Document:

ptn_ex104.htm

EXHIBIT 10.4

 

	
VENTURE LOAN AND SECURITY AGREEMENT

	  
	  	
Dated as of December 23, 2014

	
by and among

HORIZON TECHNOLOGY FINANCE CORPORATION,

a Delaware corporation

312 Farmington Avenue

Farmington, CT 06032

 

as a Lender and Collateral Agent

FORTRESS CREDIT CO LLC,

a Delaware limited liability company

1345 Avenue of Americas

New York, NY 10105

 

as a Lender

	
And

PALATIN TECHNOLOGIES, INC.,

a Delaware corporation

4B Cedar Brook Drive

Cranbury, NJ 08512

as Borrower

 

	
 

Loan A Commitment Amount: $5,000,000

Loan B Commitment Amount: $5,000,000

 

Loan A Commitment Termination Date:                                                                December 30, 2014

 

Loan B Commitment Termination Date:                                                                December 30, 2014

 

 

The Lenders, Collateral Agent and Borrower hereby agree as follows:

 

  

  

  

 

AGREEMENT

 

1. Definitions and Construction.

 

1.1 Definitions

 

. As used in this Agreement, the following capitalized terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“2012 Registration Rights Agreement” means that certain Registration Rights Agreement dated as of July 2, 2012, between the Company and the parties that are signatories thereto.

 

“2012 Securities Purchase Agreement” means that certain Securities Purchase Agreement dated as of July 2, 2012, between the Company and the named purchasers that are parties thereto.

 

“2014 Registration Rights Agreement” means that certain Registration Rights Agreement dated as of the date of this Agreement between the Company and the parties that are signatories thereto.

 

“2014 Securities Purchase Agreement” means that certain Securities Purchase Agreement dated as of the date of this Agreement between the Company and the named purchasers that are parties thereto.

 

“Account Control Agreement” means an agreement acceptable to Lenders which perfects via control Lenders’ and Collateral Agent’s security interest in Borrower’s deposit accounts and/or securities accounts.

 

“Affiliate” means, with respect to any Person, any other Person that owns or controls directly or indirectly ten percent (10%) or more of the stock of such Person, any other Person that controls or is controlled by or is under common control with such Person and each of such Person’s officers, directors, and if such person is a limited liability company, its managers, and if such Person is a partnership, its partners.  For purposes of this definition, the term “control” of a Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting Equity Securities, by contract or otherwise and the terms “controlled by” and “under common control with” shall have correlative meanings.

 

“Agreement” means this certain Venture Loan and Security Agreement by and among Borrower, Collateral Agent and Lenders dated as of the date on the cover page hereto (as it may from time to time be amended, modified or supplemented in a writing signed by Borrower, Collateral Agent and Lenders).

 

“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering, including Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.

 

  

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 “Borrower” means Borrower as set forth on the cover page of this Agreement.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banking institutions are authorized or required to close in New York, Connecticut or New Jersey.

 

“Claim” has the meaning given such term in Section 10.3 of this Agreement

 

“Code” means the Uniform Commercial Code as adopted and in effect in the State of New York, as amended from time to time; provided that if by reason of mandatory provisions of law, the creation and/or perfection or the effect of perfection or non-perfection of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “Code” shall also mean the Uniform Commercial Code as in effect from time to time in such jurisdiction for purposes of the provisions hereof relating to such creation, perfection or effect of perfection or non-perfection.

 

“Collateral” has the meaning given such term in Section 4.1 of this Agreement.

 

“Collateral Agent” means Horizon, or any successor collateral agent appointed by Lenders.

 

“Commitment Amount” means the Loan A Commitment Amount or the Loan B Commitment Amount, as applicable.

 

“Commitment Fee” has the meaning given such term in Section 2.6(c) of this Agreement.

 

“Consolidated” means the consolidation of accounts in accordance with GAAP.

 

“Default” means any event which with the passing of time or the giving of notice or both would become an Event of Default hereunder.

 

“Default Rate” means the per annum rate of interest equal to five percent (5%) over the Loan Rate, but such rate shall in no event be more than the highest rate permitted by applicable law to be charged on commercial loans in a default situation.

 

“Disclosure Schedule” means Exhibit A attached hereto.

 

“Environmental Laws” means all foreign, federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Emergency Planning and Community Right-to-Know Act.

 

“Equity Securities” of any Person means (a) all common stock, preferred stock, participations, shares, partnership interests, membership interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing.

 

  

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“ERISA” has the meaning given to such term in Section 7.12 of this Agreement.

 

“Event of Default” has the meaning given to such term in Section 8 of this Agreement.

 

“Fortress” means Fortress Credit Co LLC.

 

“Funding Certificate” means a certificate executed by a duly authorized Responsible Officer of Borrower substantially in the form of Exhibit B or such other form as Lenders may agree to accept.

 

“Funding Date” means any date on which a Loan is made to or on account of Borrower under this Agreement.

 

“GAAP” means generally accepted accounting principles as in effect in the United States of America from time to time, consistently applied.

 

“Gedeon Richter Agreement” means that certain License, Co-Development and Commercialization Agreement, dated as of August 29, 2014, by and between the Company and Chemical Works of Gedeon Richter Plc., a Hungarian company.

 

“Good Faith Deposit” has the meaning given such term in Section 2.6(a) of this Agreement.

 

“Governmental Authority” means (a) any federal, state, county, municipal or foreign government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, (c) any court or administrative tribunal, or (d) with respect to any Person, any arbitration tribunal or other non-governmental authority to whose jurisdiction that Person has consented.

 

“Hazardous Materials” means all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or petroleum derived substance or waste.

 

“Horizon” means Horizon Technology Finance Corporation.

 

“Indebtedness” means, with respect to any Person, the aggregate amount of, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade payables aged less than one hundred eighty (180) days), (d) all capital lease obligations of such Person, (e) all obligations or liabilities of others secured by a Lien on any asset of such Person, whether or not such obligation or liability is assumed, (f) all obligations or liabilities of others guaranteed by such Person, and (g) any other obligations or liabilities which are required by GAAP to be shown as debt on the balance sheet of such Person.

 

  

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“Indemnified Person” has the meaning given such term in Section 10.3 of this Agreement.

 

“Intellectual Property” means, with respect to any Person, all of such Person’s right, title and interest in and to patents, patent rights (and applications and registrations therefor and divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same), trademarks and service marks (and applications and registrations therefor and the goodwill associated therewith), whether registered or not, inventions, copyrights (including applications and registrations therefor and like protections in each work or authorship and derivative work thereof), whether published or unpublished, mask works (and applications and registrations therefor), trade names, trade styles, software and computer programs, source code, object code, trade secrets, licenses, methods, processes, know how, drawings, specifications, descriptions, and all memoranda, notes, and records with respect to any research and development, all whether now owned or subsequently acquired or developed by such Person and whether in tangible or intangible form or contained on magnetic media readable by machine together with all such magnetic media (but not including embedded computer programs and supporting information included within the definition of “goods” under the Code).

 

“Internal Revenue Code” has the meaning given such term in Section 5.19 of this Agreement.

 

“Investment” means the purchase or acquisition of any capital stock, equity interest, or any obligations or other securities of, or any similar interest in, any Person, or the extension of any advance, loan, extension of credit or capital contribution to, or any other investment in, or deposit with, any Person.

 

“Landlord Agreement” means an agreement substantially in the form provided by Lenders to Borrower or such other form as Lenders may agree to accept.

 

“Lender” means each Lender as set forth on the cover page of this Agreement and any Person who may become a Lender pursuant to Section 12.1 of this Agreement and “Lenders” means all such Lenders.

 

“Lenders’ Expenses” means (a) all reasonable costs or expenses (including reasonable attorneys’ fees and expenses) incurred in connection with the preparation, negotiation, documentation, drafting, amendment, modification, administration, perfection and funding of the Loan Documents; and (b) all of each Lender’s reasonable attorneys’ fees, costs and expenses incurred in enforcing or defending the Loan Documents (including fees and expenses of appeal or review), including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is brought, whether before or after bankruptcy or insolvency, including all fees and costs incurred by any Lender in connection with such Lender’s enforcement of its rights in a bankruptcy or insolvency proceeding filed by or against Borrower, any Subsidiary or their respective Property.

 

  

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“Lien” means any voluntary or involuntary security interest, pledge, bailment, lease, mortgage, hypothecation, conditional sales and title retention agreement, encumbrance or other lien with respect to any Property in favor of any Person.

 

“Loan” means each advance of credit by a Lender to Borrower under this Agreement.

 

“Loan A” means the advance of credit by Horizon to Borrower under this Agreement in the Loan A Commitment Amount.

 

“Loan A Commitment Amount” has the meaning set forth on the cover page of this Agreement.

 

“Loan A Commitment Termination Date” has the meaning set forth on the cover page of this Agreement.

 

“Loan A Final Payment” has the meaning given such term in Section 2.2(g) of this Agreement.

 

“Loan Amortization Date” means the Payment Date on which Borrower is required, pursuant to Section 2.2 (a) below, to commence making equal payments of principal plus accrued interest on the outstanding principal amount of the Loans.

 

“Loan B” means the advance of credit by Fortress to Borrower under this Agreement in the Loan B Commitment Amount.

 

“Loan B Commitment Amount” has the meaning set forth on the cover page of this Agreement.

 

“Loan B Commitment Termination Date” has the meaning set forth on the cover page of this Agreement.

 

“Loan B Final Payment” has the meaning given such term in Section 2.2(g) of this Agreement.

 

“Loan Documents” means, collectively, this Agreement, the Notes, the Warrants, any Landlord Agreement, any Account Control Agreement and all other documents, instruments and agreements entered into in connection with this Agreement, as each may be amended, restated or otherwise modified from time to time.

 

“Loan Rate” means, with respect to each Loan, the per annum rate of interest (as calculated in accordance with Section 2.2(c)) equal to 9.00% plus the amount by which the one month LIBOR Rate (rounded to the nearest one hundredth percent), as reported in the Wall Street Journal exceeds 0.50%. Notwithstanding the foregoing, in no event shall the Loan Rate be less than 9.00%.

 

“Material Adverse Effect” means a material adverse effect on (a) the financial condition, business, operations or Properties of Borrower, (b) the ability of Borrower to perform its Obligations under the Loan Documents or (c) the Collateral or Collateral Agent’s or any Lender’s security interest in the Collateral.

 

  

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“Maturity Date” means, with respect to each Loan, forty-eight (48) months from the first day of the month next following the month in which the Funding Date for such Loan occurs, or if earlier, the date of acceleration of such Loan following an Event of Default or the date of prepayment, whichever is applicable.

 

“Note” means each promissory note executed in connection with a Loan in substantially the form of Exhibit C attached hereto.

 

“Obligations” means all debt, principal, interest, fees, charges, expenses and reasonable attorneys’ fees and costs and other amounts, obligations, covenants, and duties owing by Borrower to Collateral Agent or any Lender of any kind and description (whether pursuant to or evidenced by the Loan Documents (other than the Warrants), or by any other agreement between Lenders and Borrower (other than the Warrants) in connection therewith, and whether or not for the payment of money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including all Lenders’ Expenses.

 

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

“Officer’s Certificate” means a certificate executed by a Responsible Officer substantially in the form of Exhibit E or such other form as Lenders may agree to accept.

 

“Payment Date” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Permitted Indebtedness” means and includes:

 

(a) Indebtedness of Borrower to Lenders under the Loan Documents;

 

(b) Indebtedness arising from the endorsement of instruments in the ordinary course of business;

 

(c) Indebtedness of Borrower existing on the date hereof and set forth on the Disclosure Schedule;

 

(d) to the extent constituting or that may constitute Indebtedness, Indebtedness evidenced by or arising from the terms of any warrants issued pursuant to the 2012 Securities Purchase Agreement or the 2014 Securities Purchase Agreement;

 

(e) Indebtedness of Borrower, up to an aggregate amount of two million dollars ($2,000,000) in any fiscal year, incurred pursuant to agreements entered into by Borrower in the ordinary course of the business, in respect of the amortized cost of, or other deferred payments made by Borrower with respect to, the specialized equipment used in manufacturing and assembling the device(s) used to administer pharmaceutical products developed by Borrower;

 

  

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(f) intercompany Indebtedness owed by any Subsidiary to Borrower or any wholly-owned Subsidiary, as applicable; provided that, if applicable, such Indebtedness is also permitted as a Permitted Investment and, in the case of such Indebtedness owed to Borrower, such Indebtedness shall be evidenced by one or more promissory notes;

 

(g) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness under subsection (c), (d), (e), (f) and (g) above; provided that the principal amount thereof is not increased or the terms thereof are not modified to impose materially more burdensome terms upon Borrower;

 

(h) to the extent constituting or that may constitute Indebtedness, any Equity Securities of Borrower outstanding as of the date hereof, including any preferred stock, warrants, options and other rights to acquire Borrower’s Equity Securities and any payments that may arise thereunder;

 

(i) Subordinated Debt; and

 

(j) Indebtedness of Borrower incurred to finance any equipment or other personal property acquired by Borrower after the date hereof, including (i) the purchase price of such equipment or other personal property, or (ii) capital lease obligations or Indebtedness incurred solely for the purpose of financing the acquisition of such equipment or other personal property, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;  provided that (A) such Indebtedness is incurred prior to or within ninety (90) days after such acquisition and (B) the aggregate principal amount of Indebtedness permitted by this clause (h) shall not exceed $1,000,000 at any time outstanding.

 

“Permitted Investments” means and includes any of the following Investments:

 

(a) Deposits and deposit accounts with commercial banks organized under the laws of the United States or a state thereof to the extent: (i) the deposit accounts of each such institution are insured by the Federal Deposit Insurance Corporation up to the legal limit; and (ii) each such institution has an aggregate capital and surplus of not less than One Hundred Million Dollars ($100,000,000);

 

(b) Investments in marketable obligations issued or fully guaranteed by the United States, any state thereof or any agency thereof and maturing not more than one (1) year from the date of issuance;

 

(c) Investments in open market commercial paper rated at least “A1” or “P1” or higher by a national credit rating agency and maturing not more than one (1) year from the creation thereof;

 

(d) Investments pursuant to or arising under currency agreements or interest rate agreements entered into in the ordinary course of business;

 

  

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(e) Investments by Borrower and Subsidiaries in their Subsidiaries outstanding on the date hereof;

 

(f) Investments in Subsidiaries permitted to be created under Section 7.8 of this Agreement;

 

(g) Loans made to employees for travel, relocation or other expenses in the ordinary course of business;

 

(h) Investments in money market funds; and

 

(i) other Investments aggregating not in excess of One Hundred Thousand Dollars ($100,000) at any time.

 

“Permitted Licenses” means and includes (i) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business, (ii) exclusive licenses of Intellectual Property entered into in the ordinary course of business and applicable solely outside the United States, provided that such exclusive licenses could not result in a legal transfer of title of the licensed Intellectual Property and (iii) exclusive licenses of Intellectual Property entered into in the ordinary course of business that are exclusive as to the United States, to the extent consented to by Lenders, which consents shall not be unreasonably withheld, conditioned or delayed.  As used herein, the term “in the ordinary course of business” shall include, without limitation, transactions such as, or comparable in scope with, the Gedeon Richter Agreement.

 

“Permitted Liens” means and includes:

 

(a) the Liens in favor of the Collateral Agent and/or the Lenders;

 

(b) Liens for fees, taxes, levies, imposts, duties or other governmental charges of any kind which are not yet delinquent or which are being contested in good faith by appropriate proceedings (provided that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower);

 

(c) Liens identified on the Disclosure Schedule;

 

(d) Liens upon any equipment or other personal property acquired by Borrower after the date hereof to secure (i) the purchase price of such equipment or other personal property, or (ii) capital lease obligations or indebtedness incurred solely for the purpose of financing the acquisition of such equipment or other personal property; provided that (A) such Liens are confined solely to the equipment or other personal property so acquired and the proceeds thereof and the amount secured does not exceed the acquisition price thereof (plus soft costs), (B) no such Lien shall be created, incurred, assumed or suffered to exist in favor of Borrower’s officers, directors or Affiliates and (C) the aggregate Indebtedness secured by such Liens does not exceed $1,000,000 in the aggregate at any time;

 

  

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(e) any liens securing Subordinated Debt;

 

(f) bankers’ liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business as long as an Account Control Agreement  (or equivalent in a form acceptable to Lender) for each account in which such deposits are held has been executed and delivered to Lender;

 

(g) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens arising in the ordinary course of business and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings (provided that such appropriate proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such Lien or reserves sufficient to discharge such Lien have been provided on the books of Borrower);

 

(h) any judgment, attachment or similar Lien, unless the judgment it secures has not been discharged or execution thereof effectively stayed and bonded against pending appeal within thirty (30) days of the entry thereof;

 

(i) Permitted Licenses;

 

(j) Liens with respect to real estate deposits and real estate leases; and

 

(k) Liens in favor of customs and revenue authorities which secure payment of customs duties in connection with the importation of goods in the ordinary course of business.

 

“Person” means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, any political subdivision thereof, and any department, agency, authority or bureau of any of the foregoing.

 

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible.

 

 “Responsible Officer” means the Chief Executive Officer or the Chief Financial Officer of Borrower.

 

“Restricted License” means any license or other agreement with respect to which Borrower is the licensee of Intellectual Property and such license or agreement is material to Borrower’s business and (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property or (b) for which a default under or termination of would reasonably be expected to interfere with Collateral Agent’s or Lenders’ right to sell any Collateral.

 

“Rights to Payment” has the meaning given such term in Section 4.1 of this Agreement.

 

  

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“Sanctions” means any economic or financial sanction administered or enforced by the United States Government (including, without limitation, OFAC and the U.S Department of State), the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.

 

“Scheduled Payments” has the meaning given such term in Section 2.2(a) of this Agreement.

 

“Solvent” has the meaning given such term in Section 5.12 of this Agreement.

 

“Subordinated Debt” means Indebtedness (i) approved by Lenders, and (ii) where the holder’s right to payment of such Indebtedness, the priority of any Lien securing the same, and the rights of the holder thereof to enforce remedies against Borrower following default have been made subordinate to the Liens of Collateral Agent and Lenders and to the prior payment to Lenders of the Obligations, either (A) pursuant to a written subordination agreement approved by Lenders in their sole but reasonable discretion or (B) on terms otherwise approved by Lenders in their sole but reasonable discretion.

 

“Subsidiary” means any corporation or other entity of which a majority of the outstanding Equity Securities entitled to vote for the election of directors or other governing body (otherwise than as the result of a default) is owned by Borrower directly or indirectly through Subsidiaries.

 

“Transfer” has the meaning given such term in Section 7.4 of this Agreement.

 

“Warrant” means the separate warrant or warrants dated on or about the date hereof in favor of each Lender or its designees to purchase securities of Borrower.

 

1.2 Construction.  References in this Agreement to “Articles,” “Sections,” “Exhibits,” “Schedules” and “Annexes” are to recitals, articles, sections, exhibits, schedules and annexes herein and hereto unless otherwise indicated.  References in this Agreement and each of the other Loan Documents to any document, instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time (subject, in the case of clauses (b) and (c), to any restrictions on such replacement, amendment, modification or supplement set forth in the Loan Documents).  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be.  The words “include” and “including” and words of similar import when used in this Agreement or any other Loan Document shall not be construed to be limiting or exclusive.  Unless the context requires otherwise, any reference in this Agreement or any other Loan Document to any Person shall be construed to include such Person’s successors and assigns.  Unless otherwise indicated in this Agreement or any other Loan Document, all accounting terms used in this Agreement or any other Loan Document shall be construed, and all accounting and financial computations hereunder or thereunder shall be computed, in accordance with GAAP, and all terms describing Collateral shall be construed in accordance with the Code. The terms and information set forth on the cover page of this Agreement are incorporated into this Agreement.

 

  

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2. Loans; Repayment.

 

2.1 Commitments.

 

(a) The Commitment Amounts.  Subject to the terms and conditions of this Agreement and relying upon the representations and warranties herein set forth as and when made or deemed to be made, Horizon agrees to lend to Borrower prior to the Loan A Commitment Termination Date, Loan A and Fortress agrees to lend to Borrower prior to the Loan B Commitment Termination Date, Loan B.

 

(b) The Loans and the Notes. The obligation of Borrower to repay the unpaid principal amount of and interest on each Loan shall be evidenced by a Note issued to the relevant Lender.

 

(c) Use of Proceeds.  The proceeds of each Loan shall be used solely for working capital or general corporate purposes of Borrower.

 

(d) Termination of Commitment to Lend.  Notwithstanding anything in the Loan Documents to the contrary, each respective Lender’s obligation to lend the undisbursed portion of its Commitment Amount to Borrower hereunder shall terminate on the earlier of (i) at such Lender’s sole election, the occurrence of any Event of Default hereunder, and (ii) with respect to Loan A, the Loan A Commitment Termination Date and with respect to Loan B, the Loan B Commitment Termination Date.  Notwithstanding the foregoing, each Lender’s obligation to lend the undisbursed portion of its Commitment Amount to Borrower shall terminate if, in such Lender’s sole discretion, there has been a material adverse change in the general affairs, management, results of operations, condition (financial or otherwise) or prospects of Borrower, whether or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the business plan of Borrower presented to Lenders on or before the date of this Agreement.

 

2.2 Payments.

 

(a) Scheduled Payments.  Borrower shall make (i) a payment of accrued interest only to each applicable Lender on the outstanding principal amount of such Lender’s Loan on the first eighteen (18) Payment Dates specified in the Note applicable to such Loan and (ii) an equal payment of principal plus accrued interest to each applicable Lender on the outstanding principal amount of such Lender’s Loan on the next thirty (30) Payment Dates as set forth in the Note applicable to such Loan (collectively, the “Scheduled Payments”).  Borrower shall make such Scheduled Payments commencing on the date set forth in the Note applicable to such Loan and continuing thereafter on the first Business Day of each calendar month (each a “Payment Date”) through the Maturity Date applicable to such Loan.  In any event, all unpaid principal and accrued interest shall be due and payable in full on the Maturity Date applicable to such Loan.

 

  

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(b) Interim Payment.  Unless the Funding Date for a Loan is the first day of a calendar month, Borrower shall pay the per diem interest (accruing at the Loan Rate from the Funding Date through the last day of that month) payable with respect to such Loan on the first Business Day of the next calendar month.

