funding, LLC, dated as of the Closing Date, substantially in the form attached hereto as Exhibit B-1 and Exhibit B-2, respectively. (e) On the Closing Date, the Initial Purchaser shall have received from KPMG LLP a letter, dated as of the Closing Date in form and substance satisfactory to the Initial Purchaser, with respect to certain financial, statistical and other information contained in the Offering Memorandum and the composition of the Collateral Debt Securities on the Closing Date. (f) The Co-Issuer shall have duly authorized, executed and delivered the Indenture and this Agreement. (g) The Issuer shall have duly authorized, executed and delivered the Indenture, the Preferred Shares Paying Agency Agreement, the Servicing Agreement, the -12- Collateral Management Agreement, each Collateral Debt Securities Purchase Agreement and each Hedge Agreement. (h) ARCM shall have duly authorized, executed and delivered the Collateral Management Agreement. (i) Each Seller shall have duly authorized, executed and delivered the applicable Collateral Debt Securities Purchase Agreement. (j) Each Hedge Counterparty shall have duly authorized, executed and delivered the related Hedge Agreement. (k) Arbor Commercial Mortgage, LLC shall have duly authorized, executed and delivered the Servicing Agreement. (l) The Notes shall have been executed by the Issuer and Co-Issuer, as applicable, and authenticated by the Trustee and the conditions precedent thereto, as set forth in the Indenture, shall have been satisfied. (m) The Preferred Shares shall have been issued by the Issuer and the conditions precedent thereto, as set forth in the Preferred Shares Paying Agency Agreement and the Governing Documents, shall have been satisfied. (n) Prior to the purchase of the Notes hereunder, the Initial Purchaser shall have received the opinions, dated as of the Closing Date, of the respective counsel to the Trustee, the Preferred Shares Paying Agent, the Collateral Manager, each Hedge Counterparty and the Advancing Agent, each in form and substance satisfactory to the Initial Purchaser. (o) Prior to the initial purchase of the Notes hereunder, the Issuer and Co-Issuer, as applicable, shall have obtained letters from Moody's Investors Service, Inc. ("Moody's"), Fitch, Inc. ("Fitch") and Standard & Poor's Rating Services, a division of The McGraw-Hill Companies ("S&P" and, together with Moody's and Fitch, the "Rating Agencies") that the Class A-1 Notes have been rated "Aaa" by Moody's and "AAA" by S&P and Fitch, that the Class A-2 Notes have been rated "Aaa" by Moody's and "AAA" by S&P and Fitch, that the Class B Notes have been rated at least "Aa2" by Moody's and "AA" by S&P and Fitch, that the Class C Notes have been rated at least "A1" by Moody's and "A+" by S&P and Fitch, that the Class D Notes have been rated at least "A2" by Moody's and "A" by S&P and Fitch, that the Class E Notes have been rated at least "A3" by Moody's and "A-" by S&P and Fitch, that the Class F Notes have been rated at least "Baa1" by Moody's and "BBB+" by S&P and Fitch, that the Class G Notes have been rated at least "Baa2" by Moody's and "BBB" by S&P and Fitch, that the Class H Notes have been rated at least "Baa3" by Moody's and "BBB-" by S&P and Fitch, and shall deliver copies of such letters to the Initial Purchaser. (p) The Initial Purchaser shall have received such further information, certificates, documents and opinions as it may have reasonably requested. -13- (q) The Co-Issuers and DTC shall have executed and delivered one or more letters of representation with respect to the Notes each in a form reasonably satisfactory to the Initial Purchaser. (r) All of the Preferred Shares shall have been purchased by ARMS Equity on the Closing Date. 8. Indemnification and Contribution. (a) Subject to the Priority of Payments set forth in Section 11.1 of the Indenture, the Co-Issuers shall indemnify and hold harmless the Initial Purchaser and each of its affiliates, respective officers, directors and each person who controls such Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an "Initial Purchaser Indemnified Person") against any losses, claims, damages, liabilities or expenses, joint or several, as the same are incurred, to which such Initial Purchaser Indemnified Person may become subject insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) (1) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Offering Materials or any amendment or supplement thereto or arise out of or are based upon the omission or alleged omission to state in the Offering Materials a material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, other than the Initial Purchaser Information (as defined below) or (2) are based upon a breach by either of the Co-Issuers of any of its representations, warranties or agreements contained in this Agreement, and shall periodically reimburse the Initial Purchaser for any and all legal or other expenses reasonably incurred by the Initial Purchaser and each other Initial Purchaser Indemnified Person in connection with investigating or defending, settling, compromising or paying any such losses, claims, damages, liabilities, expenses or actions as such expenses are incurred; provided, however, that the foregoing indemnity with respect to any untrue statement contained in or any statement omitted from any Offering Materials (as the same may be amended or supplemented) shall not inure to the benefit of the Initial Purchaser (or any Person controlling the Initial Purchaser), if (x) such loss, liability, claim, damage or expense resulted from the fact that the Initial Purchaser sold Notes to a Person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Offering Memorandum, as then amended or supplemented, (y) the Issuer shall have previously and timely