Exhibit 10.5

 

 

 

EXCHANGE AGREEMENT

among

RAIT FINANCIAL TRUST

and

TABERNA PREFERRED FUNDING VIII, LTD.

Dated as of October 5, 2011

 

 

 

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EXCHANGE AGREEMENT

This Exchange Agreement (this “Agreement”) is made and entered into as of this
5th day of October, 2011 by and among RAIT FINANCIAL TRUST, a Maryland real
estate investment trust (the “Company”) and TABERNA PREFERRED FUNDING VIII, LTD.
(“Taberna”).

RECITALS

A. Taberna is the holder of those certain securities described on Exhibit A
attached hereto (collectively the “Exchanged Securities”).

B. The Company and Wilmington Trust, National Association (the “Indenture
Trustee”) have entered into that certain Indenture (the “New Indenture”)
pursuant to which the Company proposes to issue One Hundred Million Dollars
($100,000,000) in aggregate principal amount of Senior Secured Notes, which
notes shall be issued to the Taberna as follows (collectively, the “Senior
Secured Notes”):

 

  (i) Senior Secured Note No. 1 due April 30, 2017 in the original principal
amount of $25,000,000 issued by the Company, a copy of which is attached hereto
as Exhibit B-1 (“Note 1”);

 

  (ii) Senior Secured Note No. 2 due October 30, 2017 in the original principal
amount of $25,000,000 issued by the Company, a copy of which is attached hereto
as Exhibit B-2 (“Note 2”);

 

  (iii) Senior Secured Note No. 3 due October 30, 2018 in the original principal
amount of $25,000,000 issued by the Company, a copy of which is attached hereto
as Exhibit B-3 (“Note 3”); and

 

  (iv) Senior Secured Note No. 4 due April 30, 2019 in the original principal
amount of $25,000,000 issued by the Company, a copy of which is attached hereto
as Exhibit B-4 (“Note 4”);

C. On the Closing Date and on the terms and subject to the conditions set forth
in this Agreement, the Company has requested and Taberna has agreed to exchange
the Senior Secured Notes for the Exchanged Securities.

NOW, THEREFORE, in consideration of the mutual agreements and subject to the
terms and conditions herein set forth, the parties hereto agree as follows:

1. Recitals; Definitions.

(a) Recitals. All of the recitals are hereby incorporated by reference as if
fully set forth herein.

(b) Definitions. This Agreement, the New Indenture and the Senior Secured Notes
and all documents executed and delivered in connection with the foregoing are
collectively referred to herein as the “Operative Documents.” All other
capitalized terms used

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but not defined in this Agreement shall have the respective meanings ascribed
thereto in the New Indenture. “Actual Knowledge” means the actual knowledge of
the applicable person or entity without due inquiry or investigation whatsoever.

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. §§101 et
seq., as amended.

“Benefit Plan” means an “employee benefit plan” (as defined in ERISA) that is
subject to Title I of ERISA, a “plan” as defined in Section 4975 of the Code or
any entity whose assets include (for purposes of U.S. Department of Labor
Regulations Section 2510.3-101 or otherwise for purposes of Title I of ERISA or
Section 4975 of the Code) the assets of any such “employee benefit plan” or
“plan.”

“CDO Trustee” has the meaning set forth in Section 2(c)(i).

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated under it.

“Closing Date” has the meaning set forth in Section 2(c).

“Closing Room” has the meaning set forth in Section 2(c).

“Collateral Manager” has the meaning set forth in Section 2(c)(i).

“Company” has the meaning set forth in the introductory paragraph hereof.

“Commission” has the meaning set forth in Section 4(v).

“Designated Officer” has the meaning set forth in Section 3(b).

“Eligible Pledgee” has the meaning set forth in Section 5(d).

“Equity Interests” means with respect to any Person (a) if such a Person is a
partnership, the partnership interests (general or limited) in a partnership,
(b) if such Person is a limited liability company, the membership interests in a
limited liability company and (c) if such Person is a corporation, the shares or
stock interests (both common stock and preferred stock) in a corporation.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated under it.

“Exchange” has the meaning set forth in Section 2(c).

“Exchange Act” has the meaning set forth in Section 4(j).

“Exchanged Securities” has the meaning set forth in the Recitals.

“Financial Statements” has the meaning set forth in Section 4(w).

 

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“GAAP” has the meaning set forth in Section 4(w).

“Governmental Entities” has the meaning set forth in Section 4(o).

“Governmental Licenses” has the meaning set forth in Section 4(r).

“Holder” has the meaning set forth in the New Indenture.

“Impairment” means any claim, counterclaim, setoff, defense, action, demand,
litigation (including administrative proceedings or derivative actions),
encumbrance, right (including expungement, avoidance, reduction, contractual or
equitable subordination, or otherwise) or defect.

“Indemnified Party” has the meaning set forth in Section 8(a). “Indemnified
Parties” shall have the correlative meaning.

“Indenture Trustee” has the meaning set forth in the Recitals.

“Investment Company Act” has the meaning set forth in Section 4(j).

“Lien” has the meaning set forth in Section 4(o).

“Material Adverse Effect” means a material adverse effect on the condition
(financial or otherwise), earnings, business or assets of the Company and its
Subsidiaries, taken as a whole, whether or not arising from transactions
occurring in the ordinary course of business.

“Material Adverse Change” has the meaning set forth in Section 3(e)(ii).

“New Indenture” has the meaning set forth in the Recitals.

“Note 1” has the meaning set forth in the Recitals.

“Note 2” has the meaning set forth in the Recitals.

“Note 3” has the meaning set forth in the Recitals.

“Note 4” has the meaning set forth in the Recitals.

“Regulation D” has the meaning set forth in Section 4(h).

“REIT” has the meaning set forth in Section 4(c).

“Repayment Event” has the meaning set forth in Section 4(o).

“Rule 144A(d)(3)” has the meaning set forth in Section 4(j).

“Securities Act” means the Securities Act of 1933, 15 U.S.C. §§77a et seq., as
amended, and the rules and regulations promulgated under it.

 

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“Senior Secured Notes” has the meaning set forth in the Recitals.