 

(c) Payment of Interest.  Borrower shall pay interest on each Loan at a per annum rate of interest equal to the Loan Rate.  The Loan Rate shall initially be calculated using the LIBOR Rate reported in the Wall Street Journal on the date which is five (5) Business Days prior to the proposed date of disbursement of the applicable Loan, but shall thereafter be calculated for each calendar month using the LIBOR Rate reported in the Wall Street Journal on the first calendar day of such month, provided, however, that if the first calendar day of any month is not a Business Day, the Loan Rate shall be calculated using the LIBOR Rate reported in the Wall Street Journal on the Business Day immediately preceding the first calendar day of such month. Interest (including interest at the Default Rate, if applicable) shall be computed on the basis of a 360-day year for the actual number of days elapsed. Notwithstanding any other provision hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans.

 

(d) Application of Payments.  All payments received by Lenders prior to an Event of Default shall be applied as follows:  (i) first, to each Lender’s pro rata portion of the Lenders’ Expenses then due and owing; and (ii) second, ratably, to all Scheduled Payments then due and owing (provided, however, if such payments are not sufficient to pay the whole amount then due, such payments shall be applied first to unpaid interest at the Loan Rate, then to the remaining amounts then due).  After an Event of Default, all payments and application of proceeds shall be made as set forth in Section 9.7.

 

(e) Late Payment Fee.  Borrower shall pay to each Lender a late payment fee equal to six percent (6%) of any Scheduled Payment not paid when due to such Lender.

 

(f)  Default Rate.  Borrower shall pay interest at a per annum rate equal to the Default Rate on any amounts required to be paid by Borrower to Collateral Agent or any Lender under this Agreement or the other Loan Documents (including Scheduled Payments), payable with respect to any Loan, accrued and unpaid interest, and any fees or other amounts which remain unpaid after such amounts are due.  If an Event of Default has occurred and the Obligations have been accelerated (whether automatically or by any Lender’s election), Borrower shall pay interest on the aggregate, outstanding accelerated balance hereunder from the date of the Event of Default until all Events of Default are cured, at a per annum rate equal to the Default Rate.

 

(g) Final Payment.

 

(i) Loan A Final Payment. Borrower shall pay to Horizon a payment in the amount of Two Hundred Fifty Thousand Dollars ($250,000) (the “Loan A Final Payment”) upon the earliest of (A) payment in full of the principal balance of Loan A, (B) an Event of Default and demand by the applicable Lender of payment in full of Loan A or (C) the Maturity Date applicable to Loan A, as applicable.

 

  

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(ii)  Loan B Final Payment. Borrower shall pay to Fortress a payment in the amount of Two Hundred Fifty Thousand Dollars ($250,000) (the “Loan B Final Payment”) upon the earlier of (A) payment in full of the principal balance of Loan B, (B) an Event of Default and demand by the applicable Lender of payment in full of Loan B or (C) the Maturity Date applicable to Loan B, as applicable.

 

2.3 Prepayments.

 

(a) Mandatory Prepayment Upon an Acceleration.  If the Loans are accelerated following the occurrence of an Event of Default pursuant to Section 9.1(a) hereof, then Borrower, in addition to any other amounts which may be due and owing hereunder, shall immediately pay to Lenders the amount set forth in Section 2.3(b) below, as if Borrower had opted to prepay on the date of such acceleration.

 

(b) Optional Prepayment.  Upon ten (10) Business Days’ prior written notice to Lenders, Borrower may, at its option, at any time, prepay all (and not less than all) of the outstanding Loans by simultaneously paying to each Lender an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of its Loan being prepaid; plus (ii) an amount equal to (A) if such Loan is prepaid on or before the date that is eighteen (18) months from the Funding Date thereof, three percent (3%) of the then outstanding principal balance of such Loan, or (B) if such Loan is prepaid more than eighteen (18) months from the Funding Date but on or before the date that is thirty (30) months from such Funding Date, one percent (1%) of the then outstanding principal balance of such Loan; plus (iii) the outstanding principal balance of such Loan; plus (iv) all other sums, if any, that shall have become due and payable hereunder.

 

2.4 Other Payment Terms.

 

(a) Place and Manner.  Borrower shall make all payments due to Lenders in lawful money of the United States.  All payments of principal, interest, fees and other amounts payable by Borrower hereunder shall be made, in immediately available funds, not later than 10:00 a.m. New York time, on the date on which such payment is due.  Borrower shall make such payments to each Lender via wire transfer or ACH as instructed by such Lender from time to time.

 

(b) Date.  Whenever any payment is due hereunder on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.

 

(c) Taxes.

 

(i) Unless otherwise required under applicable law, any and all payments made hereunder or under the Notes shall be made free and clear of and without deduction for any taxes; provided that if Borrower shall be required to deduct any taxes from such payments, then (A) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.4(c)) the relevant Lender receives an amount equal to the sum it would have received had no such deductions been made, (B) Borrower shall make such deductions and (C) Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

  

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(ii) Borrower shall indemnify each Lender, within 10 days after written demand therefor, for the full amount of any taxes imposed or asserted directly on such Lender by any Governmental Authority on or attributable to amounts payable under this Agreement solely as a result of such Lender entering into this Agreement to the extent such taxes are paid by such Lender, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided, however, that such indemnified taxes shall not include income or franchise taxes imposed on (or measured by) such Lender’s net income by the jurisdiction, or any political subdivision thereof or taxing authority therein, under the laws of which such recipient is organized or in which its principal office is located or in which its applicable lending office is located.  A certificate as to the amount of such payment or liability delivered to Borrower by a Lender shall be conclusive absent manifest error.

 

(iii) As soon as practicable after any payment of taxes by Borrower hereunder to a Governmental Authority, Borrower shall deliver to Lenders the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Lenders.

 

(iv) If any Lender is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement, such Lender shall deliver to Borrower, as reasonably requested by Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

 

(v) If a Lender receives a refund in respect of taxes paid by Borrower pursuant to this Section 2.4(c), which in the sole discretion of such Lender exercised in good faith is allocable to such payment, it shall promptly pay such refund, together with any other amounts paid by Borrower in connection with such refunded taxes, to Borrower, net of all reasonable out-of-pocket expenses (including any taxes to which such Lender has become subject as a result of its receipt of such refund) of such Lender incurred in obtaining such refund and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that Borrower, upon the request of the applicable Lender, shall repay to such Lender amounts paid over pursuant to the preceding clause (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such Lender is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (v), in no event will any Lender be required to pay any amount to Borrower pursuant to this paragraph (v) the payment of which would place such Lender in a less favorable net after-tax position than such Lender would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid.  This paragraph shall not be construed to require any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Borrower or any other Person.

 

  

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2.5 Procedure for Making the Loans.

 

(a) Notice.  Borrower shall notify each Lender of the date on which Borrower desires a Lender to make any Loan at least five (5) Business Days in advance of the desired Funding Date, unless the relevant Lender elects at its sole discretion to allow the Funding Date for a Loan to be made by such Lender to be within five (5) Business Days of Borrower’s notice.  Borrower’s execution and delivery to Lenders of one or more Notes in respect of a Loan shall be Borrower’s agreement to the terms and calculations thereunder with respect to such Loan.  Each Lender’s obligation to make any Loan shall be expressly subject to the satisfaction of the conditions set forth in Section 3.

 

(b) Loan Rate Calculation.  Prior to each Funding Date for any Loan, Lenders shall establish the Loan Rate with respect to such Loan, which shall be set forth in the Note to be executed by Borrower with respect to such Loan and shall be conclusive in the absence of a manifest error.

 

(c) Disbursement. Lenders shall disburse the proceeds of each Loan by wire transfer to Borrower at the account specified in the Funding Certificate for such Loan.

 

2.6 Good Faith Deposit; Legal and Closing Expenses; and Commitment Fee.

 

(a) Good Faith Deposit.  Borrower has delivered to Horizon a good faith deposit in the amount of Thirty Thousand Dollars ($30,000) (the “Good Faith Deposit”).  The Good Faith Deposit paid to Horizon will be credited to the Commitment Fee payable to Lenders. If the Funding Date does not occur, Lenders shall retain the Good Faith Deposit as compensation for their time, expenses and opportunity cost.

 

(b) Legal, Due Diligence and Documentation Expenses. Concurrently with its execution and delivery of this Agreement, Borrower shall reimburse Lenders for the reasonable legal, due diligence and documentation expenses incurred by Lenders in connection with the negotiation and documentation of this Agreement and the Loan Documents; provided that such reimbursement obligation shall not exceed Thirty Thousand Dollars ($30,000) without Borrower’s written consent.

 

(c) Commitment Fee. Borrower shall, concurrently with its execution and delivery of this Agreement, pay a commitment fee to Horizon in the amount of Fifty Thousand Dollars ($50,000) and a commitment fee to Fortress in the amount of Fifty Thousand Dollars ($50,000) (collectively, the “Commitment Fee”).  The Commitment Fee shall be retained by the applicable Lender and be deemed fully earned upon receipt.

 

3. Conditions of Loan.

 

3.1 Conditions Precedent to Closing.  At the time of the execution and delivery of this Agreement, each Lender shall have received, in form and substance reasonably satisfactory to such Lender, all of the following (unless all Lenders have agreed to waive such condition or document, in which case such condition or document shall be a condition precedent to the making of any Loan and shall be deemed added to Section 3.2):

 

  

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(a) Loan Agreement. This Agreement duly executed by Borrower, Collateral Agent and Lenders.

 

(b) Warrants. The Warrants duly executed by Borrower.

 

(c) Secretary’s Certificate. A certificate of the secretary or assistant secretary of Borrower, dated as of the date hereof, with copies of the following documents attached:  (i) the certificate of incorporation and bylaws (or equivalent documents) of Borrower certified by Borrower as being complete and in full force and effect on the date thereof, (ii) incumbency and representative signatures, and (iii) resolutions authorizing the execution and delivery of this Agreement and each of the other Loan Documents.

 

(d) Good Standing Certificates.  A good standing certificate from Borrower’s state of organization and the state in which Borrower’s principal place of business is located, each dated as of a date no earlier than thirty (30) days prior to the date hereof.

 

(e) Certificate of Insurance.  Evidence of the insurance coverage required by Section 6.8 of this Agreement.

 

(f) Consents.  All necessary consents of shareholders and other third parties with respect to the execution, delivery and performance of this Agreement, the Warrants and the other Loan Documents.

 

(g) Legal Opinion.  A legal opinion of Borrower’s counsel, dated as of the date hereof, covering the matters set forth in Exhibit D hereto.

 

(h) Account Control Agreements.  Account Control Agreements for all of Borrower’s deposit accounts and securities accounts (except as permitted under Section 7.13 of this Agreement) duly executed by all of the parties thereto.

 

(i) Fees and Expenses.  Payment of all fees and expenses then due hereunder or under any other Loan Document.

 

(j) Other Documents. Such other documents and completion of such other matters, as any Lender may reasonably deem necessary or appropriate.

 

3.2 Conditions Precedent to Making Loan A and Loan B. The obligation of the applicable Lender to make Loan A or Loan B is further subject to satisfaction of the following conditions as of the applicable Funding Date:

 

(a) No Default. No Default or Event of Default shall have occurred and be continuing.

 

  

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(b) Landlord Agreements. Borrower shall have provided Lenders with a Landlord Agreement for each location where Borrower’s books and records and the Collateral (other than (i) clinical trial materials, (ii) laptops and similar equipment maintained by Borrower’s employees, (iii) research materials maintained at contract research and storage facilities, and (iv) other Collateral with an aggregate value of not more than $100,000) is located (unless Borrower is the fee owner thereof).

 

(c) Note. Borrower shall have duly executed and delivered a Note in the amount of Loan A to Horizon, and a Note in the amount of Loan B to Fortress.

 

(d) UCC Financing Statements.  Lenders shall have received such documents, instruments and agreements, including UCC financing statements or amendments to UCC financing statements and UCC financing statement searches, as any Lender shall reasonably request to evidence the perfection and priority of the security interests granted to Collateral Agent and each Lender pursuant to Section 4. Borrower authorizes Collateral Agent and each Lender to file any UCC financing statements, continuations of or amendments to UCC financing statements they deem necessary to perfect its security interest in the Collateral.

 

(e) Funding Certificate.  Borrower shall have duly executed and delivered to Lenders a Funding Certificate for such Loans.

 

(f) Sale of Equity Securities. Borrower shall have provided Lenders with evidence reasonably satisfactory to Lenders that, on or after November 15, 2014, Borrower has received net cash proceeds of not less than Seventeen Million Five Hundred Thousand Dollars ($17,500,000) as a result of Borrower’s sale of Equity Securities.

 

(g) Representations and Warranties.  The representations and warranties made by Borrower in Section 5 and in the other Loan Documents shall be true and correct in all material respects (except for any representation and warranty qualified by materiality, in which case such representation or warranty shall be true and correct in all respects) as of such Funding Date (except for any representations and warranties that specifically relate to a prior date, which shall be true and correct in all material respects as of such earlier date).

 

(h) Other Documents.  Borrower shall have provided Lenders with such other documents and completion of such other matters, as any Lender may reasonably deem necessary or appropriate.

 

3.3 Covenant to Deliver.  Borrower agrees (not as a condition but as a covenant) to deliver to Lenders each item required to be delivered to Lenders as a condition to each Loan, if such Loan is advanced.  Borrower expressly agrees that the extension of any Loan prior to the receipt by a Lender of any such item shall not constitute a waiver by such Lender of Borrower’s obligation to deliver such item, and any such extension in the absence of a required item shall be in each Lender’s sole discretion.

 

  

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4. Creation of Security Interest.

 

4.1 Grant of Security Interests.  Borrower grants to Collateral Agent and each Lender a valid, continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the Loan Documents (other than the Warrants). The “Collateral” shall mean and include all right, title, interest, claims and demands of Borrower in the following:

 

(a) All goods (and embedded computer programs and supporting information included within the definition of “goods” under the Code) and equipment now owned or hereafter acquired, including all laboratory equipment, computer equipment, office equipment, machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;

 

(b) All inventory now owned or hereafter acquired, including all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower’s books relating to any of the foregoing;

 

(c) All contract rights and general intangibles (in each case, except to the extent included within the definition of Intellectual Property), now owned or hereafter acquired, including goodwill, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, software, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims, payments of insurance and rights to payment of any kind;

 

(d) All now existing and hereafter arising accounts, contract rights, royalties, license rights, license fees and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (subject, in each case, to the contractual rights of third parties to require funds received by Borrower to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s books relating to any of the foregoing;

 

(e) All documents, cash, deposit accounts, letters of credit and letters of credit rights (whether or not the letter of credit is evidenced by a writing) and other supporting obligations, certificates of deposit, instruments, promissory notes, chattel paper (whether tangible or electronic) and investment property, including all securities, whether certificated or uncertificated, security entitlements, securities accounts, commodity contracts and commodity accounts, and all financial assets held in any securities account or otherwise, wherever located, now owned or hereafter acquired and Borrower’s books relating to the foregoing; and

 

  

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(f) To the extent not covered by clauses (a) through (e), all other personal property of the Borrower, whether tangible or intangible, and any and all rights and interests in any of the above and the foregoing and, any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof, including insurance, condemnation, requisition or similar payments and proceeds of the sale or licensing of Intellectual Property to the extent such proceeds no longer constitute Intellectual Property.

 

Notwithstanding the foregoing, the Collateral shall not include any Intellectual Property; provided, however, that the Collateral shall include all accounts receivables, accounts, and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).  Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the date hereof, include the Intellectual Property to the extent necessary to permit perfection of Lender’s security interest in the Rights to Payment.

 

4.2 After-Acquired Property.  If Borrower shall at any time acquire a commercial tort claim, as defined in the Code, with a value in excess of Fifty Thousand Dollars ($50,000), Borrower shall immediately notify Collateral Agent and Lenders in writing signed by Borrower of the brief details thereof and, upon request of Collateral Agent, grant to Collateral Agent and each Lender in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Collateral Agent.

 

4.3 Duration of Security Interest.  Collateral Agent’s and each Lender’s security interest in the Collateral shall continue until the indefeasible payment in full and the satisfaction of all Obligations, and termination of each Lender’s commitment to fund the Loans, whereupon such security interest shall terminate.  Collateral Agent and each Lender shall, at Borrower’s sole cost and expense, execute such further documents and take such further actions as may be reasonably necessary to make effective the release contemplated by this Section 4.3, including duly authorizing and delivering termination statements for filing in all relevant jurisdictions under the Code.

 

4.4 Location and Possession of Collateral.  The Collateral (other than (i) clinical trial materials, (ii) laptops and similar equipment maintained by Borrower’s employees, (iii) research materials maintained at contract research and storage facilities, and (iv) other Collateral with an aggregate value of not more than $100,000) is and shall remain in the possession of Borrower at its location listed on the cover page hereof or as set forth in the Disclosure Schedule or at such other location(s) as to which Borrower has provided written notice to Collateral Agent.  Borrower shall remain in full possession, enjoyment and control of the Collateral (other than (i) clinical trial materials, (ii) laptops and similar equipment maintained by Borrower’s employees, (iii) research materials maintained at contract research and storage facilities, and (iv) other Collateral with an aggregate value of not more than $100,000, and otherwise, except only as may be required by Collateral Agent for perfection of the security interests therein created hereunder and as otherwise permitted under this Agreement) and so long as no Event of Default has occurred, shall be entitled to manage, operate, dispose of and use the same and each part thereof with the rights and franchises appertaining thereto; provided that the possession, enjoyment, control and use of the Collateral shall at all times be subject to the observance and performance of the terms of this Agreement.

 

  

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4.5 Delivery of Additional Documentation Required.  Borrower shall from time to time execute and deliver to Collateral Agent and Lenders, at the request of Collateral Agent, all financing statements and other documents Collateral Agent may reasonably request, in form reasonably satisfactory to Collateral Agent and Lenders, to perfect and continue Collateral Agent’s and Lenders’ perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents.

 

4.6 Right to Inspect.  Collateral Agent and each Lender (through any of their officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours, to inspect the books and records of Borrower and Subsidiaries and to make copies thereof and to inspect, test, and appraise the Collateral in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral; provided that prior to an Event of Default, Collateral Agent and Lenders shall make such inspections, in the aggregate, not more than twice in any calendar year.

 

4.7 Protection of Intellectual Property.  Borrower shall:

 

(a) protect, defend and maintain the validity and enforceability of its Intellectual Property material to Borrower’s business (as determined by Borrower in its reasonable judgment) and promptly advise Collateral Agent in writing of material infringements;

 

(b) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without each Lender’s written consent, which consent shall not be unreasonably withheld or delayed;

 

(c)  provide written notice to the Collateral Agent within ten (10) days after entering into or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public); and

 

(d) take such commercially reasonable steps as Collateral Agent requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed “Collateral” and for Collateral Agent and Lenders to have a security interest in it that otherwise could reasonably be expected to be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Collateral Agent to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with the Collateral Agent’s or Lenders’ rights and remedies under this Agreement and the other Loan Documents.

 

5. Representations and Warranties.  Except as set forth in the Disclosure Schedule, Borrower represents and warrants as follows:

 

5.1 Organization and Qualification.  Each of Borrower and its Subsidiaries is a corporation duly organized and validly existing under the laws of its state of incorporation and qualified and licensed to do business in, and is in good standing in, any jurisdiction in which the conduct of its business or its ownership of Property requires that it be so qualified and licensed or in which the Collateral is located, except for such states as to which any failure to so qualify would not have a Material Adverse Effect.

 

5.2 Authority.  Borrower has all necessary power and authority to execute, deliver, and perform its obligations in accordance with the terms thereof, the Loan Documents to which it is a party.  Borrower and Subsidiaries have all requisite power and authority to own and operate their Property and to carry on their businesses as now conducted. Borrower and Subsidiaries have obtained all licenses, permits, approvals and other authorizations necessary for the operation of their business.

 

5.3 Conflict with Other Instruments, etc.  Neither the execution and delivery of any Loan Document to which Borrower is a party nor the consummation of the transactions therein contemplated nor compliance with the terms, conditions and provisions thereof will result in a breach of any of the terms, conditions or provisions of the certificate of incorporation, the by-laws, or any other organizational documents of Borrower or violate in any material respect any law or any regulation, order, writ, injunction or decree of any court or Governmental Authority by which Borrower or any Subsidiary or any of their respective property or assets may be bound or affected or, except with respect to certain rights under the 2012 Securities Purchase Agreement and the warrants issued thereunder which have been waived in writing by the purchasers party to such 2012 Securities Purchase Agreement, result in a breach of any of the terms, conditions or provisions of any material agreement or instrument to which Borrower is a party or by which it or any of its Property is bound or to which it or any of its Property is subject or constitute a default thereunder or result in the creation or imposition of any Lien, other than Permitted Liens.

 

5.4 Authorization; Enforceability.  The execution and delivery of this Agreement, the granting of the security interest in the Collateral, the incurrence of the Loans, the execution and delivery of the other Loan Documents to which Borrower is a party and the consummation of the transactions herein and therein contemplated have each been duly authorized by all necessary action on the part of Borrower.  No authorization, consent, approval, license or exemption of, and no registration, qualification, designation, declaration or filing with, or notice to, any Person is, except for those which have been made or obtained and are in full force and effect, was or will be necessary to (a) the valid execution and delivery of any Loan Document to which Borrower is a party, (b) the performance of Borrower’s obligations under any Loan Document or (c) the granting of the security interest in the Collateral, except for filings in connection with the perfection of the security interest in any of the Collateral or the issuance of the Warrants.  The Loan Documents have been duly executed and delivered and constitute legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors’ rights or by general principles of equity.

 

  

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5.5 No Prior Encumbrances.  Borrower has good and marketable title to the Collateral, free and clear of Liens except for Permitted Liens. Borrower has good title and ownership of, or is licensed under, all of Borrower’s current Intellectual Property. Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) Permitted Licenses, (b) over-the-counter software that is commercially available to the public and (c) material Intellectual Property licensed to Borrower (other than over-the-counter software) and noted on the Disclosure Schedule.  Each patent which it owns or purports to own and which is material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part.  Except as noted on the Disclosure Schedule, Borrower is not a party to, nor is it bound by, any Restricted License.  Borrower has not received any communications alleging that Borrower has violated, or by conducting its business as proposed, would violate any proprietary rights of any other Person, in each case that could reasonably be expected to have a Material Adverse Effect. Borrower has no knowledge of any infringement or violation by it of the intellectual property rights of any third party and has no knowledge of any violation or infringement by a third party of any of its Intellectual Property.  The Collateral and the Intellectual Property constitute substantially all of the assets and property of Borrower, and Borrower owns all Intellectual Property associated with the business of Borrower and Subsidiaries, free and clear of any Liens other than Permitted Liens.