furnished sufficient copies of the Offering Memorandum, as so amended or supplemented, to the Initial Purchaser in accordance with this Agreement and (z) the Offering Memorandum, as so amended or supplemented, would have corrected such untrue statement or omission. (b) The Initial Purchaser shall indemnify and hold harmless the Issuer and the Co-Issuer, each of their respective affiliates, their respective officers, directors, managers and each person controlling the Issuer and Co-Issuer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages, liabilities or expenses, joint or several, as the same are incurred, to which the Issuer or the Co-Issuer may become subject insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the statements set forth in the Initial Purchaser Information with respect to such Initial Purchaser or acts or omissions thereof or arise out of or are based upon the -14- omission or alleged omission to state in such paragraphs a material fact necessary with respect to such Initial Purchaser or acts or omissions thereof to make the statements in such paragraphs, in the light of the circumstances under which they are made, not misleading. The parties acknowledge that the only information provided by the Initial Purchaser is in the Offering Memorandum on the cover page in the first sentence of the fourth paragraph and in the Section entitled "Subscription and Sale" in the first sentence of the first paragraph, third and fifth paragraphs, second sentence of the sixth paragraph, seventh and eighth paragraphs and twelfth paragraphs (collectively, the "Initial Purchaser Information"); (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise under such subsection except to the extent it has been materially prejudiced by such failure. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it may elect, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval of counsel by the indemnified party, the indemnifying party shall not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to local counsel) for the indemnified party), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party at the expense of the indemnifying party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages, liabilities or expenses (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as incurred as a result of such losses, claims, damages, liabilities or expenses (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits -15- received by the Co-Issuers on the one hand and the Initial Purchaser on the other from the offering of the Notes. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Co-Issuers on the one hand and the Initial Purchaser on the other in connection with the statements or omissions or breaches of representations, warranties or agreements which resulted in such losses, claims, damages, liabilities or expenses (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Co-Issuers on one hand and Wachovia Securities on the other shall be in the same proportion as the total proceeds to the Co-Issuers from the sale of Securities and the discounts and commissions received by Wachovia Securities bear to each other. The relative fault shall be determined by reference to, among other things, whether the indemnified party failed to give the notice required under subsection (c) above, including the consequences of such failure, and whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Co-Issuers on the one hand or by the Initial Purchaser on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement, omission or breach. The Co-Issuers and the Initial Purchaser agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim (which shall be limited as provided in subsection (c) above if the indemnifying party has assumed the defense of any such action in accordance with the provisions thereof). Notwithstanding the provisions of this subsection (d), the Initial Purchaser shall not be required to contribute any amount in excess of the amount by which the amount of the discounts and commissions received by the Initial Purchaser exceeds the amount of any damages which the Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation shall be entitled to a contribution from any person who was not guilty of such fraudulent misrepresentation. 9. Duration, Termination and Assignment of this Agreement. (a) This Agreement shall become effective as of the date first written above and shall remain in force until terminated as provided in this Section 9. (b) This Agreement may be terminated by the Initial Purchaser at any time without the payment of any penalty by the Initial Purchaser, if there is a breach of any of the representations, warranties, covenants or agreements of the Issuer or the Co-Issuer hereunder or if any of the conditions set forth in Section 7 hereof have not been satisfied. (c) This Agreement shall terminate in the event that on or after the date hereof, there shall have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or in trading of the securities of -16- the Collateral Manager or any affiliate of the Collateral Manager on any exchange or over-the-counter market; (ii) a general moratorium on commercial banking activities declared by either federal or New York State authorities; or (iii) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, or other calamity or crisis, if the effect of any such event specified in this clause (iii) in the judgment of the Initial Purchaser makes it impracticable or inadvisable to proceed with the offering or delivery of the Notes on the terms and in the manner contemplated by this Agreement and in the Offering Memorandum. (d) The Issuer shall pay all fees and expenses in connection with the offering and sale of the Notes from amounts standing to the credit of the Expense Account immediately following the termination of this Agreement pursuant to Section 9(c) hereof. (e) This Agreement is not assignable by any party hereto; provided, however, that the Initial Purchaser may assign this Agreement, or any of its rights or obligations hereunder, in writing to any of its affiliates, provided that the rights of the Issuer or Co-Issuer shall not be affected by such assignment. Upon an assignment by the Initial Purchaser pursuant to this Section 9(e), such Initial Purchaser shall cause the assignee to assume in writing all of the obligations and liabilities of the Initial Purchaser hereunder and shall notify the Issuer and the Co-Issuer of such assignment. 10. Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or faxed and confirmed to the parties as follows: If to Wachovia Capital Markets, LLC: Wachovia Capital Markets, LLC 12 East 49th Street, 45th Floor New York, New York 10017 Telephone: (212) 909-0035 Fax: (212) 909-0047 Attention: Michelle Tan If to the Issuer: Arbor Realty Mortgage Securities Series 2005-1, Ltd. c/o Maples Finance Limited Queensgate House P.O. Box 1093 GT Queensgate House, South Church Street George Town, Grand Cayman, Cayman Islands Attention: The Directors Telephone: (345) 945-7099 Fax: (345) 945-7100 with a copy to the Collateral Manager: -17- Arbor Realty Collateral Management, LLC 333 Earle Ovington Boulevard, 9th Floor Uniondale, New York 11553 Telephone: (212) 389-6546 Fax: (212) 389-6573 Attention: Executive Vice President, Structured Securitization If to the Co-Issuer: Arbor Realty Mortgage Securities Series 2005-1 LLC c/o Puglisi & Associates 830 Library Avenue, Suite 204, Newark, Delaware 19711 Attention: Donald J. Puglisi Telephone: (302) 738-6680 Fax: (302) 738-7210 with a copy to the Collateral Manager (as addressed above). Any party hereto may change the address for receipt of communications by giving written notice to the others. 11. Consent to Jurisdiction. Each of the Issuer and the Co-Issuer (i) agrees that any legal suit, action or proceeding brought by any party to enforce any rights under or with respect to this Agreement or any other document or the transactions contemplated hereby or thereby may be instituted in any federal court in The City of New York, State of New York, U.S.A.; provided, however, that if a federal court in the City of New York declines jurisdiction for any reason, any legal suit, action or proceeding brought by any party to enforce any rights under or with respect to this Agreement or any other document or the transactions contemplated hereby or thereby may be instituted in any state court in the City of New York, State of New York, U.S.A., (ii) irrevocably waives to the fullest extent permitted by law any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding instituted in the City of New York, State of New York, U.S.A., (iii) irrevocably waives to the fullest extent permitted by law any claim that and agrees not to claim or plead in any court that any such action, suit or proceeding brought in a court in the City of New York, State of New York, U.S.A. has been brought in an inconvenient forum and (iv) irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding or for recognition and enforcement of any judgment in respect thereof. Each of the Issuer and the Co-Issuer hereby irrevocably and unconditionally designates and appoints CT Corporation System, 111 8th Avenue, 13th Floor, New York, New York 10011, U.S.A. (and any successor entity), as its authorized agent to receive and forward on its behalf service of any and all process which may be served in any such suit, action or proceeding in any such court and agrees that service of process upon CT Corporation shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and shall be taken and held to be valid personal service upon it. Said designation and appointment shall be irrevocable. Nothing in this Section 11 shall affect the rights of the Initial -18- Purchaser, its affiliates or any indemnified party to serve process in any manner permitted by law. Each of the Issuer and the Co-Issuer further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of CT Corporation in full force and effect so long as the Notes are outstanding but in no event for a period longer than five years from the date of this Agreement. Each of the Issuer and the Co-Issuer hereby irrevocably and unconditionally authorizes and directs CT Corporation to accept such service on their behalf. If for any reason CT Corporation ceases to be available to act as such, each of the Issuer and the Co-Issuer agrees to designate a new agent in New York City on the terms and for the purposes of this provision reasonably satisfactory to the Initial Purchaser. To the extent that either the Issuer or the Co-Issuer has or hereafter may acquire any immunity from jurisdiction of any court (including, without limitation, any court in the United States, the State of New York, Cayman Islands or any political subdivision thereof) or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property or assets, this Agreement, or any other documents or actions to enforce judgments in respect of any thereof, it hereby irrevocably waives such immunity, and any defense based on such immunity, in respect of its obligations under the above-referenced documents and the transactions contemplated thereby, to the extent permitted by law. 12. Arms-Length Transaction. Each of the Co-Issuers acknowledges and agrees that (i) the Initial Purchaser is acting solely in the capacity of an arm's length contractual counterparty to the Issuer and the Co-Issuer with respect to the purchase and sale of the Notes pursuant to this Agreement and not as a financial advisor or a fiduciary to, or agent of, the Issuer or the Co-Issuer or any other person, (ii) the Initial Purchaser is not advising the Issuer, the Co-Issuer or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction, (iii) the Issuer and the Co-Issuer shall consult with their own advisors concerning any such matter and shall be responsible for making their own independent investigation and appraisal of any transactions contemplated by this Agreement, and the Initial Purchaser shall have no responsibility or liability to the Issuer or the Co-Issuer with respect thereto, and (iv) any review by the Initial Purchaser of the Issuer, the Co-Issuer or any transactions contemplated by this Agreement or any other matters relating thereto will be performed solely for the benefit of the Initial Purchaser and shall not be on behalf of the Issuer, the Co-Issuer or any other person. 