“Significant Subsidiary” means, as of any date of determination, a Subsidiary of
the Company that would constitute a “significant subsidiary” of the Company as
such term is defined under Rule 1-02(w) of Regulation S-X of the Exchange Act as
in effect on the date of this Indenture; provided that it shall not include
(a) any entity consolidated by the Company where the Company holds 50% or less
of the voting power of such entity or (b) any bankruptcy remote, special purpose
entity, used to securitize assets and consolidated by the Company, whose
indebtedness is without recourse to the Company. “Significant Subsidiaries”
means, collectively, each and every Significant Subsidiary.

“Subsidiary” has the meaning set forth in Regulations S-X under the Exchange
Act.

“Taberna” has the meaning set forth in the introductory paragraph hereof.

“Taberna Entities” has the meaning set forth in Section 4(e).

“Taberna Transferred Rights” means any and all of Taberna’s right, title, and
interest in, to and under the Exchanged Securities, together with the following:

(i) all amounts payable to Taberna under the Exchanged Securities;

(ii) all claims (including “claims” as defined in Section 101(5) of the
Bankruptcy Code), suits, causes of action, and any other right of Taberna,
whether known or unknown, that in any way is based upon, arises out of or is
related to the Exchanged Securities;

(iii) all guarantees and all collateral and security of any kind for or in
respect of the foregoing;

(iv) all cash, securities, or other property, and all setoffs and recoupments,
to be received, applied, or effected by or for the account of Taberna under the
Exchanged Securities, other than fees, costs and expenses expressly payable to
Taberna hereunder; and

(v) all proceeds of the foregoing.

“Tax” has the meaning set forth in Section 4(dd).

“Tax Return” has the meaning set forth in Section 4(dd).

2. Exchange of Exchanged Securities for Senior Secured Notes.

(a) Upon execution and delivery of this Agreement, Company and Taberna hereby
irrevocably agree to consummate the Exchange in accordance with the terms
herein, subject to no conditions other than those expressly set forth herein.

 

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(b) On the Closing Date, the Company agrees to issue the Senior Secured Notes
pursuant to the New Indenture and has requested that Taberna accept such Senior
Secured Notes in exchange for the Exchanged Securities, and Taberna hereby
agrees to accept such Senior Secured Notes on the Closing Date in exchange for
the Exchanged Securities upon the terms and conditions set forth herein.

(c) The closing of the exchange contemplated herein shall occur at the offices
of Nixon Peabody, LLP in New York, New York (the “Closing Room”), or such other
place as the parties hereto and the Indenture Trustee shall agree, at 9:00 a.m.
New York time, on the date hereof or such later date as the parties may agree
(such date and time of delivery the “Closing Date”). The Company and Taberna
hereby agree that the exchange (the “Exchange”) will occur in accordance with
the following requirements:

(i) Taberna Capital Management, LLC (as collateral manager for Taberna (the
“Collateral Manager”)) shall have delivered an issuer order instructing the
trustee (in such capacity, a “CDO Trustee”) under the applicable indenture
pursuant to which such CDO Trustee serves as trustee for Taberna to exchange the
Exchanged Securities for the Senior Secured Notes.

(ii) An original of each of the Senior Secured Notes shall have been delivered
to the Closing Room, a copy of each of the Senior Secured Notes shall have
previously been made available for inspection, if so requested.

(iii) The Company shall have directed the Indenture Trustee to authenticate each
of the Senior Secured Notes and deliver the Senior Secured Notes to the
applicable CDO Trustee.

(iv) The Indenture Trustee shall have authenticated each of the Senior Secured
Notes in accordance with the terms of the New Indenture and delivered the Senior
Secured Notes as provided above.

(v) CDO Trustee shall have caused the Exchanged Securities to be transferred to
the Company.

(vi) Upon the occurrence of the events described in clauses (i) through
(v) above and all of the conditions precedent set forth in Section 3 hereof, the
Company and Taberna shall consummate the Exchange and (A) Taberna hereby
irrevocably transfers, assigns, grants and conveys the Exchanged Securities and
the related Taberna Transferred Rights to the Company and the Company assumes
all rights and obligations of Taberna with respect to the Exchanged Securities
and the Taberna Transferred Rights and (B) each Holder shall be entitled to all
of the rights, title and interest of a Holder of the Senior Secured Notes under
the terms of the Senior Secured Notes, the New Indenture and any other Operative
Documents.

(vii) The Company shall have paid to the Indenture Trustee and the Collateral
Manager all of such party’s legal fees, costs and other expenses in connection
with the Exchange.

 

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(viii) Original executed counterparts of the Operative Documents shall be
delivered to the parties thereto along with all opinions, certificates and other
documents required pursuant thereto and hereto.

3. Conditions Precedent. The obligations of the parties under this Agreement are
subject to the following conditions precedent:

(a) The representations and warranties contained herein shall be accurate as of
the Closing Date.

(b) The Company shall have furnished to the Indenture Trustee and the Holders of
the Senior Secured Notes a certificate signed by the Company’s Chief Executive
Officer, President, an Executive Vice President, Chief Financial Officer,
Treasurer or Chief Operations Officer or Chief Accounting Officer (each a
“Designated Officer”), dated the Closing Date, addressed to the Holders of the
Senior Secured Notes, in substantially the form set out in Exhibit A of the New
Indenture.

(c) Taberna shall have been furnished the opinion of the Nixon Peabody LLP,
dated as of the Closing Date, addressed to Taberna and the Indenture Trustee, in
substantially the form set out in Annex B hereto.

(d) Taberna shall have received the certificate of the Indenture Trustee, dated
as of the Closing Date, addressed to Taberna, in substantially the form set out
in Annex C hereto.

(e) The Company shall have furnished to Taberna a certificate of the Company,
signed by any Designated Officer, dated as of the Closing Date, as to (i) and
(ii) below:

(i) the representations and warranties in this Agreement and the New Indenture
are true and correct on and as of the Closing Date, and the Company has complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date; and

(ii) since the date of the latest Financial Statements, there has been no
material adverse change in the condition (financial or other), earnings,
business or assets of the Company and its Subsidiaries, taken as a whole,
whether or not arising from transactions occurring in the ordinary course of
business (a “Material Adverse Change”).

(f) Prior to the Closing Date, the Company shall have furnished to Taberna and
its counsel such further information, certificates and documents as Taberna or
its counsel may reasonably request.

If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions,
certificates and documents mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to Taberna or its counsel,
this Agreement and any obligations of Taberna hereunder, whether as holder of
the Exchanged Securities or as prospective Holder of the Senior Secured Notes,
may be

 

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canceled at, or at any time prior to, the Closing Date by Taberna. Notice of
such cancellation shall be given to the Company in writing or by telephone and
confirmed in writing, or by e-mail or facsimile.