 

5.6 Security Interest.  The provisions of this Agreement create legal and valid security interests in the Collateral in favor of the Collateral Agent and each Lender, and assuming the proper filing of one or more financing statement(s) identifying the Collateral with the proper state and/or local authorities, such the security interests (a) constitute and will continue to constitute first priority security interests (except to the extent any Permitted Liens may have a superior priority to Collateral Agent’s and Lenders’ Lien under this Agreement) and (b) are and will continue to be superior and prior to the rights of all other creditors of Borrower (except to the extent of such Permitted Liens).

 

5.7 Name; Location of Chief Executive Office, Principal Place of Business and Collateral.  Within the last five (5) years, Borrower has not done business under any name other than that specified on the signature page hereof.  Borrower’s jurisdiction of incorporation is as set forth on the cover page of this Agreement and Borrower’s chief executive office, principal place of business, and the place where Borrower maintains its records concerning the Collateral are presently located in the state and at the address set forth on the cover page of this Agreement.  The Collateral is located at the address set forth on the cover page hereof, as set forth in the Disclosure Schedule or at such locations as permitted under Section 7.2.

 

5.8 Litigation.  There are no actions or proceedings pending by or against Borrower or any Subsidiary before any court, arbitral tribunal, regulatory organization, administrative agency or similar body in which there is a reasonable likelihood of an adverse decision that could reasonably be expected to have a Material Adverse Effect.  Borrower does not have knowledge of any such threatened actions or proceedings.

 

5.9 Financial Statements. All financial statements relating to Borrower or any Subsidiary that have been delivered by Borrower to Collateral Agent or a Lender present fairly in all material respects Borrower’s Consolidated financial condition as of the date thereof and Borrower’s Consolidated results of operations for the period then ended.

 

  

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5.10 No Material Adverse Effect.  No event has occurred and no condition exists which could reasonably be expected to have a Material Adverse Effect since June 30, 2014.

 

5.11 Full Disclosure.  No written representation, warranty or other statement made by Borrower in any Loan Document (including the Disclosure Schedule), certificate or written statement (other than projections, forward-looking statements and other information of a general economic or industry nature, which projections, forward-looking statements and other information of a general economic or industry nature have been prepared by Borrower in good faith based upon assumptions believed by Borrower to be reasonable at the time) furnished to Collateral Agent or any Lender contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements, in light of the circumstances under which they were made, not misleading.

 

5.12 Solvency, Etc. Borrower is Solvent (as defined below) and, after the execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby, Borrower will be Solvent.  “Solvent” means, with respect to any Person on any date, that on such date (a) the fair value of the property of such Person is greater than the fair value of the liabilities (including contingent liabilities) of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital.

 

5.13 Subsidiaries. Borrower has no Subsidiaries other than RhoMed Incorporated, a New Mexico corporation.

 

5.14 Catastrophic Events; Labor Disputes. None of Borrower, any Subsidiary or any of their respective Property is or has been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or other casualty that could reasonably be expected to have a  Material Adverse Effect.  There are no disputes presently subject to grievance procedure, arbitration or litigation under any of the collective bargaining agreements, employment contracts or employee welfare or incentive plans to which Borrower or any Subsidiary is a party, and there are no strikes, lockouts, work stoppages or slowdowns, or, to the knowledge of Borrower, jurisdictional disputes or organizing activity occurring or threatened, in each case, which could reasonably be expected to have a  Material Adverse Effect.

 

  

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5.15 Certain Agreements of Officers, Employees and Consultants.

 

(a) No Violation. To the knowledge of Borrower, no officer, employee or consultant of Borrower is, or is now expected to be, in violation of any term of any employment contract, proprietary information agreement, nondisclosure agreement, noncompetition agreement or any other contract or agreement or any restrictive covenant relating to the right of any such officer, employee or consultant to be employed by Borrower because of the nature of the business conducted or to be conducted by Borrower or relating to the use of trade secrets or proprietary information of others, in each case that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and to Borrower’s knowledge, the continued employment of Borrower’s officers, employees and consultants does not subject Borrower to any liability for any claim or claims arising out of or in connection with any such contract, agreement, or covenant, in each case that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(b) No Present Intention to Terminate. To the knowledge of Borrower, no officer of Borrower, and no employee or consultant of Borrower whose termination, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, has any present intention of terminating his or her employment or consulting relationship with Borrower.

5.16 No Plan Assets.  Neither Borrower nor any Subsidiary is an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of the assets of Borrower or any Subsidiary constitutes or will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.  In addition, (a) neither Borrower nor any Subsidiary is a “governmental plan” within the meaning of Section 3(32) of ERISA and (b) transactions by or with Borrower or any Subsidiary are not subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code currently in effect, which prohibit or otherwise restrict the transactions contemplated by this Loan Agreement.

 

5.17  Sanctions.  None of Borrower, any of its Subsidiaries or, to the knowledge of Borrower, any director, officer, employee, agent or Affiliate of Borrower or any of its Subsidiaries, is a Person that is, or is owned or controlled by Persons that are, (b) the subject of any Sanctions or (b) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions.  To the best of Borrower’s knowledge, as of the date hereof and at all times throughout the term of this Agreement, including after giving effect to any transfers of interests permitted pursuant to the Loan Documents, none of the funds of Borrower or any Subsidiary have been (or will be) derived from any unlawful activity with the result that the investment in the respective party (whether directly or indirectly), is prohibited by applicable law or the Loans are in violation of applicable law.

 

5.18 Regulatory Compliance. Borrower is not a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.  Neither Borrower nor any Subsidiary is an “investment company” or a company controlled by an “investment company” under the Investment Company Act of 1940.  Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) and no proceeds of any Loan will be used to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

 

  

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5.19 Payment of Taxes.  All federal and other material tax returns, reports and statements (including any attachments thereto or amendments thereof) of Borrower and its Subsidiaries filed or required to be filed by any of them have been timely filed (or extensions have been obtained and such extensions have not expired) and all taxes shown on such tax returns or otherwise due and payable and all material assessments, fees and other governmental charges upon Borrower, its Subsidiaries and their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable, except for the payment of any such taxes, assessments, fees and other governmental charges which are being diligently contested by Borrower or such Subsidiary in good faith by appropriate proceedings and for which adequate reserves have been made in accordance with GAAP.  To the knowledge of Borrower, no tax return of Borrower or any Subsidiary is currently under an audit or examination, and Borrower has not received written notice of any proposed audit or examination, in each case, where a material amount of tax is at issue.  Borrower is not an “S corporation” within the meaning of Section 1361(a)(1) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

 

6. Affirmative Covenants.  Borrower, until the full and complete payment of the Obligations, covenants and agrees that:

 

6.1 Good Standing.  Borrower shall maintain, and, expect as permitted under Section 7.6 of this Agreement, cause each of its Subsidiaries to maintain, its corporate existence and its good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect.  Borrower shall maintain, and cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which could reasonably be expected to have a Material Adverse Effect.

 

6.2 Government Compliance.  Borrower shall comply, and cause each of its Subsidiaries to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could reasonably be expected to have a Material Adverse Effect.

 

6.3 Financial Statements, Reports, Certificates.  Borrower shall deliver to each Lender promptly as they are available and in any event: (a) at the time of filing of Borrower’s Form 10-K with the Securities and Exchange Commission after the end of each fiscal year of Borrower (and in any event, within ninety (90) days following the end of each fiscal year of Borrower), the financial statements of Borrower filed or required to be filed with such Form 10-K; and (b) at the time of filing of Borrower’s Form 10-Q with the Securities and Exchange Commission after the end of each of the first three fiscal quarters of each fiscal year of Borrower (and in any event, within forty-five (45) days following the end of each of the first three fiscal quarters of each fiscal year of Borrower), the Consolidated financial statements of Borrower filed or required to be filed with such Form 10-Q.  In addition, Borrower shall deliver to each Lender (i) promptly upon becoming available, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders, (ii) such other financial information as any Lender may reasonably request from time to time, (iii) promptly upon receipt of written notice thereof, a report of any material legal actions filed or commenced against Borrower or any Subsidiary or the commencement of any action, proceeding or governmental investigation involving Borrower or any Subsidiary, in each case, that is reasonably expected to result in damages or costs to Borrower of One Hundred Thousand Dollars ($100,000) or more and (iv) no later than five (5) Business Days prior to the entry by Borrower into a Permitted License with regard to Borrower’s rights to bremelanotide for use in the United States, a copy of the final Permitted License or substantially final draft of the Permitted License to be entered into by Borrower, whichever is available. Borrower shall immediately notify each Lender if Borrower has knowledge that Borrower, any of its Subsidiaries, or any director, officer, employee, agent or Affiliate of Borrower or any of its Subsidiaries becomes the subject or target of any Sanctions or (1) is convicted on, (2) pleads nolo contendere to, (3) is indicted on or (4) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering.  The items specified in Sections 6.3(a) and 6.3(b) shall be deemed delivered upon posting with EDGAR or posting the items or a link thereto on Borrower’s website.

 

  

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6.4 Certificates of Compliance.  Each time financial statements are furnished pursuant to Section 6.3 above, Borrower shall deliver to each Lender an Officer’s Certificate signed by a Responsible Officer in the form of, and certifying to the matters set forth in Exhibit E hereto.

 

6.5 Notice of Defaults.  As soon as possible, and in any event within five (5) Business Days after the discovery of a Default or an Event of Default, Borrower shall provide each Lender with an Officer’s Certificate setting forth the facts relating to or giving rise to such Default or Event of Default and the action which Borrower has taken, or proposes to take, with respect thereto.

 

6.6 Taxes.  Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law or imposed upon any Property belonging to it, and will execute and deliver to Collateral Agent and Lenders, on demand, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make, and cause each Subsidiary to make, timely payment or deposit of all material tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Collateral Agent and Lenders with proof satisfactory to each Lender indicating that Borrower and each Subsidiary has made such payments or deposits; provided that Borrower need not make (or cause any Subsidiary to make) any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings which suspend the collection thereof  (provided that such proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has adequately bonded such amounts or reserves sufficient to discharge such amounts have been provided on the books of Borrower). In addition, Borrower shall not change its jurisdiction of residence for taxation purposes.

 

6.7 Use; Maintenance. Borrower shall keep and maintain all items of equipment and other similar types of personal property that form any significant portion or portions of the Collateral in good operating condition and repair, ordinary wear and tear excepted, and shall make all necessary replacements thereof and renewals thereto so that the value and operating efficiency thereof shall at all times be maintained and preserved.  Borrower shall not permit any such material item of Collateral to become a fixture to real estate or an accession to other personal property of another Person, without the prior written consent of Collateral Agent.  Borrower shall not permit any such material item of Collateral to be operated or maintained in violation of any applicable law, statute, rule or regulation.  With respect to items of leased equipment (to the extent Collateral Agent and Lenders have any security interest in any residual Borrower’s interest in such equipment under the lease), Borrower shall keep, maintain, repair, replace and operate such leased equipment in accordance in all material respects with the terms of the applicable lease.

 

  

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6.8 Insurance. Borrower shall keep its business and the Collateral insured for risks and in amounts customary for companies in Borrower’s industry and location, and as Collateral Agent may reasonably request.  Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Collateral Agent.  All property policies shall have a lender’s loss payable endorsement showing Collateral Agent and each Lender as an additional loss payee and all general liability policies shall show Collateral Agent and each Lender as an additional insured and all policies shall provide that the insurer must give Collateral Agent at least thirty (30) days’ notice before canceling its policy.  At Collateral Agent’s request, Borrower shall deliver certified copies of policies and evidence of all premium payments.  Proceeds payable under any property policy shall, at Collateral Agent’s or any Lender’s option, be payable to Collateral Agent, for the benefit of Lenders, or to Lenders on account of the Obligations.  Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any property policy, toward the replacement or repair of destroyed or damaged property; provided that (a) any such replaced or repaired property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall be deemed Collateral in which Collateral Agent and Lenders have been granted a first priority security interest and (b) after the occurrence and during the continuation of an Event of Default all proceeds payable under such property policy shall, at the option of Collateral Agent or any Lender, be payable to Collateral Agent, for the benefit of Lenders, or to Lenders on account of the Obligations.  If Borrower fails to obtain insurance as required under Section 6.8 or to pay any amount or furnish any required proof of payment to third persons and Collateral Agent, Collateral Agent may make all or part of such payment or obtain such insurance policies required in Section 6.8, and take any action under the policies Collateral Agent deems prudent. On or prior to the first Funding Date and prior to each policy renewal, Borrower shall furnish to Collateral Agent certificates of insurance or other evidence reasonably satisfactory to Collateral Agent that insurance complying with all of the above requirements is in effect.

 

6.9 Further Assurances.  At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Collateral Agent or any Lender to make effective the purposes of this Agreement, including the continued perfection and priority of Collateral Agent’s and Lenders’ security interest in the Collateral.

 

  

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6.10  Subsidiaries. Borrower, upon any Lender’s request, shall cause any Subsidiary to provide Lenders and Collateral Agent with a guaranty of the Obligations and a security interest in such Subsidiary’s assets to secure such guaranty, in each case on terms reasonably satisfactory to Collateral Agent and each Lender.

 

6.11 Keeping of Books.  Borrower shall keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of Borrower and its Subsidiaries in accordance with GAAP.

 

7. Negative Covenants.  Borrower, until the full and complete payment of the Obligations, covenants and agrees that Borrower shall not:

 

7.1 Chief Executive Office.  Change its name, jurisdiction of incorporation, chief executive office, principal place of business or any of the items set forth in Section 1 of the Disclosure Schedule without thirty (30) days’ prior written notice to Collateral Agent.

 

7.2 Collateral Control.  Subject to Borrower’s rights under Sections 4.4 and 7.4, remove any items of Collateral (other than (i) clinical trial materials, (ii) laptops and similar equipment maintained by Borrower’s employees, (iii) research materials maintained at contract research and storage facilities, and (iv) other Collateral with an aggregate value of not more than $100,000) from Borrower’s facility located at the address set forth on the cover page hereof or as set forth on the Disclosure Schedule, without thirty (30) days’ prior written notice to Collateral Agent.

 

7.3 Liens.  Create, incur, allow or suffer, or permit any Subsidiary to create, incur, allow or suffer, any Lien on any of its property, or assign or convey any right to receive income, including the sale of any accounts, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted herein (except for Permitted Liens that are permitted by the terms of this Agreement or by operation of law to have priority to Collateral Agent’s and Lenders’ Liens), or enter into any agreement, document, instrument or other arrangement (except with or in favor of Collateral Agent, for the benefit of Lenders, or Lenders) with any Person which prohibits Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, except (a) as otherwise permitted in Section 7.4 hereof and (b) as set forth in the definition of “Permitted Liens” herein.

 

7.4 Other Dispositions of Collateral.  Convey, sell, lease or otherwise dispose of, or permit any Subsidiary to convey, sell, lease or otherwise dispose of, all or any part of the Collateral to any Person (collectively, a “Transfer”), except for: (a) Transfers of inventory in the ordinary course of business; (b) Transfers of worn-out or obsolete equipment made in the ordinary course of business; (c) Transfers pursuant to Permitted Licenses; (d) sales of assets consented to by Lender; (e) Transfers by a Subsidiary of any or all of its business, property or assets to Borrower; (f) Transfers in connection with transactions permitted by Sections 7.5, 7.6 and 7.8; (g) Transfers of cash or cash equivalents for uses not prohibited by the terms of this Agreement; (h) Liens permitted by Section 7.3; (i) disposition of Investments permitted by Section 7.11; (j) leases, subleases, licenses or sub-licenses of real or personal property granted by Borrower or any Subsidiary to others in the ordinary course of business not interfering in any material respect with the business of Borrower or such Subsidiary; (k) the lapse of registered patents, trademarks and other Intellectual Property of Borrower and its Subsidiaries to the extent not economically desirable in the conduct of their business and so long as such lapse is not materially adverse to the interest of Lenders; and (l) Transfers not otherwise permitted pursuant to this Section; provided that (i) at the time of such Transfer, no Default or Event of Default shall exist or would result from such Transfer, (ii) such Transfer is made for fair market value and the consideration received shall be no less than 75% in cash, and (iii) the aggregate book value of all property disposed of in reliance on this clause (l) shall not exceed $100,000 in any fiscal year of Borrower.

 

  

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7.5 Distributions.  (a) Pay any dividends or make any distributions, or permit any Subsidiary to pay any dividends or make any distributions, on their respective Equity Securities (except dividends and distributions to Borrower); (b) purchase, redeem, retire, defease or otherwise acquire, or permit any Subsidiary to purchase, redeem, retire, defease or otherwise acquire, for value or make any payments or issuances with respect to or pursuant to any of their respective Equity Securities (other than (i) repurchases in connection with tax withholding obligations pursuant to the terms of now existing or hereafter adopted or amended employee stock purchase plans, employee restricted stock agreements, employee restricted stock unit agreements or similar arrangements in an amount not to exceed Five Hundred Thousand Dollars ($500,000) in any fiscal year, (ii) other repurchases pursuant to the terms of now existing or hereafter adopted or amended employee stock purchase plans, employee restricted stock agreements, employee restricted stock unit agreements or similar arrangements in an amount not to exceed One Hundred Thousand Dollars ($100,000) in any fiscal year, or (iii) payments made to repurchase fractional shares following exercise of warrants; (c) return, or permit any Subsidiary to return, any capital to any holder of its Equity Securities as such (except to Borrower); (d) make, or permit any Subsidiary to make, any distribution of assets, Equity Securities, obligations or securities to any holder of its Equity Securities as such (except to Borrower); or (e) set apart any sum for any such purpose; provided, however, Borrower may pay dividends payable solely in Borrower’s common stock.

 

7.6 Mergers or Acquisitions.  Merge or consolidate, or permit any Subsidiary to merge or consolidate, with or into any other Person or acquire, or permit any Subsidiary to acquire, all or substantially all of the capital stock or assets of another Person; provided that (a) any Subsidiary may merge into another Subsidiary and (b) any Subsidiary may merge into Borrower so long as Borrower is the surviving entity.

 

7.7 Change in Business.  Engage, or permit any Subsidiary to engage, in any business other than the businesses currently engaged in by Borrower or such Subsidiary, as applicable, or reasonably related thereto.

 

7.8 Transactions With Affiliates; Creation of Subsidiaries. (a) Enter, or permit any Subsidiary to enter, into any contractual obligation with any Affiliate or engage in any other transaction with any Affiliate except (i) upon terms at least as favorable to Borrower or such Subsidiary, as applicable, as an arms-length transaction with Persons who are not Affiliates of Borrower, (ii) transactions between or among Borrower and its Subsidiaries not involving any other Affiliate of Borrower or between or among Subsidiaries not involving any other Affiliate of Borrower, (iii) any transaction permitted by Section 7.5, (iv) employment or consulting arrangements (including arrangements made with respect to indemnification, bonuses, directors fees and expense reimbursement, severance and employee benefit arrangements) entered into in the ordinary course of Borrower’s business upon terms at least as favorable to Borrower as an arms-length transaction with Persons who are not Affiliates of Borrower, including, without limitation, issuances of Equity Securities, long term incentive compensation plans, restricted stock agreements, restricted stock unit agreements, stock option agreements, warrants and other similar arrangements, and (v) pursuant to the 2012 Securities Purchase Agreement or the 2014 Securities Purchase Agreement, in each case as in effect on the date hereof, or (b) create a Subsidiary without providing at least 10 Business Days’ advance notice thereof to Lenders and, if requested by Lenders, such Subsidiary guarantees the Obligations and grants a security interest in its assets (of substantially similar scope as the Collateral) to secure such guaranty, in each case on terms reasonably satisfactory to Collateral Agent and each Lender.

 

  

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7.9 Indebtedness Payments. (a) Prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the scheduled repayment thereof any Indebtedness for borrowed money (other than amounts due or permitted to be prepaid under this Agreement) or capital lease obligations, (b) amend, modify or otherwise change the terms of any Indebtedness for borrowed money or capital lease obligations so as to accelerate the scheduled repayment thereof or (c) repay any notes to officers, directors or shareholders.

 

7.10 Indebtedness.  Create, incur, assume or permit, or permit any Subsidiary to create, incur or permit, to exist any Indebtedness except Permitted Indebtedness.

 

7.11 Investments.  Make, or permit any Subsidiary to make, any Investment except for Permitted Investments.

 

7.12 Compliance.

 

(a) (i) Become, or permit any Subsidiary to become, an “investment company” or a company controlled by an “investment company” under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Loan for that purpose; (ii) become, or permit any Subsidiary to become, subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money; or (iii) (A) fail, or permit any Subsidiary to fail, to meet the minimum funding requirements of the Employment Retirement Income Security Act of 1974, and its regulations, as amended from time to time (“ERISA”), or (B) permit, or permit any Subsidiary to permit, a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; (iv) fail, or permit any Subsidiary to fail, to comply with the Federal Fair Labor Standards Act or violate any other applicable law or regulation, if the violation could reasonably be expected to have Material Adverse Effect.

 

  

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(b) Lenders hereby notify Borrower that pursuant to the requirements of Anti-Terrorism Laws, and each Lender’s policies and practices, each Lender is required to obtain, verify and record certain information and documentation that identifies Borrower and its principals, which information includes the name and address of Borrower and its principals and such other information that will allow such Lender to identify such party in accordance with Anti-Terrorism Laws.  Borrower will not, directly or indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of Sanctions, or (ii) in any other manner that would  result in a violation of Sanctions by any Person (including any Person participating in the Loans, whether as lender, underwriter, advisor, investor or otherwise).

 

7.13 Maintenance of Accounts.  (a) Maintain any deposit account or securities account except accounts with respect to which Collateral Agent and Lenders are able to take such actions as Lenders reasonably deem necessary to obtain a perfected security interest in such accounts through one or more Account Control Agreements and deposit accounts established solely as payroll and other zero balance accounts, provided, however, that any such payroll account over which Collateral Agent and Lenders do not maintain an Account Control Agreement shall not contain deposits in an amount exceeding one hundred five percent (105%) of the amount necessary to fund the Borrower’s payroll obligations for one payroll cycle or (b) grant or allow any other Person (other than Collateral Agent or Lenders) to perfect a security interest in, or enter into any agreements with any Persons (other than Collateral Agent or Lenders or the depositary bank pursuant to its customary terms) accomplishing perfection via control as to, any of its deposit accounts or securities accounts.