13. Judgment Currency. If, pursuant to a judgment or order being made or registered against the either the Issuer or the Co-Issuer, any payment under or in connection with this Agreement to the Initial Purchaser is made or satisfied in a currency (the "Judgment Currency") other than in United States Dollars then, to the extent that the payment (when converted into United States Dollars at the rate of exchange on the date of payment or, if it is not practicable for such Initial Purchaser to purchase United States Dollars with the Judgment Currency on the date of payment, at the rate of exchange as soon thereafter as it is practicable to do so) actually received by such Initial Purchaser falls short of the amount due under the terms of this Agreement, the Issuer or the Co-Issuer, as applicable, shall, to the extent permitted by law, as a separate and independent obligation, indemnify and hold harmless the Initial Purchaser against the amount of such short fall and such indemnity shall continue in full force and effect -19- notwithstanding any such judgment or order as aforesaid. For the purpose of this Section, "rate of exchange" means the rate at which such Initial Purchaser is able on the relevant date to purchase United States Dollars with the Judgment Currency and shall take into account any premium and other costs of exchange. 14. Amendments to this Agreement. This Agreement may be amended by the parties hereto only if such amendment is specifically approved in writing by the Issuer, the Co-Issuer and the Initial Purchaser. The Co-Issuers must provide notice of any amendment or modification of this Agreement to each Rating Agency rating the Notes at the time of any such amendment or modification. 15. Parties. This Agreement shall inure to the benefit of and be binding upon the Initial Purchaser, the Co-Issuers and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Initial Purchaser, the Co-Issuers and their respective successors and the controlling persons and officers and directors referred to in Section 8, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provisions herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Initial Purchaser, the Co-Issuers, each of their respective affiliates and their respective successors, and said controlling persons and officers, directors and managers and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities shall be deemed to be a successor by reason merely of such purchase. 16. Governing Law. This Agreement shall be construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law principles thereof. 17. Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts shall together constitute but one and the same agreement. 18. Representations, Warranties and Indemnities to Survive Delivery. The respective representations, warranties and indemnities of the Issuer, the Co-Issuer, of their respective officers and of the Initial Purchaser set forth in or made pursuant to, this Agreement, including any warranty relating to the payment of expenses owed to the Initial Purchaser hereunder shall remain in full force and effect and shall survive delivery of and payment for the Securities and any termination of this Agreement. 19. No Petition Agreement. The Initial Purchaser agrees that, so long as any Note is outstanding and for a period of one year plus one day or, if longer, the applicable preference period then in effect after payment in full of all amounts payable under or in respect of the Transaction Documents, it shall not institute against or join or assist any other Person in instituting against, any of the Issuer or the Co-Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any federal or state bankruptcy or similar law. This Section shall survive any termination of this Agreement. -20- 20. Non Recourse Agreement. Notwithstanding any other provision of this Agreement, all obligations of the Issuer or the Co-Issuer arising hereunder or in connection herewith are limited in recourse to the Pledged Obligations and to the extent the proceeds of the Pledged Obligations, when applied in accordance with the Priority of Payments, are insufficient to meet the obligations of the Issuer or the Co-Issuer hereunder in full, the Issuer or the Co-Issuer, as applicable, shall have no further liability in respect of any such outstanding obligations and any claims against the Issuer or the Co-Issuer, as applicable, shall be extinguished and shall not thereafter revive. The Initial Purchaser hereby agrees and acknowledges that the obligations of the Co-Issuers hereunder are solely the corporate obligations of the Co-Issuer and that no recourse shall be had against any officer, director, employee, shareholder, limited partner or incorporator of the Co-Issuers for any amounts payable hereunder. This Section shall survive any termination of this Agreement. -21- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Purchase Agreement as of the day and year first above written. ARBOR REALTY MORTGAGE SECURITIES SERIES 2005-1, LTD., as Issuer