Each certificate signed by any officer of the Company and delivered to Taberna
or Taberna’s counsel in connection with the Operative Documents and the
transactions contemplated hereby and thereby shall be deemed to be a
representation and warranty of the Company and not by such officer in any
individual capacity.

4. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with Taberna, as holder of the Exchanged Securities and
with the Holders of the Senior Secured Notes, as follows:

(a) It (i) is duly organized and validly existing under the laws of Maryland,
(ii) is in good standing under such laws and (iii) has full power and authority
to execute, deliver and perform its obligations under this Agreement and the
other Operative Documents.

(b) It is an “accredited investor” as defined in Rule 501 under the Securities
Act, and it is not acquiring the Exchanged Securities or the Taberna Transferred
Rights with a view towards the sale or distribution thereof in violation of the
Securities Act.

(c) The Company is organized and operated in conformity with the requirements
for qualification and taxation as a real estate investment trust (a “REIT”)
under Sections 856-860 of the Code and no actions have been taken (or not taken
which are required to be taken) which would cause such qualification to be lost.

(d) The Company (i) has no current intention to initiate any bankruptcy or
insolvency proceedings and (i) has not entered into the Operative Documents with
the actual intent to hinder, delay, or defraud any creditor. None of the New
Indenture, the Senior Secured Notes or the Exchange is subject to any
Impairment.

(e) It (i) is a sophisticated entity with respect to the Exchange, (ii) has
sufficient knowledge and experience, and has made investments of a similar
nature, so as to be aware of the risks and uncertainties inherent in the
Exchange and (iii) has independently and without reliance upon Taberna, the
Holder, the CDO Trustee, the Collateral Manager or the Indenture Trustee
(collectively, the “Taberna Entities”), and based on such information as it has
deemed appropriate, made its own analysis and decision to enter into this
Agreement, except that it has relied upon Taberna’s express representations,
warranties, covenants and agreements in this Agreement. The Company acknowledges
that none of the Taberna Entities has given it any investment advice, credit
information or opinion on whether the Exchange is prudent.

(f) It has not engaged any broker, finder or other entity acting under the
authority of it or any of its affiliates that is entitled to any broker’s
commission in connection with the transaction for which the Taberna Entities or
any of their affiliates could be responsible.

(g) No interest in the Taberna Transferred Rights is being acquired by or on
behalf of an entity that is, or at any time while the Taberna Transferred Rights
are held thereby will be, one or more Benefit Plans.

 

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(h) Neither the Company nor any of its “Affiliates” (as defined in Rule 501(b)
of Regulation D (“Regulation D”) under the Securities Act), nor any person
acting on its or their behalf, has, directly or indirectly, made offers or sales
of any security, or solicited offers to buy any security, under circumstances
that would require the registration of the Senior Secured Notes under the
Securities Act.

(i) Neither the Company nor any of its Affiliates, nor any person acting on its
or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer or
sale of the Senior Secured Notes.

(j) None of the Senior Secured Notes (i) are or has been listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or quoted on a U.S. automated
inter-dealer quotation system or (ii) are of an open-end investment company,
unit investment trust or face-amount certificate company that is, or is required
to be, registered under Section 8 of the Investment Company Act of 1940, as
amended (the “Investment Company Act”), and the Senior Secured Notes otherwise
satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to
the Securities Act (“Rule 144A(d)(3)”).

(k) Neither the Company nor any of its Affiliates, nor any person acting on its
or their behalf, has engaged, or will engage, in any “directed selling efforts”
within the meaning of Regulation S under the Securities Act with respect to the
Senior Secured Notes.

(l) The Company is not, and immediately following consummation of the
transactions contemplated hereby, will not be, an “investment company” or an
entity “controlled” by an “investment company,” in each case within the meaning
of Section 3(a) of the Investment Company Act.

(m) Each of this Agreement and the New Indenture and the consummation of the
transactions contemplated herein and therein have been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered by
the Company, and, assuming due authorization, execution and delivery by Taberna
and/or the Indenture Trustee, as applicable, will be a legal, valid and binding
obligations of the Company enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity.

(n) The Senior Secured Notes have been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered to the Indenture
Trustee for authentication in accordance with the New Indenture and, when
authenticated in the manner provided for in the New Indenture and delivered to
Taberna, will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity.

(o) Neither the issue of the Senior Secured Notes and exchange of the Senior
Secured Notes for the Exchanged Securities, nor the execution and delivery of
and compliance with the Operative Documents by the Company, nor the consummation
of the transactions

 

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contemplated herein or therein, (i) will conflict with or constitute a violation
or breach of (x) the charter or bylaws or similar organizational documents of
the Company or any Significant Subsidiary of the Company or (y) any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, governmental authority, agency or instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any of its Significant
Subsidiaries or their respective properties or assets (collectively, the
“Governmental Entities”), (ii) will conflict with or constitute a violation or
breach of, or a default or Repayment Event (as defined below) under, or, except
in connection with the Operative Documents, result in the creation or imposition
of any pledge, security interest, claim, lien or other encumbrance of any kind
(each, a “Lien”) upon any property or assets of the Company or any of its
Significant Subsidiaries pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which (A) the Company
or any of its Significant Subsidiaries is a party or by which it or any of them
may be bound, or (B) to which any of the property or assets of any of them is
subject, or any judgment, order or decree of any court, Governmental Entity or
arbitrator, except, in the case of clause (i)(y) or this clause (ii), for such
conflicts, breaches, violations, defaults, Repayment Events or Liens which
(X) would not, singly or in the aggregate, adversely affect the consummation of
the transactions contemplated by the Operative Documents and (Y) would not,
singly or in the aggregate, have a Material Adverse Effect or (iii) will require
the consent, approval, authorization or order of any court or Governmental
Entity. As used herein, a “Repayment Event” means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any of its Subsidiaries prior to its scheduled maturity.

(p) The Company has all requisite power and authority to own, lease and operate
its properties and assets and conduct the business it transacts and proposes to
transact, and is duly qualified to transact business and is in good standing in
each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified would
not, singly or in the aggregate, have a Material Adverse Effect.