 

7.14 Negative Pledge Regarding Intellectual Property.  Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Lien of any kind upon any Intellectual Property or Transfer any Intellectual Property, whether now owned or hereafter acquired, other than non-exclusive licenses of Intellectual Property entered into in the ordinary course of business and any Permitted Licenses.

 

8. Events of Default.  Any one or more of the following events shall constitute an “Event of Default” by Borrower under this Agreement:

 

8.1 Failure to Pay.  If Borrower fails to pay when due and payable or when declared due and payable in accordance with the Loan Documents: (a) any Scheduled Payment on the relevant Payment Date or on the relevant Maturity Date; or (b) any other portion of the Obligations within five (5) days after receipt of written notice from a Lender that such payment is due.

 

8.2 Certain Covenant Defaults.  If Borrower fails to perform any obligation arising under Sections 6.5 or 6.8 or violates any of the covenants contained in Section 7 of this Agreement.

 

8.3 Other Covenant Defaults.  If Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant, or agreement contained in this Agreement (other than as set forth in Sections 8.1, 8.2 or 8.4 through 8.15), in any of the other Loan Documents and Borrower has failed to cure such default within thirty (30) days after the occurrence of such default.  During this thirty (30) day period, the failure to cure the default is not an Event of Default.

 

  

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8.4 Material Adverse Change.  A Material Adverse Effect has occurred.

 

8.5 Intentionally Omitted.

 

8.6 Seizure of Assets, Etc.  (a) If any material portion of Borrower’s or any Subsidiary’s assets (i) is attached, seized, subjected to a writ or distress warrant, or is levied upon or (ii) comes into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, (b) if Borrower or any Subsidiary is enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, (c) if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s or any Subsidiary’s assets or (d) if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s or any Subsidiary’s assets by the United States Government, or any department agency or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower receives notice thereof; provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower.

 

8.7 Service of Process.  (a) The service of process upon Collateral Agent or any Lender seeking to attach by a trustee or other process any funds of Borrower in excess of One Hundred Thousand Dollars ($100,000) on deposit or otherwise held by Collateral Agent or such Lender, (b) the delivery upon Collateral Agent or any Lender of a notice of foreclosure by any Person seeking to attach or foreclose on any funds of Borrower in excess of One Hundred Thousand Dollars ($100,000) on deposit or otherwise held by Collateral Agent or such Lender or (c) the delivery of a notice of foreclosure or exclusive control to any entity holding or maintaining Borrower’s deposit accounts or accounts holding securities by any Person (other than Collateral Agent or a Lender) seeking to foreclose or attach any such accounts or securities.

 

8.8 Default on Indebtedness.  One or more defaults shall exist under any agreement by and between Borrower or any Subsidiary and any third party or parties which results in a right by such third party or parties, whether or not exercised, to accelerate the maturity of Indebtedness in an aggregate amount in excess of One Hundred Thousand Dollars ($100,000) or a default shall exist under any financing agreement with a Lender or any Lender’s Affiliates.

 

8.9 Judgments.  If a judgment or judgments for the payment of money (not acknowledged as fully covered by a reputable and financially sound insurer) in an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000) shall be rendered against Borrower or any Subsidiary and shall remain unsatisfied and unstayed for a period of ten (10) days or more.

 

  

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8.10 Misrepresentations.  If any representation or warranty made or deemed made herein or in any other Loan Document or in any written  statement, certification, or report made to Collateral Agent or any Lender by Borrower or any officer, employee, agent, or director of Borrower shall prove to have been incorrect or false in any material respect on or as of the date made or deemed made.

 

8.11 Breach of Warrant.  If Borrower shall breach any material term of any Warrant.

 

8.12 Unenforceable Loan Document.  If any Loan Document shall in any material respect cease to be, or Borrower shall assert that any Loan Document is not, a legal, valid and binding obligation of Borrower enforceable against Borrower or its Subsidiaries, to the extent parties thereto, in accordance with its terms.

 

8.13 Involuntary Insolvency Proceeding.   (a) If a proceeding shall have been instituted in a court having jurisdiction in the premises (i) seeking a decree or order for relief in respect of Borrower or any Subsidiary in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (ii) for the appointment of a receiver, liquidator, administrator, assignee, custodian, trustee (or similar official) of Borrower or any Subsidiary or for any substantial part of its Property or (iii) for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or (b) such court shall enter a decree or order granting the relief sought in any such proceeding.

 

8.14 Voluntary Insolvency Proceeding.  If Borrower or any Subsidiary shall (a) commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (b) consent to the entry of an order for relief in an involuntary case under any such law, (c) consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian (or other similar official) of Borrower or any Subsidiary or for any substantial part of its Property, (d) shall make a general assignment for the benefit of creditors, (e) shall fail generally to pay its debts as they become due or (f) take any corporate action in furtherance of any of the foregoing.

 

8.15 Change of Control.  If (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person acting in its capacity as trustee, agent or other fiduciary or administrative of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or indirectly, of 50% or more of the equity securities of the Borrower entitled to vote for members of the board of directors of the Borrower on  a fully diluted basis (but subject to any ownership limitations), or (b) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower ceases to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors).

 

  

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9. Lenders’ Rights and Remedies.

 

9.1 Rights and Remedies

 

.  Upon the occurrence and continuation of any Event of Default, no Lender shall have any further obligation to advance money or extend credit to or for the benefit of Borrower.  In addition, upon the occurrence of an Event of Default, Collateral Agent and each Lender shall have the rights, options, duties and remedies of a secured party as permitted by law and, in addition to and without limitation of the foregoing, Collateral Agent, on behalf of Lenders, or any Lender (acting alone) may, at its election, without notice of election and without demand, do any one or more of the following, all of which are authorized by Borrower:

 

(a) Acceleration of Obligations.  Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, including (i) any accrued and unpaid interest, (ii) the amounts which would have otherwise come due under Section 2.3(b)(ii) if the Loans had been voluntarily prepaid, (iii) the unpaid principal balance of the Loans and (iv) all other sums, if any, that shall have become due and payable hereunder, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.13 or 8.14 all Obligations shall become immediately due and payable without any action by Collateral Agent or any Lender);

 

(b) Protection of Collateral.  Make such payments and do such acts as Collateral Agent or such Lender considers necessary or reasonable to protect Collateral Agent’s and Lenders’ security interest in the Collateral.  Borrower agrees to assemble the Collateral if Collateral Agent or any Lender so requires and to make the Collateral available to Collateral Agent as Collateral Agent may designate.  Borrower authorizes Collateral Agent, each Lender and their designees and agents to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien which in Collateral Agent’s or such Lender’s determination appears or is claimed to be prior or superior to its security interest and to pay all expenses incurred in connection therewith.  With respect to any of Borrower’s owned premises, Borrower hereby grants Collateral Agent and each Lender a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty (120) days in order to exercise any of Collateral Agent’s and each Lender’s rights or remedies provided herein, at law, in equity, or otherwise;

 

(c) Preparation of Collateral for Sale.  Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral.  Collateral Agent, each Lender and their agents and any purchasers at or after foreclosure are hereby granted a non-exclusive, irrevocable, perpetual, fully paid, royalty-free license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s owned Intellectual Property, including labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any Property of a similar nature, now or at any time hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights; provided that such license shall only be exercisable in connection with the disposition of Collateral upon Collateral Agent’s or a Lender’s exercise of its remedies hereunder and that any exercise of remedies under this Section 9.1(c) shall be subject to any rights of third parties in or to such Intellectual Property;

 

  

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(d) Sale of Collateral.  Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Collateral Agent or any Lender determines are commercially reasonable; and

 

(e) Purchase of Collateral.  Credit bid and purchase all or any portion of the Collateral at any public sale.

 

Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

 

9.2 Set Off Right.  Collateral Agent and each Lender may set off and apply to the Obligations any and all Indebtedness at any time owing to or for the credit or the account of Borrower or any other assets of Borrower in Collateral Agent’s or such Lender’s possession or control.

 

9.3 Effect of Sale. Upon the occurrence and continuation of an Event of Default, to the extent permitted by law, Borrower covenants that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of, any stay or extension law now or at any time hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation or appraisement of the Collateral or any part thereof prior to any sale or sales thereof to be made pursuant to any provision herein contained, or to the decree, judgment or order of any court of competent jurisdiction; nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or otherwise to redeem the property so sold or any part thereof, and, to the full extent legally permitted, except as to rights expressly provided herein, hereby expressly waives for itself and on behalf of each and every Person, except decree or judgment creditors of Borrower, acquiring any interest in or title to the Collateral or any part thereof subsequent to the date of this Agreement, all benefit and advantage of any such law or laws, and covenants that it will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted and delegated to Collateral Agent or a Lender, but will suffer and permit the execution of every such power as though no such power, law or laws had been made or enacted.  Any sale, whether under any power of sale hereby given or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Borrower in and to the Property sold, and shall be a perpetual bar, both at law and in equity, against Borrower, its successors and assigns, and against any and all Persons claiming the Property sold or any part thereof under, by or through Borrower, its successors or assigns.

 

  

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9.4 Power of Attorney in Respect of the Collateral.  Borrower does hereby irrevocably appoint Collateral Agent (which appointment is coupled with an interest) the true and lawful attorney in fact of Borrower, with full power of substitution and in its name to file any notices of security interests, financing statements and continuations and amendments thereof pursuant to the Code or federal law, as may be necessary to perfect or to continue the perfection of Collateral Agent’s and Lenders’ security interests in the Collateral.  Borrower does hereby irrevocably appoint Collateral Agent (which appointment is coupled with an interest) on the occurrence and continuation of an Event of Default, the true and lawful attorney in fact of Borrower, with full power of substitution and in its name: (a) to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all rents, issues, profits, avails, distributions, income, payment draws and other sums in which a security interest is granted under Section 4 with full power to settle, adjust or compromise any claim thereunder as fully as if Collateral Agent were Borrower itself; (b) to receive payment of and to endorse the name of Borrower to any items of Collateral (including checks, drafts and other orders for the payment of money) that come into Collateral Agent’s or a Lender’s possession or under Collateral Agent’s or a Lender’s control; (c) to make all demands, consents and waivers, or take any other action with respect to, the Collateral; (d) in Collateral Agent’s discretion to file any claim or take any other action or proceedings, either in its own name or in the name of Borrower or otherwise, which Collateral Agent may reasonably deem necessary or appropriate to protect and preserve the right, title and interest of Collateral Agent and Lenders in and to the Collateral; (e) endorse Borrower’s name on any checks or other forms of payment or security; (f) sign Borrower’s name on any invoice or bill of lading for any account or drafts against account debtors; (g) make, settle, and adjust all claims under Borrower’s insurance policies; (h) settle and adjust disputes and claims about the accounts directly with account debtors, for amounts and on terms Collateral Agent determines reasonable; (i) transfer the Collateral into the name of Collateral Agent, a Lender or a third party as the Code permits; and (j) to the extent permitted by applicable law, to otherwise act with respect thereto as though Collateral Agent were the outright owner of the Collateral.

 

9.5 Lenders’ Expenses.  If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Collateral Agent may do any or all of the following:  (a) make payment of the same or any part thereof; or (b) obtain and maintain insurance policies of the type discussed in Section 6.8 of this Agreement, and take any action with respect to such policies as Collateral Agent deems prudent.  Any amounts paid or deposited by Collateral Agent shall constitute Lenders’ Expenses, shall be immediately due and payable, shall bear interest at the Default Rate and shall be secured by the Collateral.  Any payments made by Collateral Agent shall not constitute an agreement by Collateral Agent to make similar payments in the future or a waiver by Collateral Agent or any Lender of any Event of Default under this Agreement.  Borrower shall pay all fees and expenses, including Lenders’ Expenses, incurred by Collateral Agent or any Lender in the enforcement or attempt to enforce any of the Obligations hereunder not performed when due.

 

9.6 Remedies Cumulative; Independent Nature of Lenders’ Rights. Collateral Agent’s and each Lender’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Collateral Agent and each Lender shall have all other rights and remedies not inconsistent herewith as provided under the Code, by applicable law, or in equity.  No failure on the part of Collateral Agent or any Lender to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right.  The Obligations of Borrower to any Lender may be enforced by such Lender against Borrower in accordance with the terms of this Agreement and the other Loan Documents and, to the fullest extent permitted by applicable law, it shall not be necessary for Collateral Agent or any other Lender to be joined as an additional party in any proceeding to enforce such Obligations.

 

  

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9.7 Application of Collateral Proceeds.  The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Collateral Agent or any Lender, at the time of or received by Collateral Agent or any Lender after the occurrence of an Event of Default hereunder) shall be paid to and applied as follows:

 

(a) First, to the payment of out-of-pocket costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made hereunder by Collateral Agent or any Lender, including Lenders’ Expenses;

 

(b) Second, to the payment to Lenders, on a pro rata basis, of the amount then owing or unpaid on the Loans for any accrued and unpaid interest, the amounts which would have otherwise come due under Section 2.3(b)(ii), if the Loans had been voluntarily prepaid, the principal balance of the Loans, and all other Obligations with respect to the Loans (provided, however, if such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loans, then first, to the unpaid interest thereon ratably, second, to the amounts which would have otherwise come due under Section 2.3(b)(ii) ratably, if the Loans had been voluntarily prepaid, third, to the principal balance of the Loans ratably, and fourth, to the ratable payment of other amounts then payable to Lenders under any of the Loan Documents); and

 

(c) Third, to the payment of the surplus, if any, to Borrower, its successors and assigns or to the Person lawfully entitled to receive the same.

 

9.8 Reinstatement of Rights.  If Collateral Agent or any Lender shall have proceeded to enforce any right under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Collateral Agent and Lenders shall be restored to their former position and rights hereunder with respect to the Property subject to the security interest created under this Agreement.

 

  

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10. Waivers; Indemnification.

 

10.1 Demand; Protest.  Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Collateral Agent or any Lender on which Borrower may in any way be liable.

 

10.2 Lender’s Liability for Collateral.  So long as Collateral Agent and each Lender complies with its obligations, if any, under the Code, neither Collateral Agent nor any Lender shall in any way or manner be liable or responsible for:  (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause other than Collateral Agent’s or any Lender’s gross negligence or willful misconduct; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever.  All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

 

10.3 Indemnification and Waiver.  Whether or not the transactions contemplated hereby shall be consummated:

 

(a) General Indemnity. Borrower agrees upon demand to pay or reimburse Collateral Agent and each Lender for all liabilities, obligations and out-of-pocket expenses, including Lenders’ Expenses and reasonable fees and expenses of counsel for Collateral Agent and each Lender from time to time arising in connection with the enforcement or collection of sums due under the Loan Documents, and in connection with any amendment or modification of the Loan Documents or any “work-out” in connection with the Loan Documents.  Borrower shall indemnify, reimburse and hold Collateral Agent, each Lender, and each of their respective successors, assigns, agents, attorneys, officers, directors, equity holders, servants, agents and employees (each an “Indemnified Person”) harmless from and against all liabilities, losses, damages, actions, suits, demands, claims of any kind and nature (including claims relating to environmental discharge, cleanup or compliance), all costs and expenses whatsoever to the extent they may be incurred or suffered by such Indemnified Person in connection therewith (including reasonable attorneys’ fees and expenses), fines, penalties (and other charges of any applicable Governmental Authority), licensing fees relating to any item of Collateral, damage to or loss of use of property (including consequential or special damages to third parties or damages to Borrower’s property), or bodily injury to or death of any person (including any agent or employee of Borrower) (each, a “Claim”), directly or indirectly relating to or arising out of the use of the proceeds of the Loans or otherwise, the falsity of any representation or warranty of Borrower or Borrower’s failure to comply with the terms of this Agreement or any other Loan Document.  The foregoing indemnity shall cover, without limitation, (i) any Claim in connection with a design or other defect (latent or patent) in any item of equipment or product included in the Collateral, (ii) any Claim for infringement of any patent, copyright, trademark or other intellectual property right, (iii) any Claim resulting from the presence on or under or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Materials on the premises owned, occupied or leased by Borrower, including any Claims asserted or arising under any Environmental Law, (iv) any Claim for negligence or strict or absolute liability in tort or (v) any Claim asserted as to or arising under any Account Control Agreement or any Landlord Agreement; provided, however, Borrower shall not indemnify any Indemnified Person for any liability incurred by such Indemnified Person as a result of such Indemnified Person’s gross negligence or willful misconduct.  Such indemnities shall continue in full force and effect, notwithstanding the expiration or termination of this Agreement.  Upon Collateral Agent’s or a Lender’s written demand, Borrower shall assume and diligently conduct, at its sole cost and expense, the entire defense of Collateral Agent and Lenders, each of its members, partners, and each of their respective, agents, employees, directors, officers, equity holders, successors and assigns against any indemnified Claim described in this Section 10.3(a).  Borrower shall not settle or compromise any Claim against or involving Collateral Agent or any Lender without first obtaining Collateral Agent’s or such Lender’s written consent thereto, which consent shall not be unreasonably withheld.

 

  

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(b) Waiver. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER AGREES THAT IT SHALL NOT SEEK FROM COLLATERAL AGENT OR ANY LENDER UNDER ANY THEORY OF LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.

 

(c) Survival; Defense.  The obligations in this Section 10.3 shall survive payment of all other Obligations pursuant to Section 12.8.  At the election of any Indemnified Person, Borrower shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person’s reasonable discretion, at the sole cost and expense of Borrower.  All amounts owing under this Section 10.3 shall be paid within thirty (30) days after written demand.

 

  

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11. Notices.  Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail, postage prepaid, return receipt requested, by prepaid nationally recognized overnight courier, or by prepaid facsimile or other electronic means (e.g. email attaching .pdfs) to Borrower or to any Lender, as the case may be, at their respective addresses set forth below:

 

	
If to Borrower:

	
Palatin Technologies, Inc.

4B Cedar Brook Drive

Cranbury, NJ 08512

Attention: Stephen T. Wills

Fax: (609) 495-2203

Ph: (609) 495-2200

With a copy to:

Thompson Hine LLP

335 Madison Avenue, 12th Floor

New York, NY 10017

Attention: Faith L. Charles, Esq.

Fax: (212) 344-6101

Ph: (212) 908-3905

	
If to Horizon:

	
Horizon Technology Finance Corporation

312 Farmington Avenue

Farmington, CT 06032

Attention: Legal Department

Fax: (860) 676-8655

Ph: (860) 676-8654

 

	
If to Fortress:

	
Fortress Credit Co LLC

c/o Fortress Investment Group

1345 Avenue of Americas

New York, NY 10105

Attention: General Counsel - Credit Funds

Fax: (917) 639-9672

Email: gc.credit@fortress.com

 

	
With a copy to:

	
Baker Botts L.L.P.

30 Rockefeller Plaza

New York, NY 10112

Attn: Martin Toulouse

Fax: (212) 259-2559

Ph: (212) 408-2559

  

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The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

12. General Provisions.

 

12.1 Successors and Assigns.  This Agreement and the Loan Documents shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, neither this Agreement nor any rights hereunder may be assigned by Borrower without each Lender’s prior written consent, which consent may be granted or withheld in each Lender’s sole discretion.  Each Lender shall have the right without the consent of or notice to Borrower to sell, transfer, assign, negotiate, or grant participations in all or any part of, or any interest in such Lender’s rights and benefits hereunder; provided that prior to the occurrence of an Event of Default, no Lender may sell, transfer, assign, negotiate, or grant participations in all or any part of, or any interest in such Lender’s rights and benefits hereunder to any party if such buyer, transferee, assignee or participant is a competitor of Borrower and has been designated by Borrower as such by written notice to Collateral Agent and each Lender not less than ten (10) Business Days prior to such sale, transfer, assignment, negotiation or granting of such participation. Collateral Agent and each Lender may disclose the Loan Documents and any other financial or other information relating to Borrower to any potential participant or assignee of any of the Loans; provided that such participant or assignee agrees for the benefit of Borrower to protect the confidentiality of such documents and information using the same measures that it uses to protect its own confidential information. Notwithstanding anything to the contrary contained in this Section 12.1, Borrower acknowledges that (a) each of Lender’s Affiliates, (b) commercial or corporate banks and (c) any funds which principally hold passive investments in commercial loans or debt securities for investment purposes in the ordinary course of business are not competitors of Borrower.

 

12.2 Time of Essence.  Time is of the essence for the performance of all obligations set forth in this Agreement.

 

12.3 Severability of Provisions.  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

12.4 Entire Agreement; Construction; Amendments and Waivers.

 

(a) Entire Agreement.  This Agreement and each of the other Loan Documents, taken together, constitute and contain the entire agreement among Borrower, Collateral Agent and Lenders and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.  Borrower acknowledges that it is not relying on any representation or agreement made by Collateral Agent, any Lender or any employee, attorney or agent thereof, other than the specific agreements set forth in this Agreement and the Loan Documents.

 

  

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(b) Construction.  This Agreement is the result of negotiations between and has been reviewed by each of Borrower, Collateral Agent and each Lender as of the date hereof and their respective counsel; accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against Borrower, Collateral Agent or any Lender.  Borrower, Collateral Agent and Lenders agree that they intend the literal words of this Agreement and the other Loan Documents and that no parol evidence shall be necessary or appropriate to establish Borrower’s, Collateral Agent’s or any Lender’s actual intentions.

 

(c) Amendments and Waivers.  Any and all discharges or waivers of, or consents to any departures from any provision of this Agreement or of any of the other Loan Documents shall not be effective without the written consent of each Lender; provided that no such discharge, waiver or consent affecting the rights or duties of the Collateral Agent under this Agreement or any other Loan Document shall be effective without the written consent of the Collateral Agent. Any and all amendments and modifications of this Agreement or of any of the other Loan Documents shall not be effective without the written consent of each Lender and Borrower; provided that no such amendment or modification affecting the rights or duties of the Collateral Agent under this Agreement or any other Loan Document shall be effective without the written consent of the Collateral Agent.  Any waiver or consent with respect to any provision of the Loan Documents shall be effective only in the specific instance and for the specific purpose for which it was given.  No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances.  Any amendment, modification, waiver or consent affected in accordance with this Section 12.4 shall be binding upon Collateral Agent, Lenders and on Borrower.