By: /s/ Martin Couch ------------------------------------ Name: Martin Couch Title: Director ARBOR REALTY MORTGAGE SECURITIES SERIES 2005-1 LLC, as Co-Issuer By: /s/ Guy R. Milone, Jr. ------------------------------------ Name: Guy R. Milone, Jr. Title: Authorized Signatory WACHOVIA CAPITAL MARKETS, LLC By: /s/ Michelle Tan ------------------------------------ Name: Michelle Tan Title: Director EXHIBIT A ARBOR REALTY COLLATERAL MANAGEMENT, LLC Officer's Certificate The undersigned, ____________________, pursuant to Section 7(c) of that certain Purchase Agreement dated as of January 11, 2006, by and among Arbor Realty Mortgage Securities Series 2005-1, Ltd., Arbor Realty Mortgage Securities Series 2005-1 LLC and Wachovia Capital Markets, LLC (the "Purchase Agreement") does HEREBY CERTIFY that: (a) The Collateral Manager (i) is a limited liability company, duly organized, is validly existing and is in good standing under the laws of the State of Delaware, (ii) has full power and authority to own its assets and to transact the business in which it is currently engaged, and (iii) is duly qualified and is in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires, or the performance of the Collateral Management Agreement and the Indenture would require, such qualification, except for failures to be so qualified that would not in the aggregate have a material adverse effect on the business, operations, assets or financial condition of the Collateral Manager or on the ability of the Collateral Manager to perform its obligations thereunder, or on the validity or enforceability of, the Collateral Management Agreement and the provisions of the Indenture applicable to the Collateral Manager; the Collateral Manager has full power and authority to execute, deliver and perform the Collateral Management Agreement and its obligations thereunder and the provisions of the Indenture applicable to it; the Collateral Management Agreement has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding agreement of the Collateral Manager, enforceable against it in accordance with the terms thereof, except that the enforceability thereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law); (b) Neither the Collateral Manager nor any of its Affiliates is in violation of any Federal or state securities law or regulation promulgated thereunder that would have a material adverse effect upon the ability of the Collateral Manager to perform its duties under the Collateral Management Agreement or the Indenture, and there is no charge, investigation, action, suit or proceeding before or by any court or regulatory agency pending or, to the best knowledge of the Collateral Manager, threatened which could reasonably be expected to have a material adverse effect upon the ability of the Collateral Manager to perform its duties under the Collateral Management Agreement or the Indenture; (c) Neither the execution and delivery of the Collateral Management Agreement nor the performance by the Collateral Manager of its duties thereunder or under the Indenture conflicts with or will violate or result in a breach or violation of any of the terms or provisions of, or constitutes a default under: (i) the limited liability company agreement of the Collateral Manager, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement or other evidence of indebtedness or other agreement, obligation, condition, covenant -22- or instrument to which the Collateral Manager is a party or is bound, (iii) any law, decree, order, rule or regulation applicable to the Collateral Manager of any court or regulatory, administrative or governmental agency, body or authority or arbitrator having jurisdiction over the Collateral Manager or its properties, and which would have, in the case of any of (i), (ii) or (iii) of this subsection (c), either individually or in the aggregate, a material adverse effect on the business, operations, assets or financial condition of the Collateral Manager or the ability of the Collateral Manager to perform its obligations under the Collateral Management Agreement or the Indenture; (d) No consent, approval, authorization or order of or declaration or filing with any government, governmental instrumentality or court or other person is required for the performance by the Collateral Manager of its duties under the Collateral Management Agreement and under the Indenture, except such as have been duly made or obtained; (e) The Offering Memorandum, as of the date thereof (including as of the date of any supplement thereto) and as of the Closing Date does not contain any untrue statement of a material fact and does not omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (f) On the Closing Date, there shall not have been, since the respective dates as of which information is given in the Offering Materials, any material adverse change or prospective material adverse change with respect to the Issuer, the Co-Issuer or the Collateral; and (g) The Collateral Manager is subject to a valid exemption from registration as a registered investment adviser under the United States Investment Advisers Act or 1940, as amended. Capitalized terms not set forth herein shall have the meaning ascribed thereto in the Indenture. -2- IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 11th day of January, 2006. ARBOR REALTY COLLATERAL MANAGEMENT, LLC By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- EXHIBIT B-1 [-] Officer's Certificate IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 11th day of January, 2006. [-] By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- EXHIBIT B-2 [-] Officer's Certificate IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 11th day of January, 2006. [-] By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- SCHEDULE A