(q) The Significant Subsidiaries are listed in Schedule 1 attached hereto. Each
Significant Subsidiary is an entity duly and properly incorporated or organized
or formed, as the case may be, validly existing and in good standing under the
laws of the jurisdiction in which it is chartered or organized or formed, with
all requisite power and authority to own, lease and operate its properties and
conduct the business it transacts, except where the failure to be in good
standing would not, singly or in the aggregate, have a Material Adverse Effect.
Each Significant Subsidiary is duly qualified to transact business as a foreign
corporation, partnership or limited liability company, as applicable, and is in
good standing in each jurisdiction where the nature of its activities requires
such qualification, except where the failure to be so qualified would not,
singly or in the aggregate, have a Material Adverse Effect.

(r) The Company and each of the Company’s Significant Subsidiaries hold all
necessary approvals, authorizations, orders, licenses, consents, registrations,
qualifications, certificates and permits (collectively, the “Governmental
Licenses”) of and from Governmental Entities necessary to conduct their
respective businesses as now being conducted, and neither the Company nor any of
the Significant Subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such Government License, except where the
failure to be

 

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so licensed or approved or the receipt of an unfavorable decision, ruling or
finding, would not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and effect, except
where the invalidity or the failure of such Governmental Licenses to be in full
force and effect, would not, singly or in the aggregate, have a Material Adverse
Effect; and the Company and its Significant Subsidiaries are in compliance with
all applicable laws, rules, regulations, judgments, orders, decrees and
consents, except where the failure to be in compliance would not, singly or in
the aggregate, have a Material Adverse Effect.

(s) All of the issued and outstanding Equity Interests of the Company and each
of its Significant Subsidiaries are validly issued, fully paid and
non-assessable; except with respect to the Significant Subsidiaries that are
issuers of collateralized debt obligations, all of the issued and outstanding
Equity Interests of each Significant Subsidiary of the Company is owned by the
Company, directly or through Subsidiaries, free and clear of any Lien, claim or
equitable right; and none of the issued and outstanding Equity Interests of the
Company or any Significant Subsidiaries was issued in violation of any
preemptive or similar rights arising by operation of law, under the charter,
by-laws certificate of formation, limited liability company agreement,
certificate of limited partnership, agreement of limited partnership or similar
organizational document of such entity or under any agreement to which the
Company or any of its Significant Subsidiaries is a party.

(t) Neither the Company nor any of its Significant Subsidiaries is (i) in
violation of its respective charter, by-laws certificate of formation, limited
liability company agreement, certificate of limited partnership, agreement of
limited partnership or similar organizational document or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any such Subsidiary is a
party or by which it or any of them may be bound or to which any of the property
or assets of any of them is subject, except, in the case of clause (ii), where
such violation or default would not, singly or in the aggregate, have a Material
Adverse Effect.

(u) Other than as set forth in the filings of the Company filed with the
Commission, there is no action, suit or proceeding before or by any Governmental
Entity, arbitrator or court, domestic or foreign, now pending or, to the Actual
Knowledge of the Company after due inquiry, threatened against or affecting the
Company or any of its Subsidiaries, except for such actions, suits or
proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents or have a Material Adverse Effect.

(v) The accountants of the Company who certified the Financial Statements
(defined below) are independent public accountants of the Company and its
Subsidiaries within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the “Commission”)
thereunder.

(w) The audited consolidated financial statements (including the notes thereto)
and schedules of the Company and its consolidated Subsidiaries for the fiscal
year ended December 31, 2010 (the “Financial Statements”) provided to Taberna
are the most recent available audited consolidated financial statements of the
Company and its consolidated

 

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Subsidiaries, respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles (“GAAP”), the
financial position of the Company and its consolidated Subsidiaries, and the
results of operations and changes in financial condition as of the dates and for
the periods therein specified. Such consolidated financial statements and
schedules have been prepared in accordance with GAAP consistently applied
throughout the periods involved (except as otherwise noted therein).

(x) Other than as set forth in the filings of the Company filed with the
Commission, neither the Company nor any of its Subsidiaries has any material
liability, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due, including any liability for taxes (and there is no past or
present fact, situation, circumstance, condition or other basis for any present
or future action, suit, proceeding, hearing, charge, complaint, claim or demand
against the Company or any of its Subsidiaries that could give rise to any such
liability), except for (i) liabilities set forth in the Financial Statements and
(ii) normal fluctuations in the amount of the liabilities referred to in
clause (i) above occurring in the ordinary course of business of the Company and
all of its Subsidiaries since the date of the most recent balance sheet included
in such Financial Statements.

(y) Since the date of the Financial Statements, there has not been (A) any
Material Adverse Change or (B) any dividend or distribution of any kind
declared, paid or made by the Company on any class of its Equity Interests,
other than annual and regular quarterly dividends on the Company’s Equity
Interests.

(z) The documents of the Company filed with the Commission in accordance with
the Exchange Act, from and including the commencement of the fiscal year covered
by the Company’s most recent Annual Report on Form 10-K, at the time they were
or hereafter are filed by the Company with the Commission (collectively, the
“1934 Act Reports”), complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder (the “1934 Act Regulations”), and, at the date of this Agreement and
on the Closing Date, do not and will not include 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 the light of the circumstances
under which they were made, not misleading; and other than such instruments,
agreements, contracts and other documents as are filed as exhibits to the
Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K, there are no instruments, agreements, contracts or
documents required to be filed pursuant to Item 601 of Regulation S-K
promulgated by the Commission to which the Company or any of its Subsidiaries is
a party. The Company is in compliance in all material respects with all
currently applicable requirements of the Exchange Act that were added by the
Sarbanes-Oxley Act of 2002, as amended, except for such failure to comply which
would not reasonably be expected to have a Material Adverse Effect.

(aa) No labor dispute with the employees of the Company or any of its
Subsidiaries exists or, to the Actual Knowledge of the Company, is imminent,
except those which would not, singly or in the aggregate, have a Material
Adverse Effect.

 

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(bb) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Governmental Entity, other than
those that have been made or obtained, is necessary or required for the
performance by the Company of its obligations under the Operative Documents or
the consummation by the Company of the transactions contemplated by the
Operative Documents.