 

12.5 Reliance by Lenders.  All covenants, agreements, representations and warranties made herein by Borrower shall be deemed to be material to and to have been relied upon by Collateral Agent and Lenders, notwithstanding any investigation by Collateral Agent or any Lender.

 

12.6 No Set-Offs by Borrower.  All sums payable by Borrower pursuant to this Agreement or any of the other Loan Documents shall be payable without notice or demand and shall be payable in United States Dollars without set-off or reduction of any manner whatsoever.

 

12.7 Counterparts.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts (including signatures delivered by facsimile or other electronic means), each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.

 

12.8 Survival.  All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations or commitment to fund remain outstanding.  The obligations of Borrower to indemnify Collateral Agent and Lenders with respect to the expenses, damages, losses, costs and liabilities described in Section 10.3 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Collateral Agent or any Lender have run.

 

  

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13. Relationship of Parties.  Borrower and Lenders acknowledge, understand and agree that the relationship between Borrower, on the one hand, and Lenders, on the other, is, and at all times shall remain solely that of a borrower and lender.  No Lender shall, under any circumstances, be construed to be a partner or a joint venturer of Borrower or any of its Affiliates; nor shall any Lender, under any circumstances, be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or any of its Affiliates, or to owe any fiduciary duty or any other duty to Borrower or any of its Affiliates.  Neither Collateral Agent nor any Lender undertakes or assumes any responsibility or duty to Borrower or any of its Affiliates to select, review, inspect, supervise, pass judgment upon or otherwise inform Borrower or any of its Affiliates of any matter in connection with its or their Property, any Collateral held by Collateral Agent or any Lender or the operations of Borrower or any of its Affiliates.  Borrower and each of its Affiliates shall rely entirely on their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Collateral Agent or any Lender in connection with such matters is solely for the protection of Collateral Agent and Lenders and neither Borrower nor any Affiliate is entitled to rely thereon.

 

14. Confidentiality.  All information (other than periodic reports filed by Borrower with the Securities and Exchange Commission and information otherwise publicly disclosed by Borrower) disclosed by Borrower or its representatives to Collateral Agent or any Lender or their respective representatives, whether furnished before or after the date hereof and regardless of the manner in which such information is furnished (including disclosures through inspection pursuant to this Agreement and the other Loan Documents) shall be considered confidential if it is marked confidential or designated, in writing, as confidential, or if either Lender knows that such information is material non-public information, including, without limitation, financial information and information regarding Borrower’s existing and prospective relationships and transactions with third parties (such information, collectively, the “Confidential Information”).  Collateral Agent and each Lender agrees to use the same degree of care to safeguard and prevent disclosure of such Confidential Information as Collateral Agent and such Lender uses with its own confidential information, but in any event no less than a reasonable degree of care.  Neither Collateral Agent nor any Lender shall disclose such Confidential Information to any third party (other than (a) to another party hereto, (b) to Collateral Agent’s or any Lender’s members, partners, attorneys, governmental regulators (including any self-regulatory authority) or auditors, (c) to Collateral Agent’s or a Lender’s subsidiaries and affiliates, (d) on a confidential basis, to any rating agency, (e) to prospective transferees and purchasers of the Loans or any actual or prospective party (or its Affiliates) to any swap, derivative or other transaction under which payments are to be made by reference to the Obligations, Borrower, any Loan Document or any payment thereunder, all subject to the same confidentiality obligation in favor of Borrower as set forth herein or (f) as required by law, regulation, subpoena or other order to be disclosed) and shall use such information only for purposes of evaluation of its investment in Borrower and the exercise of Collateral Agent’s or any Lender’s rights and the enforcement of its remedies under this Agreement and the other Loan Documents.  The obligations of confidentiality shall not apply to any information that (i) was known to the public prior to disclosure by Borrower or its representatives under this Agreement, (ii) becomes known to the public through no fault of Collateral Agent or any Lender, (iii) is disclosed to Collateral Agent or any Lender on a non-confidential basis by a third party or (iv) is independently developed by Collateral Agent or any Lender.  Notwithstanding the foregoing, Collateral Agent’s and Lenders’ agreement of confidentiality shall not apply if Collateral Agent or any Lender has acquired indefeasible title to any Collateral or in connection with any enforcement or exercise of Collateral Agent’s or a Lender’s rights and remedies under this Agreement following an Event of Default, including the enforcement of Collateral Agent’s and each Lender’s security interest in the Collateral.

 

  

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15. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  EACH OF BORROWER, COLLATERAL AGENT AND LENDERS HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN THE STATE OF NEW YORK.  BORROWER, COLLATERAL AGENT AND LENDERS HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.

 

 

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44

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

BORROWER:

PALATIN TECHNOLOGIES, INC.

 

/s/ Stephen T. Wi

 

lls

 

By:

Name: Stephen T. Wills

Title: Chief Financial Officer, Chief Operating Officer and Executive Vice President

LENDERS:

HORIZON TECHNOLOGY FINANCE CORPORATION

/s/ Robert D. Pomeroy, Jr.

 

By:______________________________

Name:           Robert D. Pomeroy, Jr.

Title:           Chief Executive Officer

 

FORTRESS CREDIT CO LLC

/s/ Constantine M. Dakolias

 

By:______________________________

Name:           Constantine M. Dakolias

Title: President

 

  

[SIGNATURE PAGE TO VENTURE LOAN AND SECURITY AGREEMENT]

  

 

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A                      Disclosure Schedule

Exhibit B                      Funding Certificate

Exhibit C                      Form of Note

Exhibit D                      Form of Legal Opinion

Exhibit E                      Form of Officer’s CertificateEX-10.1

MASTER REPURCHASE AGREEMENT

Dated as of December 23, 2014

by and between

BARCLAYS BANK PLC,

as Purchaser,

and

RAIT CRE CONDUIT IV, LLC,

as Seller

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ARTICLE 1   APPLICA	 	BILITY 1

	 	ARTICLE 2	 	DEFINITIONS
	 	 	1	 
	ARTICLE 3	 	INITIATION; CONFIRMATION; TERMINATION; FEES
	 	 	18	 	 	 	 	 	 	 
	ARTICLE 4	 	MARGIN MAINTENANCE
	 	 	26	 	 	 	 	 	 	 
	ARTICLE 5	 	PAYMENTS; COLLECTION ACCOUNT
	 	 	27	 	 	 	 	 	 	 
	ARTICLE 6	 	SECURITY INTEREST
	 	 	28	 	 	 	 	 	 	 
	ARTICLE 7	 	PAYMENT, TRANSFER AND CUSTODY
	 	 	29	 	 	 	 	 	 	 
	ARTICLE 8	 	SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED
	 	 	 	 	 	30	 	 	 	 
	 	 	 	 	ASSETS

	 	ARTICLE 9	 	REPRESENTATIONS AND WARRANTIES
	 	 	31	 
	ARTICLE 10	 	NEGATIVE COVENANTS OF SELLER
	 	 	39	 	 	 	 	 	 	 
	ARTICLE 11	 	AFFIRMATIVE COVENANTS OF SELLER
	 	 	40	 	 	 	 	 	 	 
	ARTICLE 12	 	SINGLE PURPOSE ENTITY
	 	 	44	 	 	 	 	 	 	 
	ARTICLE 13	 	EVENTS OF DEFAULT; REMEDIES
	 	 	46	 	 	 	 	 	 	 
	ARTICLE 14	 	SINGLE AGREEMENT
	 	 	51	 	 	 	 	 	 	 
	ARTICLE 15	 	RECORDING OF COMMUNICATIONS
	 	 	51	 	 	 	 	 	 	 
	ARTICLE 16	 	NOTICES AND OTHER COMMUNICATIONS
	 	 	52	 	 	 	 	 	 	 
	ARTICLE 17	 	ENTIRE AGREEMENT; SEVERABILITY
	 	 	52	 	 	 	 	 	 	 
	ARTICLE 18	 	NON-ASSIGNABILITY
	 	 	52	 	 	 	 	 	 	 
	ARTICLE 19	 	GOVERNING LAW
	 	 	53	 	 	 	 	 	 	 
	ARTICLE 20	 	NO WAIVERS, ETC
	 	 	53	 	 	 	 	 	 	 
	ARTICLE 21	 	INTENT
	 	 	53	 	 	 	 	 	 	 
	ARTICLE 22	 	DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
	 	 	54	 	 	 	 	 	 	 
	ARTICLE 23	 	CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
	 	 	55	 	 	 	 	 	 	 
	ARTICLE 24	 	NO RELIANCE
	 	 	56	 	 	 	 	 	 	 
	ARTICLE 25	 	INDEMNITY
	 	 	56	 	 	 	 	 	 	 
	ARTICLE 26	 	DUE DILIGENCE
	 	 	58	 	 	 	 	 	 	 
	ARTICLE 27	 	SERVICING
	 	 	59	 	 	 	 	 	 	 
	ARTICLE 28	 	MISCELLANEOUS
	 	 	60	 	 	 	 	 	 	 

EXHIBITS

	 	 	 
	EXHIBIT I

EXHIBIT II

EXHIBIT III

EXHIBIT IV

EXHIBIT V

EXHIBIT VI

EXHIBIT VII

EXHIBIT VIII

EXHIBIT IX

EXHIBIT X

EXHIBIT XI

	 	Names and Addresses for Communications between Parties

Form of Confirmation Statement

Authorized Representatives of Seller

Form of Power of Attorney

Representations and Warranties Regarding Individual Purchased Assets

Form of Escrow Agreement

Advance Procedures

Form of Margin Call

UCC Filing Jurisdictions

Form of Release Letter

Form of Covenant Compliance Certificate

EXHIBIT XII Seller Asset ScheduleMASTER REPURCHASE AGREEMENT

MASTER REPURCHASE AGREEMENT, dated as of December 23, 2014 (as amended, restated, supplemented
or otherwise modified and in effect from time to time, this “Agreement”), by and between
Barclays Bank PLC, a public limited company organized under the laws of England and Wales
(including any successor thereto, “Purchaser”) and RAIT CRE Conduit IV, LLC, a limited
liability company organized under the laws of the State of Delaware (“Seller”).

ARTICLE 1

APPLICABILITY

From time to time the parties hereto may enter into transactions in which Seller and Purchaser
agree to the transfer from Seller to Purchaser all of Seller’s rights, title and interest to
certain Eligible Assets (as defined herein) or other assets and, in each case, the other related
Purchased Items (as defined herein) (collectively, the “Assets”) against the transfer of
funds by Purchaser to Seller, with a simultaneous agreement by Purchaser to transfer back to Seller
such Assets at a date certain or on demand, against the transfer of funds by Seller to Purchaser.
Each such transaction shall be referred to herein as a “Transaction” and, unless otherwise
agreed in writing, shall be governed by this Agreement, including any supplemental terms or
conditions contained in any exhibits identified herein as applicable hereunder. Each individual
transfer of an Eligible Asset shall constitute a distinct Transaction. Notwithstanding any
provision or agreement herein, at no time shall Purchaser be obligated to agree to enter into any
Transaction. Any commitment to enter into a Transaction shall be evidenced by Purchaser’s delivery
of a Confirmation pursuant to Article 3(b)(ii)(A) and shall be subject to satisfaction of
all terms and conditions of this Agreement.

ARTICLE 2

DEFINITIONS

“Accelerated Repurchase Date” shall have the meaning specified in Article
13(b)(i).

“Accepted Servicing Practices” shall mean with respect to any Purchased Asset, those
mortgage loan servicing practices of prudent mortgage lending institutions that service mortgage
loans of the same type as such Purchased Asset in the state where the related underlying real
estate directly or indirectly securing or supporting such Purchased Asset is located.

“Account Bank” shall mean Wells Fargo Bank, National Association, or any successor
appointed by Purchaser in its sole and absolute discretion.

“Account Control Agreement” shall mean that certain Blocked Account Agreement, dated
as of the date hereof, among Purchaser, Seller and Account Bank, as the same may be amended,
modified and/or restated from time to time, and/or any replacement agreement.

“Act of Insolvency” shall mean, with respect to any Person, (a) the filing of a
petition, commencing, or authorizing the commencement of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the
protection of creditors, or suffering any such petition or proceeding to be commenced by another
which is consented to, not timely contested or results in entry of an order for relief; (b) the
seeking or consenting to the appointment of a receiver, trustee, custodian or similar official for
such Person or all or substantially all of the property of such Person; (c) the appointment of a
receiver, conservator, or manager for such Person by any governmental agency or authority having
the jurisdiction to do so; (d) the making of a general assignment for the benefit of creditors; (e)
the admission by such Person of its inability to pay its debts or discharge its obligations as they
become due or mature; or (f) that any Governmental Authority or agency or any person, agency or
entity acting or purporting to act under Governmental Authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or substantially all of the
property of such Person, or shall have taken any action to displace the management of such Person
or to curtail its authority in the conduct of the business of such Person.

“Affiliate” shall mean, when used with respect to any specified Person, (a) any other
Person directly or indirectly controlling, controlled by, or under common control with, such Person
or (b) any “affiliate” of such Person, as such term is defined in the Bankruptcy Code. Control
shall mean the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise and “controlling” and “controlled” shall have meanings correlative thereto.

“Agreement” shall have the meaning specified in the introductory paragraph hereof.

“Alternative Rate” shall have the meaning specified in Article 3(g).

“Alternative Rate Transaction” shall mean, with respect to any Pricing Rate Period,
any Transaction with respect to which the Pricing Rate for such Pricing Rate Period is determined
with reference to the Alternative Rate.

“Anti-Money Laundering Laws” shall have the meaning specified in Article
9(b)(xxxi).

“Assets” shall have the meaning specified in Article 1.

“Assignee” shall have the meaning specified in Article 18.

“Bankruptcy Code” shall mean The United States Bankruptcy Code of 1978, as amended
from time to time.

“Benefit Plan Investor” shall have the meaning specified in Article
9(b)(xvii).

“Breakage Costs” shall have the meaning specified in Article 3(l).

“Business Day” shall mean a day other than (a) a Saturday or Sunday, or (b) a day in
which the New York Stock Exchange or banks in the State of New York are authorized or obligated by
law or executive order to be closed.

“Capital Stock” shall mean any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all equivalent equity
ownership interests in a Person which is not a corporation, including, without limitation, any and
all member or other equivalent interests in any limited liability company, and any and all warrants
or options to purchase any of the foregoing.

“Capitalized Lease Obligations” shall mean obligations under a lease that are required
to be capitalized for financial reporting purposes in accordance with GAAP. The amount of a
Capitalized Lease Obligation is the capitalized amount of such obligation as would be required to
be reflected on the balance sheet prepared in accordance with GAAP of the applicable Person as of
the applicable date.

“Change of Control” shall mean the occurrence of any of the following events: (a) with
respect to Guarantor, any “person” or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) shall become, or obtain rights (whether by means of warrants, options or otherwise)
to become, the beneficial owner, directly or indirectly, of 51% or more of the total voting power
of all classes of Capital Stock of Guarantor entitled to vote generally in the election of the
directors or (b) with respect to Seller, Guarantor shall cease to own and control, of record and
beneficially, directly or indirectly, 100% of the Capital Stock of Seller.

“Closing Date” shall mean December 23, 2014.

“Collateral” shall have the meaning specified in Article 6.

“Collection Account” shall have the meaning specified in Article 5(a).

“Confirmation” shall have the meaning specified in Article 3(b)(ii)(A).

“Covenant Compliance Certificate” shall mean a properly completed and executed
Covenant Compliance Certificate substantially in the form of Exhibit XI hereto.

“Custodial Agreement” shall mean the Custodial Agreement, dated as of the date hereof,
by and among Custodian, Seller and Purchaser, as the same may be amended, modified and/or restated
from time to time, and/or any replacement agreement.

“Custodial Delivery” shall have the meaning specified in the Custodial Agreement.

“Custodian” shall mean Wells Fargo Bank, National Association, or any successor
custodian appointed by Purchaser.

“DBRS” shall mean DBRS, Inc. and any successor or successors thereto.

“Default” shall mean any event which, with the giving of notice, the passage of time,
or both, would constitute an Event of Default.

“Defaulted Mortgage Asset” shall mean any asset (a) that is thirty (30) days or more
delinquent in the payment of principal, interest, fees or other amounts payable under the terms of
the related transaction documents, (b) for which there is a material breach of the applicable
representations and warranties set forth on Exhibit V hereto that have not been cured, (c)
as to which an Act of Insolvency shall have occurred with respect to the Borrower or (d) as to
which a non-monetary event of default shall have occurred under any document included in the
Purchased Asset File for such Purchased Asset.

“Dollars” and “$” shall mean freely transferable lawful money of the United
States of America.

“Dry Purchased Asset” shall mean an Eligible Asset which Seller is selling to
Purchaser and for which the Purchased Asset File has been, or will be delivered to Custodian, prior
to the related Purchase Date.

“Due Diligence Package” shall have the meaning specified in Exhibit VII to
this Agreement.

“Early Repurchase” shall mean a repurchase of a Purchased Asset as described in
Article 3(e).

“Early Repurchase Date” shall have the meaning specified in Article 3(e).

“Eligibility Criteria” shall mean:

(a) with respect to any Mortgage Loan any commercial mortgage loan that:

(i) is newly-originated, fully disbursed (except for customary holdbacks, reserves
and escrows for tenant improvements and leasing commissions) and performing;

(ii) accrues interest at a floating rate based on LIBOR;

(iii) has a term to maturity of no greater than five (5) years;

(iv) is not, and has not previously been, subject to any other warehouse or
repurchase facility;

(v) has an underlying borrower that is a bankruptcy-remote special purpose entity (to
the extent required pursuant to Rating Agency criteria);

(vi) is secured by a Mortgage on one or more properties that are of an Eligible
Property Type and otherwise satisfies the criteria set forth in the definition of Eligible
Property Type;

(vii) has a Senior Financing loan-to-value ratio (taking into account such Mortgage
Loan together with any pari-passu loans but excluding any subordinate loans secured
directly or indirectly by the same collateral (the “Senior Financing”)) of up to
80.0% as determined by Purchaser on a case-by-case basis and employing commercially
reasonable methods (which methods may include, without limitation, appraisals); and

(viii) has a Total Financing loan-to-value ratio (taking into account such Mortgage
Loan together with any related pari-passu or subordinate (including mezzanine) loans
secured directly or indirectly by the same collateral (the “Total Financing”) of
up to 85.0% as determined by Purchaser on a case-by-case basis and employing commercially
reasonable methods (which methods may include, without limitation, appraisals); or

(b) with respect to any Senior Note or Senior Participation Interest, the related Mortgage
Loan satisfies the criteria set forth in clause (a) above.

“Eligible Assets” shall mean any Mortgage Loan, Senior Note or Senior Participation
Interest (i) that on the related Purchase Date is approved by Purchaser in its sole discretion,
(ii) that on the related Purchase Date satisfies the Eligibility Criteria, (iii) satisfies the
requirements set forth in the Pricing Matrix, (iv) with respect to which the representations and
warranties set forth in this Agreement (including the exhibits hereto) are true and correct in all
material respects except to the extent disclosed in a Requested Exceptions Report approved by
Purchaser. The determination by Purchaser that a Purchased Asset constitutes an Eligible Asset
shall not be revoked by Purchaser in the absence of fraud, bad faith or malfeasance by the Seller.
The forgoing sentence shall not in any way limit the ability of Purchaser to re-determine Market
Value for any Purchased Asset in accordance with Article 4(a) hereof.

Any Mortgage Loan, as of the proposed Purchase Date: (i) that is a non-performing loan;
(ii) that is a Defaulted Mortgage Assets; (iii) for which the applicable appraisal is (a) not dated
within three hundred sixty-four (364) days of such proposed Purchase Date or (b) not acceptable to
purchaser in its sole and absolute discretion or (iv) that is secured directly or indirectly by
loans described in the preceding clauses (i) through (iii), shall not constitute an
Eligible Asset.

“Eligible Property Types” shall mean multi-family, office, retail and
warehouse/industrial properties that:

(i) have at least three (3) years of operating history (if applicable) with, to the
extent available, audited financial statements (in each case subject to certain exceptions
approved by Purchaser on a case-by-case basis);

(ii) are fully stabilized;

(iii) have a minimum value of $5 million as determined by Purchaser on a case-by-case
basis and employing commercially reasonable methods (which methods may include, without
limitation, appraisals);

(iv) are not undergoing any major renovation or expansion and are free of material
structural or environmental defects; and

(v) are not occupied by a single-tenant (subject to certain exceptions approved by
Purchaser on a case-by-case basis).

Purchaser may, on a case-by-case basis, approve mobile home park, self-storage and hospitality
properties and the pricing terms therefor. The Eligible Property Type criteria set forth herein
may be revised by Purchaser in its sole discretion with respect to any new Eligible Assets proposed
to be purchased by the Purchaser under the Facility. For the avoidance of doubt, such revised
Eligible Property Type criteria shall only be applicable to new Eligible Assets being proposed for
purchase under the Facility after the date such Eligible Property Type criteria is revised and
written notice of such revision is provided to Seller.

“Environmental Law” shall mean any federal, state, foreign or local statute, law,
rule, regulation, ordinance, code, guideline, written policy and rule of common law now or
hereafter in effect and in each case as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or judgment, relating to
the environment, employee health and safety or Hazardous Materials, including, without limitation,
CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701
et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et
seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq. and the Occupational
Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder. Section references to ERISA are to
ERISA, as in effect at the date of this Agreement and, as of the relevant date, any subsequent
provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

“ERISA Affiliate” shall mean any corporation or trade or business that is a member of
any group of organizations (i) described in Section 414(b) or (c) of the Internal Revenue Code of
which Seller is a member and (ii) solely for purposes of potential liability under Section 302 of
ERISA and Section 412 of the Internal Revenue Code, described in Section 414(m) or (o) of the
Internal Revenue Code of which Seller is a member.

“Escrow Agreement” shall mean an agreement substantially in the form of
Exhibit VI hereto or such other form as may be approved by Purchaser in its sole and
absolute discretion, delivered by a Settlement Agent to Purchaser and Custodian.

“Event of Default” shall have the meaning specified in Article 13(a).

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended.

“Exit Fee” shall have the meaning specified in the Fee Letter.

“Extension Fee” shall have the meaning specified in the Fee Letter.

“Extension Period” shall have the meaning specified in Article 3(m)(i).

“FDICIA” shall have the meaning specified in Article 21(d).

“Federal Funds Rate” shall mean, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by Purchaser from three (3) federal funds
brokers of recognized standing selected by it; provided, that such selected brokers shall
be the same brokers as selected for all of Purchaser’s other repurchase customers where the Federal
Funds Rate is to be applied, to the extent such brokers are available.

“Fee Letter” shall mean the letter agreement, dated as of the date hereof, from
Purchaser and accepted and agreed by Seller and Guarantor, as the same may be amended, modified
and/or restated from time to time, and/or any replacement agreement.

“Filings” shall have the meaning specified in Article 6(b).

“Financing Lease” shall mean any lease of property, real or personal, the obligations
of the lessee in respect of which are required in accordance with GAAP to be capitalized on a
balance sheet of the lessee.

“Fitch” shall mean Fitch Ratings, Inc., Fitch Ratings, Ltd. and their subsidiaries
including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or successors thereto.

“GAAP” shall mean United States generally accepted accounting principles consistently
applied as in effect from time to time.

“Governmental Authority” shall mean any national or federal government, any state,
regional, local or other political subdivision thereof with jurisdiction and any Person with
jurisdiction exercising executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government (including any supra-national bodies such as the European Union or the
European Central Bank).

“Guarantor” shall mean RAIT Financial Trust, a Maryland Real Estate Investment Trust.

“Guaranty” shall mean the Guaranty, dated as of the date hereof, from Guarantor in
favor of Purchaser, in form and substance acceptable to Purchaser, as the same may be amended,
modified and/or restated from time to time, and/or any replacement agreement.

“Indebtedness” shall mean, for any Person, (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt
securities or the sale of property to another Person subject to agreement, contingent or otherwise,
to repurchase such property from such Person); (b) obligations of such Person to pay the deferred
purchase or acquisition price of property or services, other than trade accounts payable (other
than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business
so long as such trade accounts payable are payable within ninety (90) days of the date the
respective goods are delivered or the respective services are rendered; (c) Indebtedness of others
secured by a lien on the property of such Person, whether or not the respective Indebtedness so
secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person
in respect of letters of credit or similar instruments issued or accepted by banks and other
financial institutions for account of such Person; (e) obligations of such Person under repurchase
agreements, sale/buy-back agreements or like arrangements; (f) Indebtedness of others guaranteed by
such Person; (g) all obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; (h) Recourse Indebtedness of such Person; (i) Indebtedness
of general partnerships of which such Person is secondarily or contingently liable (other than by
endorsement of instruments in the course of collection), whether by reason of any agreement to
acquire such indebtedness to supply or advance sums or otherwise; (j) Capitalized Lease Obligations
of such Person; (k) all net liabilities or obligations under any interest rate, interest rate swap,
interest rate cap, interest rate floor, interest rate collar, or other hedging instrument or
agreement; and (l) all obligations of such Person under Financing Leases; provided, that,
Indebtedness shall not include any borrowings by the Guarantor or its Subsidiaries from the Federal
Reserve Bank of New York’s Term Asset-Backed Securities Loan Facility.

“Indemnified Amounts” and “Indemnified Parties” shall have the meaning
specified in Article 25.

“Independent Manager” shall mean shall mean a natural Person who (a) is not at the
time of initial appointment and has never been, and will not while serving as Independent Manager
be: (i) a stockholder, director, officer, employee, partner, member (other than a “special member”
or “springing member”), manager (with the exception of serving as the Independent Manager of
Seller), attorney or counsel of Seller or Guarantor or any Affiliate or equity owner of Seller or
Guarantor; (ii) a customer, supplier or other Person who derives any of its purchases or revenues
(other than any revenue derived from serving as the Independent Manager of such party) from its
activities with Seller or Guarantor or any Affiliate or equity owner of Seller or Guarantor; (iii)
a Person controlling or under common control with any such stockholder, director, officer,
employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other
Person of Seller, or Guarantor or any Affiliate or equity owner of Seller or Guarantor; or (iv) a
member of the immediate family of any such stockholder, director, officer, employee, partner,
member, manager, attorney, counsel, equity owner, customer, supplier or other Person of Seller or
Guarantor or any Affiliate or equity owner of Seller or Guarantor and (b) has (i) prior experience
as an independent director or independent manager for a corporation, a trust or limited liability
company whose charter documents required the unanimous consent of all independent directors or
independent managers thereof before such corporation, trust or limited liability company could
consent to the institution of bankruptcy or insolvency proceedings against it or could file a
petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii)
at least three (3) years of employment experience and who is provided by CT Corporation,
Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company or Stewart
Management Company, or if none of these companies is then providing professional independent
directors, another nationally recognized company acceptable to Purchaser, that is not an Affiliate
of Seller and that provides, inter alia, professional independent directors or independent managers
in the ordinary course of their respective business to issuers of securitization or structured
finance instruments, agreements or securities or lenders originating commercial real estate loans
for inclusion in securitization or structured finance instruments, agreements or securities (a
“Professional Independent Manager”) and is an employee of such a company or companies at
all times during his or her service as an Independent Manager. A natural Person who satisfies the
foregoing definition except for being (or having been) the independent director or independent
manager of a “special purpose entity” Affiliated with Seller or Guarantor (provided such Affiliate
does not or did not own a direct or indirect equity interest in Seller) shall not be disqualified
from serving as an Independent Manager, provided that such natural Person satisfies all
other criteria set forth above and that the fees such individual earns from serving as independent
director or independent manager of Affiliates of Seller or in any given year constitute in the
aggregate less than five percent (5%) of such individual’s annual income for that year. A natural
Person who satisfies the foregoing definition other than subparagraph (a)(ii) shall not be
disqualified from serving as an Independent Manager if such individual is a Professional
Independent Manager and such individual complies with the requirements of the previous sentence.

“Interim Servicing Agreement” shall mean the Interim Servicing Agreement, dated as of
the date hereof, by and among the Servicer, Seller and Purchaser, as the same may be amended,
modified and/or restated from time to time, and/or any replacement agreement.

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.

“Kroll” shall mean Kroll Bond Rating Agency, Inc. and any successor or successors
thereto.

“LIBOR” shall mean, with respect to each Pricing Rate Period, the rate determined by
Purchaser to be (i) the per annum rate for one (1) month deposits in Dollars, which appears on the
Reuters Screen LIBOR01 Page (or any successor thereto) as the London Interbank Offering Rate as of
11:00 a.m., London time, on the day that is two (2) London Business Days prior to that respective
Pricing Rate Determination Date (rounded upwards, if necessary, to the nearest 1/1000 of 1%); (ii)
if such rate does not appear on said Reuters Screen LIBOR01 Page, the arithmetic mean (rounded as
aforesaid) of the offered quotations of rates obtained by Purchaser from the Reference Banks for
one (1) month deposits in Dollars to prime banks in the London Interbank market as of approximately
11:00 a.m., London time, on the day that is two (2) London Business Days prior to that Pricing Rate
Determination Date and in an amount that is representative for a single transaction in the relevant
market at the relevant time; or (iii) if fewer than two (2) Reference Banks provide Purchaser with
such quotations, the rate per annum which Purchaser determines in its commercially reasonable
discretion to be the arithmetic mean (rounded as aforesaid) of the offered quotations of rates
which major banks in New York, New York selected by Purchaser are quoting at approximately 11:00
a.m., New York City time, on the Pricing Rate Determination Date for loans in Dollars to leading
European banks for a period equal to the applicable Pricing Rate Period in amounts of not less than
$1,000,000.00; provided, that such selected banks shall be the same banks as selected for
all of Purchaser’s other repurchase customers where LIBOR is to be applied, to the extent such
banks are available. Purchaser’s determination of LIBOR in accordance with this definition shall
be binding and conclusive on Seller absent manifest error. LIBOR may or may not be the lowest rate
based upon the market for U.S. Dollar deposits in the London Interbank Eurodollar Market at which
Purchaser prices loans on the date which LIBOR is determined by Purchaser as set forth above.

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, encumbrance, lien
(statutory or other), charge or other security interest or any preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any financing lease having
substantially the same economic effect as any of the foregoing), and the filing of any financing
statement under the UCC or comparable law of any jurisdiction in respect of any of the foregoing.

“London Business Day” shall mean any day other than (a) a Saturday, (b) a Sunday or
(c) any other day on which commercial banks in London, England are not open for business.

“Margin Amount” shall mean, with respect to any Purchased Asset on any date, an amount
equal to (a) the lesser of (i) the unpaid principal balance of such Purchased Asset and (ii) the
Market Value of such Purchased Asset, multiplied by (b) the applicable Purchase Price Percentage
for such Purchased Asset.

“Margin Call” shall have the meaning specified in Article 4(a).

“Margin Deficit” shall exist, with respect to any Purchased Asset, if (a) the Margin
Amount for such Purchased Asset is less than (b) the Repurchase Price for such Purchased Asset.

“Margin Deficit Event” shall exist, with respect to any Purchased Asset, if the Margin
Amount for such Purchased Asset is less than the product of (a) 98% multiplied by (b) the
Repurchase Price for such Purchased Asset.

“Margin Excess” shall have the meaning specified in Article 4(c).

“Margin Return Amount” shall mean, with respect to any Purchased Asset, any amounts
paid to Seller by Purchaser pursuant to Article 4(c) with respect to such Purchased Asset.

“Market Value” shall mean, with respect to any Purchased Asset as of any relevant
date, the market value for such Purchased Asset on such date as determined by Purchaser in its sole
discretion, exercised in good faith. Without limiting the foregoing, the Market Value shall, at
Purchaser’s option, be deemed to be zero with respect to each Purchased Asset (i) in respect of
which there is a material breach of a representation and warranty set forth in Exhibit V
hereto, (ii) in respect of which the complete Purchased Asset File has not been delivered to the
Custodian in accordance with the terms of the Custodial Agreement, (iii) that has been released
from the possession of the Custodian under the Custodial Agreement to the Seller for a period in
excess of ten (10) calendar days, (iv) upon the occurrence of any Act of Insolvency with respect to
any co-participant or any other Person having an interest in such Purchased Asset or any related
Mortgaged Property that is pari passu with, in right of payment or priority, the rights of
Purchaser in such Purchased Asset or (v) that is determined by Purchaser to be a Defaulted Mortgage
Asset.

The Market Value of each Purchased Asset may be determined by Purchaser on each Business Day
during the term of this Agreement, and shall take into consideration any assigned hedging
arrangements.

“Marketable Title” shall mean title that is freely transferable and clear of all
encumbrances, liens, clouds, risks of litigation, or other title defects.

“Material Adverse Effect” shall mean a material adverse effect on (a) the property,
business, operations or financial condition of Seller or Guarantor, (b) the ability of Seller or
Guarantor to perform its obligations under any of the Transaction Documents, (c) the validity or
enforceability of any of the Transaction Documents or (d) the rights and remedies of Purchaser
under any of the Transaction Documents.

“Materials of Environmental Concern” shall mean any toxic mold, any petroleum
(including, without limitation, crude oil or any fraction thereof) or petroleum products
(including, without limitation, gasoline) or any hazardous or toxic substances, materials or
wastes, defined as such in or regulated under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls, and urea-formaldehyde insulation.

“Maximum Facility Purchase Price” shall have the meaning specified in the Fee Letter.

“Moody’s” shall mean Moody’s Investors Service, Inc. and any successor or successors
thereto.

“Morningstar” shall mean Morningstar, Inc. and any successor or successors thereto.

“Mortgage” shall mean a mortgage, deed of trust, deed to secure debt or other
instrument, creating a valid and enforceable first Lien on or a first priority ownership interest
in an estate in fee simple in real property and the improvements thereon or a ground lease,
securing a Mortgage Note or similar evidence of indebtedness.

“Mortgage Loan” shall mean a whole mortgage loan that is secured by a first Lien on
one or more commercial or multi-family properties.

“Mortgage Note” shall mean a note or other evidence of indebtedness of a Mortgagor
secured by a Mortgage.

“Mortgaged Property” shall mean, in the case of:

(a) a Mortgage Loan, the mortgaged property securing such Mortgage Loan; and

(b) a Mortgage Note or a Participation Interest, the mortgaged property securing the related
Mortgage Loan.

“Mortgagor” shall mean the obligor on a Mortgage Note and the grantor of the related
Mortgage.

“Multiemployer Plan” shall mean a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been, or were required to have been, made by Seller or any
ERISA Affiliate and that is covered by Title IV of ERISA.

“Net Cash Flow” shall mean, with respect to any Purchased Asset at any time, all
monies collected from or in respect of such Purchased Asset, including without limitation, payments
of interest, principal, repayment, rental or other income, insurance and liquidation proceeds, plus
all proceeds from sale or other disposition of such Purchased Asset.

“Participation Certificate” shall mean the physical participation certificate
evidencing ownership of a Participation Interest in form and substance acceptable to Purchaser.

“Participation Interest” shall mean a participation interest in a Mortgage Loan.

“Participants” shall have the meaning specified in Article 18.

“Person” shall mean an individual, corporation, limited liability company, business
trust, partnership, joint tenant or tenant-in-common, trust, joint stock company, joint venture,
unincorporated organization, or any other entity of whatever nature, or a Governmental Authority.

“Plan” shall mean an employee benefit or other plan established or maintained by
Seller or any ERISA Affiliate during the five year period ended prior to the date of this Agreement
or to which Seller or any ERISA Affiliate makes, is obligated to make or has, within the five year
period ended prior to the date of this Agreement, been required to make contributions and that is
covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of the Internal Revenue Code,
other than a Multiemployer Plan.

“Pre-Purchase Due Diligence” shall have the meaning specified in Article
3(b)(iv).

“Pre-Purchase Due Diligence/Legal Review Fee” shall have the meaning specified in the
Fee Letter.

“Pricing Rate” shall mean, for any Pricing Rate Period, an annual rate equal to the
sum of (i) LIBOR and (ii) the relevant Spread, in each case, for the applicable Pricing Rate Period
for the related Purchased Asset. The Pricing Rate shall be subject to adjustment and/or conversion
as provided in the Transaction Documents (including, without limitation, as provided in
Articles 3(g) and (h)) or the related Confirmation.

“Pricing Rate Determination Date” shall mean with respect to any Pricing Rate Period
with respect to any Transaction, the second (2nd) Business Day preceding the first day
of such Pricing Rate Period.

“Pricing Rate Period” shall mean, with respect to any Transaction and any Remittance
Date (a) in the case of the first Pricing Rate Period, the period commencing on and including the
Purchase Date for such Transaction and ending on and excluding the following Remittance Date, and
(b) in the case of any subsequent Pricing Rate Period, the period commencing on and including the
immediately preceding Remittance Date and ending on and excluding the following Remittance Date;
provided, however, that in no event shall any Pricing Rate Period for a Purchased
Asset end subsequent to the Repurchase Date for such Purchased Asset.

“Principal Payment” shall mean, with respect to any Purchased Asset, any payment or
prepayment of principal received or allocated as principal in respect thereof.

“Prohibited Investor” shall mean (1) a person or entity whose name appears on the list
of Specially Designated Nationals and Blocked Persons by the Office of Foreign Asset Control
(“OFAC”), (2) any foreign shell bank, and (3) any person or entity resident in or whose
subscription funds are transferred from or through an account in a jurisdiction that has been
designated as a non-cooperative with international anti-money laundering principles or procedures
by an intergovernmental group or organization, such as the Financial Action Task Force on Money
Laundering (“FATF”), of which the U.S. is a member and with which designation the U.S.
representative to the group or organization continues to concur. See
http://www.fatf-gati.org for FATF’s list of Non-Cooperative Countries and Territories.

“Properties” shall have the meaning specified in Article 9(b)(xxvii)(A).

“Purchase Date” shall mean, with respect to any Purchased Asset, the date on which
Purchaser purchases such Purchased Asset from Seller hereunder.

“Purchase Price” shall mean, with respect to any Purchased Asset, the price at which
such Purchased Asset is transferred by Seller to Purchaser on the applicable Purchase Date. The
Purchase Price as of the Purchase Date for any Purchased Asset shall be an amount (expressed in
Dollars) equal to the product obtained by multiplying (a) the applicable Purchase Price Percentage,
as determined by Purchaser on a case-by-case basis in its sole and absolute discretion, by (b) the
lesser of (x) the unpaid principal balance of such Purchased Asset and (y) the Market Value of such
Purchased Asset.

“Purchase Price Differential” shall mean, with respect to any Purchased Asset as of
any date, the amount equal to the product of (a) the applicable Pricing Rate for such Purchased
Asset and (b) the average outstanding Purchase Price of such Purchased Asset, calculated on the
basis of a 360-day year and the actual number of days during the period commencing on (and
including) the Purchase Date for such Purchased Asset and ending on (but excluding) the Repurchase
Date for such Purchased Asset (reduced by any amount of such Purchase Price Differential previously
paid by Seller to Purchaser with respect to such Purchased Asset).

“Purchase Price Percentage” shall have the meaning specified in the Fee Letter.

“Purchased Asset” shall mean (a) with respect to any Transaction, the Eligible Asset
sold by Seller to Purchaser in such Transaction and (b) with respect to the Transactions in
general, all Eligible Assets sold by Seller to Purchaser (other than Purchased Assets that have
been repurchased by Seller). An Eligible Asset that is repurchased by Seller in accordance with
this Agreement shall cease to be a Purchased Asset.

“Purchased Asset Documents” shall mean, with respect to a Purchased Asset, the
documents comprising the Purchased Asset File for such Purchased Asset.

“Purchased Asset File” shall mean the documents specified as the “Purchased Asset
File” in the Custodial Agreement, together with any additional documents and information required
to be delivered to Purchaser or its designee (including the Custodian) pursuant to this Agreement
and/or the Custodial Agreement; provided that to the extent that Purchaser waives,
including pursuant to Article 7(c), receipt of any document in connection with the purchase
of an Eligible Asset (but not if Purchaser merely agrees to accept delivery of such document after
the Purchase Date), such document shall not be a required component of the Purchased Asset File.

“Purchased Items” shall mean all of Seller’s right, title and interest in, to and
under each of the following items of property, whether now owned or hereafter acquired, now
existing or hereafter created and wherever located:

(i) the Purchased Assets and all “securities accounts” (as defined in Article 8
501(a) of the UCC) to which any or all of the Purchased Assets are credited;

(ii) the Purchased Asset Documents, the Servicing Rights, the Interim Servicing
Agreement, the Servicing Records, mortgage guaranties, mortgage insurance, insurance
policies, insurance claims, collection and escrow accounts, and letters of credit, in each
case, relating to the Purchased Assets;

(iii) all related forward trades and takeout commitments placed on the Purchased
Assets;

(iv) all proceeds relating to the sale, securitization, liquidation, or other
disposition of the Purchased Assets;

(v) all “general intangibles”, “accounts”, “chattel paper”, “investment property”,
“instruments” and “deposit accounts”, each as defined in the UCC, relating to or
constituting any and all of the foregoing; and

(vi) all replacements, substitutions or distributions on or proceeds, payments, Net
Cash Flow and profits of, and records (but excluding any financial models or other
proprietary information) and files relating to any and all of any of the foregoing.

Notwithstanding the foregoing, upon the payment in full to Purchaser of the Repurchase Price
for a Purchased Asset, all right, title and interest in the Purchased Items related to such
Purchased Asset shall be vested in Seller.

“Purchaser” shall have the meaning assigned thereto in the introductory paragraph
hereof.

“Rating Agency” shall mean any of Fitch, Moody’s, S&P, DBRS, Morningstar and Kroll, or
any other rating agency designated by Purchaser.

“Recourse Indebtedness” shall mean, for any Person on any date, without duplication,
the indebtedness of such Person (and its consolidated Subsidiaries) for which such Person (and its
consolidated Subsidiaries) is directly responsible or liable as obligor or guarantor (excluding
obligations arising by reason of customary recourse carve-outs under a non-recourse instrument,
including, but not limited to, fraud, misappropriation and environmental indemnities).

“Reference Banks” shall mean banks designated by Purchaser, in its sole discretion
exercised in good faith, each of which shall (i) be a leading bank engaged in transactions in
Eurodollar deposits in the international Eurocurrency market and (ii) have an established place of
business in London.

“Release Letter” shall mean a letter substantially in the form of Exhibit X
hereto (or such other form as may be acceptable to Purchaser).

“REMIC” shall mean a real estate mortgage investment conduit, within the meaning of
Section 860D(a) of the Internal Revenue Code.

“Remittance Date” shall mean the 15th calendar day of each month, or the
immediately succeeding Business Day, if such calendar day shall not be a Business Day, or such
other day as is mutually agreed to by Seller and Purchaser.

“Repurchase Date” means, with respect to any Purchased Asset, the earliest to occur of
(a) the date set forth in the applicable Confirmation, as the same may be extended in accordance
with Article 3(n), or if such day is not a Business Day, the immediately following Business
Day; (b) the Termination Date; (c) the Early Repurchase Date with respect to such Purchased Asset;
or (d) the Accelerated Repurchase Date. Notwithstanding the foregoing, in no event shall the
Repurchase Date specified in a Confirmation for any Purchased Asset be more than nine (9) months
following the original Purchase Date for such Purchased Asset.

“Repurchase Date Extension Conditions” shall have the meaning assigned thereto in
Article 3(n).

“Repurchase Obligations” shall have the meaning assigned thereto in Article
6(a).

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any
Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder,
the price at which such Purchased Asset is to be transferred from Purchaser to Seller; such price
will be determined in each case as the sum of (i) the Purchase Price of such Purchased Asset;
(ii) the accreted and unpaid Purchase Price Differential with respect to such Purchased Asset as of
the date of such determination (other than, with respect to calculations in connection with the
determination of a Margin Deficit, accreted and unpaid Purchase Price Differential for the current
Pricing Rate Period); (iii) the related Exit Fee (if any), (iv) all accrued and unpaid costs and
expenses relating to such Purchased Assets; and (v) any other amounts due and owing by Seller to
Purchaser and its Affiliates pursuant to the terms of this Agreement (including, without
limitation, pursuant to Article 3(l)) as of such date. In addition to the forgoing, the
Repurchase Price shall be (i) decreased by (A) the portion of any Principal Payments on such
Purchased Asset that is applied pursuant to Article 5 to reduce such Repurchase Price and
(B) any other amounts specifically paid to Purchaser by Seller to reduce such Repurchase Price and
(ii) increased by any Margin Return Amounts with respect to such Purchased Asset.