(cc) The Company and each of its Significant Subsidiaries has good and
marketable title to all of its respective real and personal property, in each
case free and clear of all Liens and defects, except for those that would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect; and all of the leases and subleases under which the Company or any of
its Significant Subsidiaries holds properties are in full force and effect,
except where the failure of such leases and subleases to be in full force and
effect would not, singly or in the aggregate, have a Material Adverse Effect,
and neither the Company nor any of its Significant Subsidiaries has any notice
of any claim of any sort that has been asserted by anyone adverse to the rights
of the Company or any Significant Subsidiary under any such leases or subleases,
or affecting or questioning the rights of such entity to the continued
possession of the leased or subleased premises under any such lease or sublease,
except for such claims that would not, singly or in the aggregate, have a
Material Adverse Effect.

(dd) Other than as set forth in the filings of the Company filed with the
Commission, the Company and each Significant Subsidiary has timely and duly
filed all Tax Returns (as defined below) required to be filed by them, and all
such Tax Returns are true, correct and complete in all material respects, except
for such failures to timely file or inaccuracies that would not, singly or in
the aggregate, have a Material Adverse Effect. The Company and each of the
Significant Subsidiaries have timely and duly paid in full all Taxes required to
be paid by them (whether or not such amounts are shown as due on any Tax
Return), except for such failures to timely and duly pay that would not, singly
or in the aggregate, have a Material Adverse Effect. To the Actual Knowledge of
the Company, there are no federal, state, or other Tax audits or deficiency
assessments proposed or pending with respect to the Company or and Significant
Subsidiary, and to the Actual Knowledge of the Company, no such audits or
assessments are threatened, except for audits or assessments that would not,
singly or in the aggregate, have a Material Adverse Effect. As used herein, the
terms “Tax” or “Taxes” mean (i) all federal, state, local, and foreign taxes,
and other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto, imposed by any Governmental Entity, and (ii) all liabilities in respect
of such amounts arising as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group, as a successor to another
person or by contract. As used herein, the term “Tax Returns” means all federal,
state, local, and foreign Tax returns, declarations, statements, reports,
schedules, forms, and information returns and any amendments thereto filed or
required to be filed with any Governmental Entity.

(ee) Interest payable by the Company on the Senior Secured Notes is deductible
by the Company for United States federal income tax purposes. To the Actual
Knowledge of the Company, there are no rulemaking or similar proceedings before
the United States Internal Revenue Service or comparable federal, state, local
or foreign government bodies which involve or affect the Company or any
Subsidiary, which, if the subject of an action unfavorable to the Company or any
Subsidiary, could result in a Material Adverse Effect.

 

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(ff) The books, records and accounts of the Company and its Subsidiaries
accurately and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the Company
and its Subsidiaries. The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(gg) The Company and its Significant Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts in all material respects as are customary in the businesses in which
they are engaged or propose to engage after giving effect to the transactions
contemplated hereby, including but not limited to, real or personal property
owned or leased against theft, damage, destruction, act of vandalism and all
other risks customarily insured against. All policies of insurance and fidelity
or surety bonds insuring the Company or any of its Significant Subsidiaries of
the Company’s or its Significant Subsidiaries’ respective businesses, assets,
employees, officers and directors are in full force and effect. The Company and
each of the Significant Subsidiaries are in compliance with the terms of such
policies and instruments in all material respects. Neither the Company nor any
Significant Subsidiary has reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect. Within the
past twelve months, neither the Company nor any Significant Subsidiary has been
denied any insurance coverage it has sought or for which it has applied.

(hh) To the Actual Knowledge of the Company, the Company, its Subsidiaries or
any person acting on behalf of the Company and/or its Subsidiaries including,
without limitation, any director, officer, manager, agent or employee of the
Company or its Subsidiaries has not, directly or indirectly, while acting on
behalf of the Company and/or its Subsidiaries (i) used any corporate,
partnership or company funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate, partnership or
company funds; (iii) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made any other unlawful payment.

(ii) The information provided by the Company pursuant to the Operative Documents
does not, as of the date hereof, and will not as of the Closing Date, contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

5. Representations and Warranties of Taberna. Taberna, for itself, represents
and warrants to, and agrees with, the Company as follows:

 

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(a) It is a company duly incorporated, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated with all
requisite (i) power and authority to execute, deliver and perform under the
Operative Documents to which it is a party, to make the representations and
warranties specified herein and therein and to consummate the transactions
contemplated in the Operative Documents.

(b) This Agreement and the consummation of the transactions contemplated herein
has been duly authorized by it and, on the Closing Date, will have been duly
executed and delivered by it and, assuming due authorization, execution and
delivery by the Company and the Indenture Trustee of the Operative Documents to
which each is a party, will be a legal, valid and binding obligation of Taberna,
enforceable against Taberna in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and to general principles of equity.

(c) No filing with, or authorization, approval, consent, license, order
registration, qualification or decree of, any Governmental Entity or any other
Person, other than those that have been made or obtained, is necessary or
required for the performance by Taberna of its obligations under this Agreement
or to consummate the transactions contemplated herein.

(d) It is a “Qualified Holder” as such term is defined in Section 2(a)(51) of
the Investment Company Act and a “Qualified Institutional Buyer” as that term is
defined in Rule 144A promulgated under the Securities Act and is otherwise
eligible to be a pledgee of the collateral securing the Senior Secured Notes
under the indentures for, or other documents evidencing, the collateral (an
“Eligible Pledgee”).

(e) Taberna is the legal and beneficial owner of the Exchanged Securities and
the related Taberna Transferred Rights and shall deliver the Exchanged
Securities free and clear of any Lien created by Taberna.

(f) There is no action, suit or proceeding before or by any Governmental Entity,
arbitrator or court, domestic or foreign, now pending or, to its Actual
Knowledge, threatened against or affecting it, except for such actions, suits or
proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents.

(g) Intentionally Omitted.

(h) It is aware that the Senior Secured Notes have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States or to “U.S. persons” (as defined in Regulation S under the
Securities Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act.

(i) It is an “accredited investor,” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act. Without characterizing the Senior Secured
Notes as “security” within the meaning of applicable securities laws, it has not
made any offers to sell, or solicitations of any offers to buy, all or any
portion of the Senior Secured Notes in violation of any applicable securities
laws.

 

 

- 14 -

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(j) Neither it nor any of its Affiliates, nor any person acting on its or its
Affiliate’s behalf has engaged, or will engage, any form of “general
solicitation or general advertising” (within the meaning of Regulation D under
the Securities Act) in connection with any offer or sale of the Senior Secured
Notes.