“Requested Exceptions Report” shall have the meaning specified in Exhibit VII
hereto.

“Requirement of Law” shall mean any applicable law, treaty, rule, regulation, code,
directive, policy, order or requirement or determination of an arbitrator or a court or other
Governmental Authority whether now or hereafter enacted or in effect.

“Responsible Officer” shall mean any executive officer of Seller.

“S&P” shall mean Standard and Poor’s Ratings Services and any successor or successors
thereto.

“SEC” shall have the meaning specified in Article 22(a).

“Seller” shall have the meaning assigned thereto in the introductory paragraph hereof.

“Seller Asset Schedule” shall mean, with respect to each Purchased Asset, the
information set forth in Exhibit XII hereto.

“Senior Note” shall mean a Mortgage Note evidencing a senior or pari passu senior
position in a Mortgage Loan. A Senior Note shall not be junior to any other Mortgage Note secured
by the same Mortgaged Property.

“Senior Participation Interest” shall mean a senior or pari passu senior Participation
Interest evidenced by a Participation Certificate. A Senior Participation Interest shall not be
junior to any other Participation Interest or Mortgage Notes secured directly or indirectly by the
same Mortgaged Property.

“Servicer” shall mean RAIT Partnership, L.P. or any other servicer approved by
Purchaser in its reasonable discretion; provided that, Purchaser shall not unreasonably
withhold its consent to appoint a servicer that has a primary servicer rating of at least average
by S&P; provided further, that after the occurrence and during the continuance of
an Event of Default Purchaser may designate a Servicer in its sole and absolute discretion.

“Servicing Records” shall have the meaning specified in Article 27(b).

“Servicing Rights” shall mean rights of any Person, to administer, service or
subservice the Purchased Assets or to possess related Servicing Records.

“Settlement Agent” shall mean a title company, escrow company or attorney, as
applicable in accordance with local law and practice, which is a party to the Escrow Agreement and
is approved by Purchaser in its sole and absolute discretion.

“SIPA” shall have the meaning specified in Article 22(a).

“Spread” shall have the meaning specified in the Fee Letter.

“Structuring Fee” shall have the meaning specified in the Fee Letter.

“Subsidiary” shall mean, as to any Person, a corporation, partnership or other entity
of which shares of stock or other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement
shall refer to a Subsidiary or Subsidiaries of Seller.

“Termination Date” shall mean the day that is the earlier of (i) three hundred
sixty-four (364) calendar days after the Closing Date, or such later date as may be in effect
pursuant to Article 3(m) hereof or (ii) the day on which an Event of Default occurs (after
all applicable grace, notice and/or cure periods).

“Termination Date Extension Conditions” shall have the meaning specified in
Article 3(m).

“Title Insurer” shall mean a nationally recognized title insurance company qualified
to do business in the jurisdiction where the applicable mortgaged property is located.

“Title Policy” shall mean an American Land Title Association (ALTA) lender’s title
insurance policy or a comparable form of lender’s title insurance policy (or escrow instructions
binding on the Title Insurer and irrevocably obligating the Title Insurer to issue such title
insurance policy, a title policy commitment or pro-forma “marked up” at the closing of the related
Purchased Asset and countersigned by the Title Insurer or its authorized agent) as adopted in the
applicable jurisdiction.

“Transaction” shall mean a Transaction, as specified in Article 1.

“Transaction Documents” shall mean, collectively, this Agreement, any applicable
Exhibits to this Agreement, the Fee Letter, the Guaranty, the Custodial Agreement, the Interim
Servicing Agreement, the Account Control Agreement, all Confirmations and assignment documentation
executed pursuant to this Agreement in connection with specific Transactions, and all other
documents executed in connection with this Agreement or any Transaction.

“Trust Receipt” shall have the meaning specified in the Custodial Agreement.

“UCC” shall have the meaning specified in Article 6(b).

“Underwriting Issues” shall mean, with respect to any Purchased Asset as to which
Seller intends to request a Transaction, all material information that has come to Seller’s
attention that, based on the making of reasonable inquiries and the exercise of reasonable care and
diligence under the circumstances, would be considered a materially “negative” factor (either
separately or in the aggregate with other information), or a defect in loan documentation or
closing deliveries (such as any absence of any Purchased Asset Document(s)), to a reasonable
institutional mortgage Purchaser in determining whether to originate or acquire the Purchased Asset
in question.

“Wet Purchased Asset” shall mean an Eligible Asset which Seller is selling to
Purchaser simultaneously with the origination thereof and for which the Purchased Asset File has
not been delivered to Custodian.

All references to articles, schedules and exhibits are to articles, schedules and exhibits in
or to this Agreement unless otherwise specified. The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting principles. References
to “good faith” in this Agreement shall mean “honesty in fact in the conduct or transaction
concerned”.

ARTICLE 3

INITIATION; CONFIRMATION; TERMINATION; FEES

(a) Condition Precedent to Initial Transaction. Purchaser’s agreement to enter into
the initial Transaction hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Transaction, of the condition precedent that Purchaser shall
have received from Seller the following fees and expenses, and all of the following items, each of
which shall be satisfactory in form and substance to Purchaser and its counsel:

(i) The following documents, delivered to Purchaser:

(A) this Agreement, duly completed and executed by each of the parties hereto
(including all exhibits hereto);

(B) the Fee Letter, duly completed and executed by each of the parties hereto;

(C) the Custodial Agreement, duly executed and delivered by each of the parties
thereto;

(D) the Account Control Agreement, duly completed and executed by each of the
parties thereto;

(E) the Guaranty, duly completed and executed by each of the parties thereto;

(F) the Interim Servicing Agreement, duly completed and executed by each of the
parties thereto;

(G) [reserved];

(H) any and all consents and waivers applicable to Seller or to the Purchased
Assets;

(I) a power of attorney substantially in the form of Exhibit IV hereto,
duly completed and executed;

(J) UCC financing statements for filing in each of the UCC filing jurisdictions
described on Exhibit IX hereto, each naming the Seller as “Debtor” and
Purchaser as “Secured Party” and describing as “Collateral” all of the items set
forth in the definition of Collateral and Purchased Items in this Agreement,
together with any other documents necessary or requested by Purchaser to perfect the
security interests granted by Seller in favor of Purchaser under this Agreement or
any other Transaction Document;

(K) opinions of outside counsel to Seller and Guarantor reasonably acceptable
to Purchaser (including, but not limited to, those relating to enforceability,
corporate matters, , applicability of the Investment Company Act of 1940, security
interests and Bankruptcy Code safe harbors);

(L) good standing certificates and certified copies of the charters and by-laws
(or equivalent documents) of Seller and Guarantor and of all corporate or other
authority for Seller and Guarantor with respect to the execution, delivery and
performance of the Transaction Documents and each other document to be delivered by
Seller and Guarantor from time to time in connection herewith;

(ii) Purchaser shall have received payment from Seller of an amount equal to the amount
of all reasonable and documented out-of-pocket expenses, including but not limited to
reasonable legal fees and due diligence fees, actually incurred by Purchaser in connection
with the development, preparation and execution of this Agreement, the other Transaction
Documents and any other documents prepared in connection herewith or therewith;

(iii) Purchaser shall have received payment from Seller of the Structuring Fee; and

(iv) all such other and further documents and documentation as Purchaser in its
discretion shall reasonably require.

(b) Conditions Precedent to All Transactions. Purchaser’s agreement to enter into
each Transaction (including the initial Transaction) is subject to the satisfaction of the
following further conditions precedent, both immediately prior to entering into such Transaction
and also immediately after giving effect to the consummation thereof and the intended use of the
proceeds of the sale:

(i) the sum of (A) the aggregate unpaid Repurchase Price for all prior outstanding
Transactions (excluding accrued and unpaid Price Differential for the then current Pricing
Rate Period) and (B) the requested Purchase Price for the pending Transaction shall not
exceed an amount equal the Maximum Facility Purchase Price;

(ii) Seller shall have, no less than ten (10) Business Days prior to the requested
Purchase Date:

(A) given notice to Purchaser of the proposed Transaction by delivering to
Purchaser an executed and completed confirmation substantially in the form of
Exhibit II hereto (a “Confirmation”). The Confirmation shall be
signed by a Responsible Officer of Seller; provided, however, that
Purchaser shall not be liable to Seller if it inadvertently acts on a Confirmation
that has not been signed by a Responsible Officer of Seller; and

(B) concurrently with the delivery of the Confirmation, paid to Purchaser the
Pre-Purchase Due Diligence/Legal Review Fee with respect to each Eligible Asset
proposed to be subject to the Transaction;

(iii) Seller shall have delivered to Purchaser with respect to each Eligible Asset
subject to the proposed Transaction, the documents required to be delivered prior to
entering into a Transaction pursuant to Exhibit VII hereto in accordance with the
time frames set forth therein;

(iv) Seller shall have delivered to Custodian (A) the Custodial Delivery with respect
to each Eligible Asset to be sold to Purchaser and (B) with respect to each Eligible Asset
that is a Dry Purchased Asset, the Purchased Asset File, in each case, in accordance with
the procedures and time frames set forth in the Custodial Agreement;

(v) Purchaser shall have completed its due diligence investigation of the Eligible
Assets subject to the pending Transaction and such other documents, records, agreements,
instruments, mortgaged properties or information relating to such Eligible Assets, the
Seller and the Guarantor as Purchaser in its sole discretion deems appropriate to review and
such review shall be satisfactory to Purchaser in its sole discretion (the “Pre-Purchase
Due Diligence”) and has determined, in its sole discretion, to purchase any or all of
the Eligible Assets proposed to be sold to Purchaser by Seller, all of which Purchaser shall
use commercially reasonable efforts to complete within the above-referenced ten (10)
Business Day period. Purchaser shall inform Seller of its determination with respect to any
such proposed Transaction solely in accordance with Exhibit VII hereto;

(vi) Purchaser shall have deliver to Seller a countersigned copy of the related
Confirmation described in clause (ii)(A) above;

(vii) no Default or Event of Default shall have occurred and be continuing under this
Agreement or any other Transaction Document;

(viii) no event shall have occurred which has, or would have, a Material Adverse
Effect;

(ix) Purchaser shall have waived all exceptions in the related Requested Exceptions
Report;

(x) the representations and warranties made by Seller in Article 9 (other than
those contained in Article 9(b)(x)(D) relating to Purchased Assets subject to other
Transactions) shall be true, correct and complete on and as of the Purchase Date for the
pending Transaction in all respects with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly stated to have been made
as of a specific date, as of such specific date);

(xi) [reserved];

(xii) Purchaser shall have determined, in its sole and absolute discretion, that no
Margin Deficit shall exist, either immediately prior to or after giving effect to the
requested Transaction;

(xiii) Purchaser shall have received from Custodian on each Purchase Date a Trust
Receipt accompanied by an Asset Schedule and Exception Report with respect to each Eligible
Asset to be sold to Purchaser, dated the Purchase Date, duly completed and with exceptions
acceptable to Purchaser in its sole discretion in respect of Eligible Assets to be purchased
hereunder on such Purchase Date;

(xiv) Purchaser shall have received from Seller a Release Letter covering each Eligible
Asset to be sold to Purchaser;

(xv) Purchaser shall have reasonably determined that a change in any Requirement of Law
or in the interpretation or administration of any Requirement of Law applicable to Purchaser
has not made it unlawful, and no Governmental Authority shall have asserted in writing that
it is unlawful, for Purchaser to enter into Transactions;

(xvi) the Repurchase Date for such Transaction is not later than the earlier of (A) the
Termination Date and (B) three hundred sixty-four (364) days following the related Purchase
Date;

(xvii) Seller shall have taken such other action as Purchaser shall have reasonably
requested in order to transfer the Eligible Assets being transferred to Purchaser pursuant
to this Agreement and to perfect all security interests granted under this Agreement or any
other Transaction Document in favor of Purchaser as secured party under the UCC with respect
to such Eligible Assets; and

(xviii) Purchaser shall have received all such other and further documents,
documentation and legal opinions (including, without limitation, opinions regarding the
perfection of Purchaser’s security interests) as Purchaser in its reasonable discretion
shall reasonably require.

(c) Upon the satisfaction of all conditions set forth in Article 3(a) for the initial
Transaction and Article 3(b) for each Transaction (including the initial Transaction), the
Eligible Asset shall be transferred to Purchaser against the transfer of the Purchase Price to an
account of Seller.

(d) Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms
of the Transaction covered thereby. In the event of any conflict between the terms of such
Confirmation and the terms of this Agreement, other than with respect to the Purchase Price
Percentage or the applicable Purchase Price Differential set forth in the related Confirmation,
this Agreement shall prevail.

(e) Early Repurchase of Purchased Assets. Seller shall be entitled to terminate a
Transaction on demand and repurchase the Purchased Asset subject to a Transaction on any Business
Day prior to the Repurchase Date (an “Early Repurchase Date”); provided,
however, that:

(i) Seller notifies Purchaser in writing of its intent to terminate such Transaction
and repurchase such Purchased Asset, setting forth the Early Repurchase Date and identifying
with particularity the Purchased Asset to be repurchased on such Early Repurchase Date, no
later than five (5) Business Days prior to such Early Repurchase Date;

(ii) no Default or Event of Default (in each case, other than with respect to
Purchaser) under this Agreement shall have occurred and be continuing both as of the date
notice is delivered pursuant to Article 3(e)(i) above and as of the applicable Early
Repurchase Date, unless (A) such Default or Event of Default is cured by such repurchase or
(B) Seller repurchases all of the Purchased Assets on such Early Repurchase Date;

(iii) on such Early Repurchase Date, Seller pays to Purchaser an amount equal to the
Repurchase Price for the applicable Purchased Asset and any other amounts payable under this
Agreement against transfer to Seller or its designated agent of such Purchased Asset; and

(iv) on such Early Repurchase Date, in addition to the amounts set forth in
subclause (iii) above, Seller pays to Purchaser an amount sufficient to reduce the
Repurchase Price for all other Purchased Assets to an amount equal to the Margin Amount for
such Purchased Asset.

(f) Repurchase of Purchased Assets. On the Repurchase Date (including any Early
Repurchase Date) for any Transaction, termination of the Transaction will be effected by transfer
to Seller of the Purchased Assets being repurchased and any Net Cash Flow in respect thereof
received by Purchaser (and not previously credited or transferred to, or applied to the obligations
of, Seller pursuant to Article 5) against the simultaneous transfer of the Repurchase Price
to an account of Purchaser. Promptly following such Repurchase Date, Purchaser’s security interest
in the related Collateral shall terminate in accordance with Article 6(b).

(g) If on the Pricing Rate Determination Date for any Pricing Rate Period with respect to any
Transaction, (i) Purchaser shall have determined in the exercise of its commercially reasonable
business judgment (which determination shall be conclusive and binding upon Seller) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do not exist for
ascertaining LIBOR for such Pricing Rate Period, or (ii) LIBOR determined or to be determined for
such Pricing Rate Period will not adequately and fairly reflect the cost to Purchaser (as
determined and certified by Purchaser) of making or maintaining Transactions during such Pricing
Rate Period (such determinations to be made in the same manner as for all of Purchaser’s other
repurchase customers), Purchaser shall give telecopy or telephonic notice thereof to Seller as soon
as practicable thereafter. If such notice is given, the Pricing Rate with respect to such
Transaction for such Pricing Rate Period, and for any subsequent Pricing Rate Periods until
(i) LIBOR is again ascertainable for subsequent pricing periods or (2) LIBOR adequately and fairly
reflects the cost to purchaser of making or maintaining transactions during such Price Rate Period,
as applicable, shall be a per annum rate equal to the Federal Funds Rate plus the Spread (the
“Alternative Rate”).

(h) Notwithstanding any other provision herein, if the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof shall make it unlawful for
Purchaser to enter into or maintain Transactions as contemplated by the Transaction Documents, the
determination of such unlawfulness to be made in the same manner as for all of Purchaser’s other
repurchase customers, (i) the commitment of Purchaser hereunder to enter into new Transactions and
to continue Transactions as such shall forthwith be canceled, and (ii) the Transactions then
outstanding shall be converted automatically to Alternative Rate Transactions on the last day of
the then current Pricing Rate Period or within such earlier period as is required by law. If any
such conversion of a Transaction occurs on a day that is not the last day of the then current
Pricing Rate Period with respect to such Transaction, Seller shall pay to Purchaser such amounts,
if any, as may be required pursuant to Article 3(l).

(i) Upon demand by Purchaser, Seller shall indemnify Purchaser and hold Purchaser harmless
from any loss, cost or expense (including, without limitation, reasonable attorneys’ fees and
disbursements) that Purchaser may sustain or incur as a consequence of (i) default by Seller
repurchasing any Purchased Asset after Seller has given a notice in accordance with Article
3(e) of an Early Repurchase, (ii) any payment of the Repurchase Price on any day other than a
Remittance Date, (iii) a default by Seller in selling Eligible Assets after Seller has notified
Purchaser of a proposed Transaction and Purchaser has agreed to purchase such Eligible Assets in
accordance with the provisions of this Agreement, (iv) Purchaser’s enforcement of the terms of any
of the Transaction Documents, (v) any actions taken to perfect or continue any lien created under
any Transaction Documents, and/or (vi) Purchaser entering into any of the Transaction Documents,
but excluding any losses, costs or expenses arising out of Purchaser’s gross negligence or willful
misconduct or a default by Purchaser under any of the Transaction Documents, or owning any
Purchased Item. A certificate as to such costs, losses, damages and expenses, setting forth the
calculations thereof shall be submitted promptly by Purchaser to Seller and shall be prima facie
evidence of the information set forth therein.

(j) If the adoption of or any change in any Requirement of Law or in the interpretation or
application thereof by any Governmental Authority or compliance by Purchaser with any request or
directive (whether or not having the force of law) from any central bank or other Governmental
Authority having jurisdiction over Purchaser made subsequent to the date hereof:

(i) shall subject Purchaser to any tax of any kind whatsoever with respect to the
Transaction Documents, any Purchased Asset or any Transaction, or change the basis of
taxation of payments to Purchaser in respect thereof (except for taxes imposed on or
measured by net income (however denominated), franchise taxes, and branch profits taxes, in
each case, (i) imposed as a result of a Purchaser being organized under the laws of, or
having its principal office or its applicable lending office located in, the jurisdiction
imposing such tax (or any political subdivision thereof) or (ii) that are imposed as a
result of a present or former connection between such Purchaser and the jurisdiction
imposing such tax (other than connections arising from such Purchaser having executed,
delivered, become a party to, performed its obligations under, received payments under,
received or perfected a security interest under, engaged in any other transaction pursuant
to or enforced any document contemplated hereunder));

(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of Purchaser that is not otherwise included in the determination of
LIBOR hereunder; or

(iii) shall impose on Purchaser any other condition;

and the result of any of the foregoing is to increase the cost to Purchaser of entering into,
continuing or maintaining Transactions or to reduce any amount receivable by Purchaser under the
Transaction Documents in respect thereof, by an amount that Purchaser deems, in the exercise of its
reasonable business judgment, to be material; then, in any such case, Seller shall promptly pay
Purchaser, after written demand, any additional amounts necessary to compensate Purchaser for such
increased cost or reduced amount receivable. Such notification as to the calculation of any
additional amounts payable pursuant to this subsection shall be submitted by Purchaser to Seller,
shall contain an explanation of Purchaser’s claim and shall be prima facie evidence of such
additional amounts. This covenant shall survive the termination of this Agreement and the
repurchase by Seller of any or all of the Purchased Assets.

(k) If Purchaser shall have determined that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or application thereof or compliance by
Purchaser or any corporation controlling Purchaser with any request or directive regarding capital
adequacy (whether or not having the force of law) from any Governmental Authority made subsequent
to the date hereof has the effect of reducing the rate of return on Purchaser’s or such
corporation’s capital as a consequence of its obligations hereunder to a level below that which
Purchaser or such corporation could have achieved but for such adoption, change or compliance
(taking into consideration Purchaser’s or such corporation’s policies with respect to capital
adequacy) by an amount deemed by Purchaser, in the exercise of its reasonable business judgment, to
be material, then from time to time, after submission by Purchaser to Seller of a written request
therefor and provided Purchaser imposes such additional costs generally on its similarly situated
customers, Seller shall pay to Purchaser such additional amount or amounts as will compensate
Purchaser for such reduction. Such notification as to the calculation of any additional amounts
payable pursuant to this subsection shall be submitted by Purchaser to Seller and shall contain an
explanation of Purchaser’s claim and shall be prima facie evidence of such additional amounts.
This covenant shall survive the termination of this Agreement and the repurchase by Seller of any
or all of the Purchased Assets.

(l) If Seller repurchases Purchased Assets on a day other than the Remittance Date, Seller
shall indemnify Purchaser and hold Purchaser harmless from any actual losses, costs and/or expenses
which Purchaser sustains as a direct consequence of terminating any LIBOR contracts Purchaser
entered into in relation to such Purchased Assets (“Breakage Costs”), in each case for the
remainder of the applicable Pricing Rate Period. Purchaser shall deliver to Seller a statement
setting forth the amount and basis of determination of any Breakage Costs in reasonable detail, it
being agreed that such statement and the method of its calculation (which shall be consistent with
this clause (l)) shall be conclusive and binding upon Seller absent manifest error. This
Article 3(l) shall survive termination of this Agreement and the repurchase of all
Purchased Assets subject to Transactions hereunder.

(m) Facility Expiration Extension. (i) Upon written request of Seller,
provided that all of the extension conditions listed in clause (ii) below
(collectively, the “Termination Date Extension Conditions”) shall have been satisfied,
Purchaser may, at its sole discretion, extend the Termination Date, for a period not to exceed
three hundred sixty-four (364) additional days (an “Extension Period”) by giving notice to
Seller of such extension and of the new Termination Date. Notwithstanding anything to the contrary
in this Article 3(m)(i), in no event shall Seller be permitted to extend the Termination
Date for more than one (1) Extension Period.