(k) It understands and acknowledges that (i) no public market exists for the
Senior Secured Notes and that it is unlikely that a public market will ever
exist for the Senior Secured Notes, (ii) it is acquiring the Senior Secured
Notes for its own account, for investment and not with a view to, or for offer
or sale in connection with, any distribution thereof in violation of the
Securities Act or other applicable securities laws, subject to any requirement
of law that the disposition of its property be at all times within its control
and subject to its ability to resell such Senior Secured Notes pursuant to an
effective registration statement under the Securities Act or pursuant to an
exemption therefrom or in a transaction not subject thereto, and it agrees to
the legends and transfer restrictions applicable to the Senior Secured Notes
contained in the New Indenture and (iii) it has had the opportunity to ask
questions of, and receive answers and request additional information from, the
Company and is aware that it may be required to bear the economic risk of an
investment in the Senior Secured Notes.

(l) It has not engaged any broker, finder or other entity acting under its
authority that is entitled to any broker’s commission in connection with this
Agreement and the consummation of transactions contemplated in this Agreement
and the New Indenture for which the Company could be responsible.

(m) It (i) is a sophisticated entity with respect to the Exchange, (ii) has such
knowledge and experience, and has made investments of a similar nature, so as to
be aware of the risks and uncertainties inherent in the Exchange and (iii) has
independently and without reliance upon the Company or any of its affiliates
(other than the Collateral Manager), and based on such information as it has
deemed appropriate, made its own analysis and decision to enter into this
Agreement, except that it has relied upon the Company’s express representations,
warranties, covenants and agreements in the Operative Documents and the other
documents delivered by the Company in connection therewith.

Except as expressly stated in this Agreement, Taberna makes no representations
or warranties, express or implied, with respect to the Exchange, the Taberna
Transferred Rights, the Securities, the Exchanged Securities, the Senior Secured
Notes or any other matter.

6. Covenants and Agreements of the Company. The Company agrees with Taberna and
the Holders as follows:

(a) The Company will arrange for the qualification of the Senior Secured Notes
for sale under the laws of such jurisdictions as the Holders of the Senior
Secured Notes may designate and will maintain such qualifications in effect so
long as required for the sale of the Senior Secured Notes. The Company will
promptly advise the Holders of the Senior Secured Notes of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Senior Secured Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.

 

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(b) The Company will not, and will not permit any of its Affiliates or any
person acting on its or their behalf to, directly or indirectly, make offers or
sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Senior Secured Notes
under the Securities Act.

(c) The Company will not, and will not permit any of its Affiliates or any
person acting on its or their behalf to, engage in (i) any form of “general
solicitation or general advertising” (within the meaning of Regulation D), or
(ii) any “directed selling efforts” within the meaning of Regulation S under the
Securities Act, in connection with any offer or sale of the Senior Secured
Notes.

(d) So long as the Senior Secured Notes are outstanding, (i) the Senior Secured
Notes shall not be listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system and (ii) the Company shall not be an open-end investment
company, unit investment trust or face-amount certificate company that is, or is
required to be, registered under Section 8 of the Investment Company Act, and,
the Senior Secured Notes shall otherwise satisfy the eligibility requirements of
Rule 144A(d)(3).

(e) Intentionally Omitted.

(f) The Company shall pay to the CDO Trustee, for distribution to Taberna, a
cash payment in an amount equal to the accrued interest on the Exchanged
Securities for the period commencing on July 30, 2011 and continuing through but
excluding Closing Date, promptly after the Company receives the payment of such
accrued interest on the Exchanged Securities for such period or such earlier
date as it elects in its sole discretion, provided, however, in no event shall
such payment be paid to the CDO Trustee later than December 31, 2011.

7. Payment of Expenses. In addition to the obligations agreed to by the Company
under Section 2(c)(vii), the Company agrees to pay all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, whether or not the transactions contemplated herein are consummated
or this Agreement is terminated, including all costs and expenses incident to
(i) the authorization and issuance of the Senior Secured Notes and any taxes
payable in connection therewith, (ii) the fees and expenses of counsel,
accountants and any other experts or advisors retained by the Company and
(iii) the fees and all reasonable expenses of Indenture Trustee and any other
trustee or paying agent appointed under the Operative Documents, including the
fees and disbursements of counsel for such trustees. The fees of the Indenture
Trustee (excluding fees and disbursements of counsel) shall not exceed the
amounts set forth in that certain Fee Agreement dated as of the date hereof
between the Company and the Indenture Trustee, executed in connection with this
Agreement and the New Indenture.

8. Indemnification. (a) The Company agrees to indemnify and hold harmless the
Taberna Entities and their respective affiliates (other than the Company) and
their successors and assigns (collectively, the “Indemnified Parties”), each
person, if any, who controls any of the Indemnified Parties within the meaning
of the Securities Act or the Exchange Act, and the

 

- 16 -

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Indemnified Parties’ respective directors, officers, employees and agents
against any and all losses, claims, damages or liabilities, joint or several, to
which the Indemnified Parties may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based on (i) any untrue
statement or alleged untrue statement of a material fact contained in any
information or documents provided by or on behalf of the Company to the
Indemnified Parties, (ii) any omission or alleged omission to state a material
fact required to be stated or necessary to make the statements contained in any
information provided by the Company to the Indemnified Parties, in light of the
circumstances under which they were made, not misleading, (iii) the breach or
alleged breach of any representation, warranty, or agreement of the Company
contained herein, or (iv) the execution and delivery by the Company of the
Operative Documents and the consummation of the transactions contemplated herein
and therein, and agrees to reimburse each such Indemnified Party, as incurred,
for any legal or other expenses reasonably incurred by the Indemnified Parties
in connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability that the Company may otherwise have.

(b) Promptly after receipt by an Indemnified Party under this Section 8 of
notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, promptly notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve the indemnifying party from liability under paragraph (a) above unless
and to the extent that such failure results in the forfeiture by the
indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in paragraph (a) above.
The Indemnified Parties shall be entitled to appoint counsel to represent the
Indemnified Parties in any action for which indemnification is sought. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, that counsel to the indemnifying party shall not (except with
the consent of the Indemnified Party) also be counsel to the Indemnified Party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all Indemnified Parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, unless an Indemnified Party
elects to engage separate counsel because such Indemnified Party reasonably
believes that a conflict of interest might result. An indemnifying party will
not, without the prior written consent of the Indemnified Parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Parties
are actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding.

9. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company
and/or its officers set forth in or made pursuant to this Agreement will remain
in full force and effect and will

 

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survive the Exchange. The provisions of Sections 7 and 8 shall survive the
termination or cancellation of this Agreement.

10. Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement by
each of the parties hereto.

11. Notices. All communications hereunder will be in writing and effective only
on receipt, and will be mailed, delivered by hand or courier or sent by
facsimile and confirmed or by any other reasonable means of communication,
including by electronic mail, to the relevant party at its address specified in
Exhibit D.

12. Successors and Assigns. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any person other than the parties hereto and the
affiliates, directors, officers, employees, agents and controlling persons
referred to in Section 8 hereof and their successors, assigns, heirs and legal
representatives, any right or obligation hereunder. None of the rights or
obligations of the Company under this Agreement may be assigned, whether by
operation of law or otherwise, without Taberna’s prior written consent. The
rights and obligations of Taberna under this Agreement may be assigned by
Taberna without the Company’s consent; provided, that the assignee assumes the
obligations of Taberna under this Agreement and is an Eligible Pledgee.

13. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW).

14. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY
PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT
IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF
NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT.

15. Counterparts and Facsimile. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. This Agreement may be executed by any one or more
of the parties hereto by facsimile.

 

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16. Entire Agreement. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.

[Signature Page Follows]

 

- 19 -

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IN WITNESS WHEREOF, this Agreement has been entered into as of the date first
written above.

 

COMPANY: RAIT FINANCIAL TRUST By:   /s/ James J. Sebra Name:   James J. Sebra
Title:   SVP & CAO

(Signatures continue on the next page)

SIGNATURE PAGE TO EXCHANGE AGREEMENT

--------------------------------------------------------------------------------

TABERNA, AS HOLDER OF THE EXCHANGED SECURITIES: TABERNA PREFERRED FUNDING VIII,
LTD. By:   /s/ Karen Ellerbe   Name:   Karen Ellerbe   Title:   Director

SIGNATURE PAGE TO EXCHANGE AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT A

Description of Exchanged Securities

EXCHANGED SECURITIES

 

Name

  

Type

   CUSIP    Original Par      Factor      Current Par  

Duke Realty LP

   Senior REIT Note    26441YAQ0      10,000,000         1.0000        
10,000,000   

HCP Inc.

   Senior REIT Note    40414LAA7      6,500,000         1.0000         6,500,000
  

HRPT Properties Trust

   Senior REIT Note    40426WAV3      5,000,000         1.0000         5,000,000
  

HRPT Properties Trust

   Senior REIT Note    40426WAV3      5,000,000         1.0000         5,000,000
  

Hospitality Properties Trust

   Senior REIT Note    44106MAN2      5,000,000         1.0000         5,000,000
  

Hospitality Properties Trust

   Senior REIT Note    44106MAN2      2,500,000         1.0000         2,500,000
  

Realty Income Corporation

   Senior REIT Note    756109AK0      5,000,000         1.0000         5,000,000
  

Realty Income Corporation

   Senior REIT Note    756109AK0      1,000,000         1.0000         1,000,000
  

Simon Property Group LP

   Senior REIT Note    828807BW6      1,000,000         1.0000         1,000,000
  

BACM 2007-4 CL AM

   Senior CMBS    059513AG6      1,741,000         1.0000         1,741,000   

CD 2005-CD1 CL AJ

   Senior CMBS    12513EAK0      1,411,000         1.0000         1,411,000   

CGCMT 2007-C6 CL AM

   Senior CMBS    17311QBM1      812,500         1.0000         812,500   

GCCFC 2006-GG7 CL AM

   Senior CMBS    20173MAG5      593,000         1.0000         593,000   

CSMC 2006-C1 CL AM

   Senior CMBS    225470F99      420,000         1.0000         420,000   

JPMCC 2006-LDP7 CL AJ

   Senior CMBS    46628FAN1      5,000,000         1.0000         5,000,000   

JPMCC 2007-CB20 CL AM

   Senior CMBS    46631QAH5      2,500,000         1.0000         2,500,000   

LBUBS 2006- C7 CL AM

   Senior CMBS    50180CAF7      1,980,000         1.0000         1,980,000   

MLMT 2006-C2 CL AJ

   Senior CMBS    59022KAG0      5,000,000         1.0000         5,000,000   

MLMT 2007-C1 CL AM

   Senior CMBS    59025KAG7      3,700,000         1.0000         3,700,000   

MLMT 2007-C1 CL AM

   Senior CMBS    59025KAG7      324,000         1.0000         324,000   

MSC 2006- HQ10 CL AM

   Senior CMBS    61750HBA3      4,000,000         1.0000         4,000,000   

MSC 2007-HQ11 CL A4

   Senior CMBS    61751NAF9      8,400,000         1.0000         8,400,000   

WBCMT 2006-C27 CL AM

   Senior CMBS    92977QAG0      1,150,000         1.0000         1,150,000   

BACM 2007-2 CL K

   Mezzanine CMBS    059511BC8      5,000,000         0.8642         4,321,018
  

 

A-1

--------------------------------------------------------------------------------

BSCMS 2007-PW15 CL F

   Mezzanine CMBS    07388RAP2      3,000,000         1.0000         3,000,000
  

CD 2007-CD4 CL H

   Mezzanine CMBS    12513YAS9      1,000,000         1.0000         1,000,000
  

CSMC 2007-C3 CL F

   Mezzanine CMBS    22544QAP4      5,000,000         1.0000         5,000,000
  

JPMCC 2006-LDP8 CL H

   Mezzanine CMBS    46629MAW5      250,000         1.0000         250,000   

JPMCC 2007-LD11 CL F

   Mezzanine CMBS    46631BAQ8      5,000,000         1.0000         5,000,000
  

LBCMT 2007-C3 CL F

   Mezzanine CMBS    50177AAN9      5,000,000         1.0000         5,000,000
  

MLCFC 2007-5

   Mezzanine CMBS    55312YAT9      4,000,000         1.0000         4,000,000
  

MSC 2007-HQ11 H

   Mezzanine CMBS    61751NAR3      2,000,000         1.0000         2,000,000
  

WBCMT 2007-C32 CL F

   Mezzanine CMBS    92978YAN0      5,000,000         1.0000         5,000,000
  

Anthracite CRE CDO 2006-HY3 Ltd.

   CRE CDO Note    03703FAQ3      6,000,000         0.7834         4,700,157   

ARMSS 2004-1A CL B

   CRE CDO Note    03877VAB1      1,154,540         1.0000         1,154,540   

ARMSS 2004-1A CL C

   CRE CDO Note    03877VAC9      2,895,410         0.5481         1,587,101   

ARMSS 2006-1A CL C

   CRE CDO Note    03878CAE6      329,509         1.0000         329,509   

ARMSS 2006-1A CL F

   CRE CDO Note    03878CAH9      548,343         1.0000         548,343   

ARMSS 2006-1A CL G

   CRE CDO Note    03878CAJ5      1,722,039         1.0000         1,722,039   

ARMSS 2006-1A CL H

   CRE CDO Note    03878CAK2      1,760,737         1.0000         1,760,737   

ARMSS 2005-1A CL F

   CRE CDO Note    038927AF6      811,056         0.7576         614,487   

ARMSS 2005-1A CL H

   CRE CDO Note    038927AH2      1,419,348         0.7576         1,075,352   

CBRE 2007-1A CL B

   CRE CDO Note    1248MLAG8      5,030,675         1.0000         5,030,675   

GKKRE 2007-1A CL A3

   CRE CDO Note    38500XAC6      4,167,000         1.0000         4,167,000   

GKKRE 2007-1A CL BFL

   CRE CDO Note    38500XAD4      1,583,000         1.0000         1,583,000   

 

A-2

--------------------------------------------------------------------------------

EXHIBIT B-1

Form of Note 1

(See attached)

 

B-1

--------------------------------------------------------------------------------

EXHIBIT B-2

Form of Note 2

(See attached)

 

B-2

--------------------------------------------------------------------------------

Exhibit B-3

Form of Note 3

(See attached)

 

B-3

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Exhibit B-4

Form of Note 4

(See attached)

 

B-4

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Exhibit D

Notice Information

Taberna:

c/o Taberna Capital Management, LLC

2929 Arch Street, 17th Floor

Philadelphia, PA 19104

Attention: Mr. Ken Frappier

Facsimile: (215) 243-9039

e-mail: kfrappier@raitft.com

Company:

RAIT Financial Trust

Cira Center

2929 Arch Street, 17th Floor

Philadelphia, PA 19104

Attention: Raphael Licht

Facsimile: (215) 243-9039

e-mail: rlicht@raitft.com

 

D-1

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SCHEDULE 1

List of Significant Subsidiaries

 

1. RAIT Financial Trust

 

2. RAIT Partnership, L.P.

 

3. Taberna Realty Finance Trust

 

Sch. 1-1

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ANNEX A

Reserved

 

Annex A-1

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ANNEX B

Pursuant to Section 3(c) of the Agreement, Nixon Peabody LLP shall deliver an
opinion to the effect that for U.S. federal income tax purposes, the Senior
Secured Notes will constitute indebtedness of the Company.

In rendering such opinion, such counsel may (A) state that its opinion is
limited to the federal laws of the United States, (B) rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers of
the Company and public officials and (C) make such other assumptions and
exclusions as it deems reasonably necessary.

 

Annex B-1

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ANNEX C

WILMINGTON TRUST, NATIONAL ASSOCIATION

Trustee’s Certificate

October 5, 2011

The undersigned, Wilmington Trust, National Association, as trustee (the
“Trustee”), does hereby certify as follows:

1. The Indenture, dated as of October 5, 2011 (the “Indenture”), between RAIT
Financial Trust, a Maryland real estate investment trust (the “Company”) and the
Trustee, has been duly executed and validly delivered on behalf of the Trustee.

2. Pursuant to the provisions of Section 2.02 of the Indenture, the Trustee has,
in accordance with the instructions of the Company, duly authenticated and
delivered $100,000,000 aggregate principal amount of the Company’s Senior
Secured Notes (the “Notes”).

3. Each person who, on behalf of the Trustee, executed the Indenture and the
Certificate of Authentication on the Notes set forth thereon was at the time of
such execution a duly elected or appointed officer of the Trustee authorized and
empowered so to act and the signature of each such person appearing on each such
document is genuine.

4. Attached hereto as Annex A is an Assistant Secretary’s Certificate of the
Trustee which includes a true and correct copy of certain resolutions adopted by
the Board of Directors of the Trustee evidencing the authority of the
above-mentioned officer of the Trustee, which resolutions have not been amended
and are in full force and effect on the date hereof and a copy of the Trustee’s
Bylaws which contains provisions relating to the authority of the
above-mentioned officer of the Trustee to execute indentures.

[Signature page follows.]

 

Annex C-1

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Annex A to Certificate

WILMINGTON TRUST, NATIONAL ASSOCIATION

The undersigned, a duly appointed Assistant Secretary of Wilmington Trust,
National Association, a national banking association (“WTNA”), DOES HEREBY
CERTIFY as follows:

1. Each of the persons named on Exhibit A hereto has been duly elected or
appointed and is duly qualified as an officer of WTNA on the date hereof,
holding the office or offices set forth opposite his or her name, and the
signature set forth opposite his or her name is a specimen of his or her genuine
signature.

2. Attached hereto as Exhibit B is a true and correct copy of the Articles of
Association of WTNA as in effect on the date hereof.

3. Attached hereto as Exhibit C is a true and correct copy of the By-Laws of
WTNA as in effect on the date hereof.

4. Attached hereto as Exhibit D is a true and correct copy of a resolution
adopted by unanimous written consent of the Board of Directors of WTNA on
July 1, 2011. Such resolution has not been amended, modified, rescinded or
revoked and is in full force and effect on the date hereof.

5. WTNA is an association existing and in good standing under the laws of the
United States.

6. There is no proceeding pending or, to the best of my knowledge, threatened,
for the dissolution or liquidation of WTNA.

IN WITNESS WHEREOF, the undersigned has caused this Certificate to be duly
executed as of this 5th day of October, 2011.

/s/ Jane Schweiger Assistant Secretary

THE UNDERSIGNED, a Vice President of WTNA, does hereby certify that Timothy
Mowdy is a duly appointed, duly qualified Assistant Secretary of WTNA, and that
the signature above is his/her genuine signature.

IN WITNESS WHEREOF, I have hereunto set my hand as of the day and year written
above.

/s/ Timothy P. Mowdy Vice President

 

Annex C-1