(ii) For purposes of this Article 3(m), the Termination Date Extension
Conditions shall be deemed to have been satisfied if:

(A) Purchaser shall have received payment from Seller, as consideration for
Purchaser’s agreement to extend the then-current Termination Date, of an Extension
Fee, such amount to be paid to Purchaser in Dollars, in immediately available funds,
without deduction, set-off or counterclaim;

(B) Seller shall have given Purchaser written notice, not less than one hundred
and eighty (180) days prior to the originally scheduled Termination Date, of
Seller’s desire to extend the Termination Date;

(C) no Material Adverse Effect, Margin Deficit, Default or Event of Default
under this Agreement shall have occurred and be continuing as of the date notice is
given under subclause (ii)(B) above or as of the originally scheduled
Termination Date; and

(D) all representations and warranties made by Seller and Guarantor in the
Transaction Documents (except to the extent disclosed in a Requested Exceptions
Report) shall be true, correct, complete and accurate in all material respects as of
the existing Termination Date.

(n) Repurchase Date Extension. (i) Provided that all of the extension conditions
listed in clause (ii) below (collectively, the “Repurchase Date Extension
Conditions”) shall have been satisfied with respect to a Purchased Asset, Purchaser shall
extend the then-current Repurchase Date for such Purchased Asset for a period not to exceed three
(3) additional months, but in any event, not beyond 364 days from the initial Purchase Date for
such Purchased Asset, by giving notice to Seller of such extension and of the new Repurchase Date
for such Purchased Asset. Notwithstanding anything to the contrary, in no event shall Seller be
permitted to extend the Repurchase Date for any Purchased Asset more than once.

(ii) For purposes of this Article 3(n), the Repurchase Date Extension
Conditions shall be deemed to have been satisfied if:

(A) Seller shall have, not less than thirty (30) or more than sixty (60) days
prior to the then-current Repurchase Date for a Purchased Asset, (1) given Purchaser
written notice that a securitization of such Purchased Asset is pending and that
Seller desires to extend the Repurchase Date of such Purchased Asset to facilitate
the sale of such Purchased Asset into such securitization and (2) provided to
Purchaser evidence reasonably satisfactory to Purchaser that such Purchased Asset
will be included in such securitization and of the intended closing date of such
securitization;

(B) no Material Adverse Effect, Margin Deficit, Default or Event of Default
under this Agreement shall have occurred and be continuing as of the date notice is
given under subclause (ii)(A) above or as of the then-current Repurchase
Date for such Purchased Asset; and

(C) all representations and warranties made by Seller and Guarantor in the
Transaction Documents (except to the extent disclosed in a Requested Exceptions
Report) shall be true, correct, complete and accurate in all material respects as of
the existing Termination Date.

ARTICLE 4

MARGIN MAINTENANCE

(a) Purchaser may, at its option in its sole discretion, re-determine the Market Value for any
Purchased Asset at any time and from time to time. Upon the occurrence and during the continuance
of a Margin Deficit Event with respect to any Purchased Asset, Purchaser may, by written notice to
Seller substantially in the form of Exhibit VIII hereto (a “Margin Call”), require
Seller to (i) make a cash payment in reduction of the Repurchase Price of such Purchased Asset or
(ii) at the option of the Purchaser, deliver additional Eligible Assets to Purchaser, in each case,
so that after giving effect to such payment or delivery, no Margin Deficit shall exist with respect
to such Purchased Asset.

(b) If a Margin Call is given by Purchaser under Article 4(a) on any Business Day at
or prior to 10 a.m. (New York time), the Seller shall cure the related Margin Deficit as provided
in Article 4(a) no later than 5:00 p.m. (New York time) on the same day. If a Margin Call
is given by Purchaser under Article 4(a) on any Business Day after 10 a.m. (New York time),
the Seller shall cure the related Margin Deficit as provided in Article 4(a) no later than
5:00 p.m. (New York time) on the immediately following Business Day.

(c) From time to time, if (i) the Market Value of one or more Purchased Assets has been
reduced solely as a result of market fluctuations, (ii) the aggregate amount of cash payments made
by Seller to Purchaser to cure the related Margin Deficits pursuant to Article 4(a) minus
the aggregate amount of Margin Return Amounts with respect to such Purchased Assets exceeds
$3,000,000 and (iii) the Margin Amount for such Purchased Assets exceeds the Repurchase Price for
such Purchased Assets (the amount of such excess, the “Margin Excess”) by an amount of not
less than $3,000,000, then Purchaser may, in its sole and absolute discretion, consider a request
from Seller to transfer cash to Seller in an amount up to such Margin Excess, but not exceeding the
aggregate amount of cash payments made by Seller to Purchaser with respect to such Purchased Asset
to cure Margin Deficits resulting from market fluctuations.

(d) The failure or delay by Purchaser, on any one or more occasions, to exercise its rights
under this Article 4 shall not change or alter the terms and conditions of this Agreement
or limit or waive the right of Purchaser to do so at a later date or in any way create additional
rights for Seller.

ARTICLE 5

PAYMENTS; COLLECTION ACCOUNT

(a) Concurrently with the execution and delivery of this Agreement, Seller shall establish a
segregated interest bearing deposit account (the “Collection Account”) in the name of
Seller for the benefit of the Purchaser at Account Bank. The Collection Account shall be subject
to the Account Control Agreement in favor of the Purchaser.

(b) Seller shall cause Servicer to promptly remit, and in any event no later than two (2)
Business Days after receipt thereof, all Net Cash Flow in respect of the Purchased Assets directly
into the Collection Account. If Seller, Guarantor or any Affiliate of the foregoing shall receive
any Net Cash Flow with respect to a Purchased Asset other than by remittance from the Collection
Account in accordance with the following sentence, such party shall (and Seller shall cause such
party to) promptly remit such amounts directly into the Collection Account. Amounts in the
Collection Account shall be remitted by Account Bank in accordance with the provisions of
Articles 5(c) and 5(d).

(c) So long as no Event of Default shall have occurred and be continuing, Account Bank shall,
on each Business Day, remit all amounts in the Collection Account to Seller. To the extent Net
Cash Flow is applied to reduce the outstanding principal balance of any Purchased Asset, Seller
shall repay the Repurchase Price for such Purchased Asset in an amount equal to the amount of such
principal repayment up to the amount of the Repurchase Price for such Purchased Asset within two
(2) Business Days of receipt thereof.

(d) Upon receipt of written notice from Purchaser that an Event of Default shall have occurred
and be continuing, and so long as Purchaser has not withdrawn such notice, Account Bank shall cease
remitting funds to Seller pursuant to Article 5(c) and shall instead remit, on each
Business Day beginning on the Business Day after receipt of such notice from the Purchaser, all
amounts on deposit in the Collection Account as of the prior Business Day in the following order of
priority:

(i) first, to Purchaser, an amount equal to all accrued and unpaid Purchase Price
Differential;

(ii) second, to the extent Principal Payments are received for a particular Purchased
Asset, to Purchaser in reduction of the Repurchase Price for such Purchased Asset;

(iii) third, to Purchaser, in reduction of the Repurchase Price for all Purchased
Assets, on a pro rata basis based on each Purchased Asset’s unpaid principal balance, until
the Repurchase Price for each Purchased Asset has been reduced to zero;

(iv) fourth, to Purchaser, an amount equal to any other amounts then due and payable to
Purchaser or its Affiliates under any Transaction Document; and

(v) fifth, to Seller, the remainder, if any.

(e) On or before each Remittance Date, Seller shall pay to Purchaser all accrued and unpaid
Purchase Price Differential due on such Remittance Date.

ARTICLE 6

SECURITY INTEREST

(a) Purchaser and Seller intend that the Transactions hereunder be sales to Purchaser of the
Purchased Assets and not loans from Purchaser to Seller secured by the Purchased Assets. However,
in order to preserve Purchaser’s rights under the Transaction Documents, in the event that a court
or other forum re-characterizes the Transactions hereunder as other than sales, and as security for
the performance by Seller of all of Seller’s obligations to Purchaser under the Transaction
Documents and the Transactions entered into hereunder, or in the event that a transfer of a
Purchased Asset is otherwise ineffective to effect an outright transfer of such Purchased Asset to
Purchaser, Seller hereby assigns, pledges and grants a security interest in all of its right, title
and interest in, to and under the Collateral, whether now owned or hereafter acquired, now existing
or hereafter created and wherever located, to Purchaser to secure the payment of the Repurchase
Price on all Transactions to which it is a party and all other amounts owing by it to Purchaser
hereunder, including, without limitation, amounts owing pursuant to Article 25, and under
the other Transaction Documents (collectively, the “Repurchase Obligations”). Seller
agrees to mark its books and records to evidence the interests granted to Purchaser hereunder. For
purposes of this Agreement, “Collateral” shall mean:

(i) the Collection Account and all monies from time to time on deposit in the
Collection Account and any and all replacements, substitutions, distributions on, income
relating to or proceeds of any and all of the foregoing; and

(ii) the Purchased Items.

(b) Purchaser’s security interest in the Collateral shall terminate only upon satisfaction of
the Repurchase Obligations. Upon such satisfaction and upon request by Seller, Purchaser shall, at
Seller’s sole expense, deliver to Seller such UCC termination statements and other release
documents as may be commercially reasonable and return the Purchased Assets to Seller and reconvey
the Purchased Items to Seller and release its security interest in the Collateral, such release to
be effective automatically without further action by any party. For purposes of the grant of the
security interest pursuant to this Article 6, this Agreement shall be deemed to constitute
a security agreement under the New York Uniform Commercial Code (the “UCC”). Purchaser
shall have all of the rights and may exercise all of the remedies of a secured creditor under the
UCC and the other laws of the State of New York. In furtherance of the foregoing, (i) Purchaser,
at Seller’s sole cost and expense, as applicable, shall cause to be filed in such locations as may
be necessary to perfect and maintain perfection and priority of the security interest granted
hereby, UCC financing statements and continuation statements (collectively, the “Filings”),
and shall forward copies of such Filings to Seller upon completion thereof, and (ii) Seller shall
from time to time take such further actions as may be reasonably requested by Purchaser to maintain
and continue the perfection and priority of the security interest granted hereby (including marking
its records and files to evidence the interests granted to Purchaser hereunder). Notwithstanding
the foregoing, the Repurchase Obligations shall be full recourse to Seller.

(c) Seller acknowledges that it has no rights to service the Purchased Assets other than as a
party to the Interim Servicing Agreement. Without limiting the generality of the foregoing and the
grant of a security interest in Article 6(a), and in the event that Seller is deemed by a
court, other forum or otherwise to retain any residual Servicing Rights (notwithstanding that such
Servicing Rights are Purchased Items hereunder), and for the avoidance of doubt, Seller hereby
acknowledges and agrees that the Servicing Rights constitute Collateral hereunder for all purposes.
The foregoing provision is intended to constitute a security agreement or other arrangement or
other credit enhancement related to the Agreement and Transactions hereunder as defined under
Sections 101(47)(v) and 741(7)(x) of the Bankruptcy Code.

(d) Seller agrees, to the extent permitted by applicable law, that neither it nor anyone
claiming through or under it will set up, claim or seek to take advantage of any appraisement,
valuation, stay, extension or redemption law now or hereafter in force in any locality where any
Purchased Assets may be situated in order to prevent, hinder or delay the enforcement or
foreclosure of this Agreement after the occurrence and during the continuance of an Event of
Default, or the absolute sale of any of the Purchased Assets, or the final and absolute putting
into possession thereof, immediately after such sale, of the purchasers thereof, and Seller, for
itself and all who may at any time claim through or under it, hereby waives, after the occurrence
and during the continuance of an Event of Default, to the full extent that it may be lawful so to
do, the benefit of all such laws and any and all right to have any of the properties or assets
constituting the Purchased Assets marshaled upon any such sale, and agrees that Purchaser or any
court having jurisdiction to foreclose the security interests granted in this Agreement may, after
the occurrence and during the continuance of an Event of Default, sell the Purchased Assets as an
entirety or in such parcels as Purchaser or such court may determine.

ARTICLE 7

PAYMENT, TRANSFER AND CUSTODY

(a) Unless otherwise mutually agreed in writing, all transfers of funds to be made by Seller
hereunder shall be made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to Purchaser, in accordance with the wiring instructions set forth below, not later
than 5:00 p.m. (New York time), on the date on which such payment shall become due (and each such
payment made after such time shall be deemed to have been made on the next succeeding Business
Day).

	 	 	 
	Bank Name:

ABA Number:

Account Number:

Account Name:

Reference:

Attention:

	 	Bank of New York

021-000-018

GLA 111569-HEL

HEL

RAIT CRE Conduit IV, LLC Repo Facility

Whole Loan Operations

(b) On the Purchase Date for each Transaction, ownership of the Purchased Assets and other
Purchased Items shall be transferred to Purchaser or its designee (including the Custodian) against
the simultaneous transfer of the Purchase Price in immediately available funds to an account of
Seller or its designee specified in the Confirmation relating to such Transaction, subject to and
in accordance with this Agreement.

(c) Seller shall deposit the Purchased Asset Files representing the Purchased Assets, or
direct that the Purchased Asset Files be deposited directly, with the Custodian in accordance with
the Custodial Agreement. The Purchased Asset Files shall be maintained in accordance with the
Custodial Agreement. If a Purchased Asset File is not delivered to Purchaser or its designee
(including the Custodian), such Purchased Asset File shall be held in trust by Seller or its
designee for the benefit of Purchaser as the owner thereof. Seller or its designee shall maintain
a copy of the Purchased Asset File and the originals of the Purchased Asset File not delivered to
Purchaser or its designee (including the Custodian). The possession of the Purchased Asset File by
Seller or its designee is at the will of Purchaser for the sole purpose of servicing the related
Purchased Asset, and such retention and possession by Seller or its designee is in a custodial
capacity only. The books and records (including, without limitation, any computer records or
tapes) of Seller or its designee shall be marked appropriately to reflect clearly the sale of the
related Purchased Asset to Purchaser. Seller or its designee (including the Custodian) shall
release its custody of the Purchased Asset File only in accordance with a written request
acknowledged in writing by Purchaser and otherwise in accordance with the Custodial Agreement.

(d) From time to time, Seller shall forward to the Custodian, with copy to the Purchaser,
additional original documents or additional documents evidencing any assumption, modification,
consolidation or extension of a Purchased Asset approved in accordance with the terms of this
Agreement, and upon receipt of any such other documents (which shall be clearly marked as to which
Purchased Asset File such documents relate).

ARTICLE 8

SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

(a) Title to all Purchased Assets shall pass to Purchaser on the applicable Purchase Date, and
Purchaser shall have free and unrestricted use of all Purchased Assets, subject, however, to the
terms of this Agreement. Nothing in this Agreement or any other Transaction Document shall
preclude Purchaser from engaging in repurchase transactions with the Purchased Assets or otherwise
selling, transferring, pledging, repledging, hypothecating or rehypothecating the Purchased Assets,
all on terms that Purchaser may determine in its sole discretion, but no such transaction shall
relieve Purchaser of its obligations to transfer the same Purchased Assets to Seller pursuant to
Article 3.

(b) Nothing contained in this Agreement or any other Transaction Document shall obligate
Purchaser to segregate any Purchased Assets delivered to Purchaser by Seller. Except to the extent
expressly set forth in this Agreement or any other Transaction Document, no Purchased Asset shall
remain in the custody of Seller or any Affiliate of Seller.

ARTICLE 9

REPRESENTATIONS AND WARRANTIES

(a) Each of Seller and Purchaser represents and warrants (as to itself) to the other that (i)
it is duly authorized to execute and deliver this Agreement, to enter into Transactions
contemplated hereunder and to perform its obligations hereunder and has taken all necessary action
to authorize such execution, delivery and performance, (ii) it will engage in such Transactions as
principal, (iii) the person signing this Agreement on its behalf is duly authorized to do so on its
behalf (or on behalf of any such disclosed principal), (iv) it has obtained all authorizations of
any Governmental Authority required in connection with this Agreement and the Transactions
hereunder and such authorizations are in full force and effect and (v) the execution, delivery and
performance of this Agreement and the Transactions hereunder will not violate any Requirement of
Law applicable to it or its organizational documents or any agreement by which it is bound or by
which any of its assets are affected. On each Purchase Date, Purchaser and Seller shall each be
deemed to repeat all the foregoing representations made by it.

(b) In addition to the representations and warranties in subsection (a) above, Seller
represents and warrants to Purchaser as of the date of this Agreement and will be deemed to
represent and warrant to Purchaser as of the Purchase Date for the purchase of any Purchased Assets
by Purchaser from Seller, unless otherwise stated herein:

(i) Organization. Seller is duly organized, validly existing and in good
standing under the laws and regulations of the jurisdiction of Seller’s incorporation or
organization, as the case may be, and is duly licensed, qualified, and in good standing in
every state where such licensing or qualification is necessary for the transaction of
Seller’s business, except where failure to so qualify could not be reasonably likely to have
a Material Adverse Effect. Seller has the power to own and hold the assets it purports to
own and hold, and to carry on its business as now being conducted and proposed to be
conducted, and has the power to execute, deliver, and perform its obligations under this
Agreement and the other Transaction Documents.

(ii) Due Execution; Enforceability. The Transaction Documents to which it is a
party have been or will be duly executed and delivered by Seller, for good and valuable
consideration. Once executed by each applicable counterparty, the Transaction Documents
constitute the legal, valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms subject to bankruptcy, insolvency, and other
limitations on creditors’ rights generally and to equitable principles.

(iii) Ability to Perform. Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in the
Transaction Documents applicable to it to which it is a party.

(iv) Non-Contravention. Neither the execution and delivery of the Transaction
Documents, nor consummation by Seller of the transactions contemplated by the Transaction
Documents (or any of them), nor compliance by Seller with the terms, conditions and
provisions of the Transaction Documents (or any of them) will conflict with or result in a
breach of any of the terms, conditions or provisions of (i) the organizational documents of
Seller, (ii) any contractual obligation to which Seller is now a party or the rights under
which have been assigned to Seller or the obligations under which have been assumed by
Seller or to which the assets of Seller is subject or constitute a default thereunder, or
result thereunder in the creation or imposition of any lien upon any of the assets of
Seller, other than pursuant to the Transaction Documents, (iii) any judgment or order, writ,
injunction, decree or demand of any court applicable to Seller, or (iv) any applicable
Requirement of Law, in the case of clauses (ii) or (iii) above, to the extent that
such conflict or breach would have a Material Adverse Effect.

(v) Litigation; Requirements of Law. Except as disclosed in any public filings
of Guarantor or its affiliates and specifically identified to Purchaser by Seller prior to
the date hereof and prior to each Purchase Date, as of the date hereof and as of the
Purchase Date for any Transaction hereunder, there is no action, suit, proceeding,
investigation, or arbitration pending or, to the best knowledge of Seller, threatened in
writing against Guarantor, Seller, any Affiliate of Seller or any of their respective
assets, nor is there any action, suit, proceeding, investigation, or arbitration pending or
threatened in writing against Guarantor, Seller or any Affiliate of Seller that may result
in any Material Adverse Effect. Seller is in compliance in all material respects with all
Requirements of Law. Neither Guarantor, Seller nor any of its Affiliates is in default in
any material respect with respect to any judgment, order, writ, injunction, decree, rule or
regulation of any arbitrator or Governmental Authority that may result in any Material
Adverse Effect.

(vi) No Broker. Seller has not dealt with any broker, investment banker,
agent, or other Person (other than Purchaser or an Affiliate of Purchaser) who may be
entitled to any commission or compensation in connection with the sale of Purchased Assets
pursuant to any of the Transaction Documents.

(vii) Good Title to Purchased Assets. Immediately prior to the purchase of any
Purchased Assets and other Purchased Items by Purchaser from Seller, such Purchased Assets
and other Purchased Items are free and clear of any lien, encumbrance or impediment to
transfer (including any “adverse claim” as defined in Article 8-102(a)(1) of the UCC), and
Seller is the record and beneficial owner of and has good and Marketable Title to and the
right to sell and transfer such Purchased Assets and other Purchased Items to Purchaser and,
upon transfer of such Purchased Assets and other Purchased Items to Purchaser, Purchaser
shall be the owner of such Purchased Assets and other Purchased Items free of any adverse
claim. In the event the related Transaction is recharacterized as a secured financing of
the Purchased Assets and other Purchased Items, the provisions of this Agreement are
effective to create in favor of Purchaser a valid “security interest” (as defined in Section
1-201(b)(35) of the UCC) in all rights, title and interest of Seller in, to and under the
Collateral and Purchaser shall have a valid, perfected first priority security interest in
the Collateral (and without limitation on the foregoing, Purchaser, as entitlement holder,
shall have a “security entitlement” to the Collateral).

(viii) No Decline in Market Value; No Defaults. To the best of Seller’s
knowledge, there are no facts or circumstances that are reasonably likely to cause or have
caused the Market Value of any Purchased Asset to decline. No Default or Event of Default
has occurred or exists under or with respect to the Transaction Documents.

(ix) Authorized Representatives. The duly authorized representatives of Seller
are listed on, and true signatures of such authorized representatives are set forth on,
Exhibit II attached to this Agreement, or such other most recent list of authorized
representatives substantially in the form of Exhibit II to this Agreement as Seller
may from time to time deliver to Purchaser.

(x) Representations and Warranties Regarding Purchased Assets; Delivery of
Purchased Asset File.

(A) Since the Purchase Date for any Purchased Asset, Seller has not assigned,
pledged, or otherwise conveyed or encumbered any Purchased Asset or other Purchased
Items related to such Purchased Asset to any other Person, and immediately prior to
the sale of such Purchased Asset and other Purchased Items related to such Purchased
Asset to Purchaser, Seller was the sole owner of such Purchased Asset and other
Purchased Items and had good and Marketable Title thereto, free and clear of all
liens, in each case except for liens to be released simultaneously with the sale to
Purchaser hereunder.

(B) The provisions of the Transaction Documents are effective to either
constitute a sale of Purchased Items to Purchaser or to create in favor of Purchaser
a legal, valid and enforceable security interest in all right, title and interest of
Seller in, to and under the Collateral.

(C) Upon receipt by the Custodian of (x) each Mortgage Note, endorsed in blank
by a duly authorized officer of Seller, or (y) each Participation Certificate, along
with an assignment of such Participation Certificate, in form and substance required
by the related participation agreement, assigning such Participation Certificate in
favor of Purchaser or in blank, duly executed by the applicable Seller, as
applicable, and the payment to Seller by Purchaser of the related Purchase Price
therefor, either a purchase shall have been completed by Purchaser of such Mortgage
Note or Participation Certificate, or Purchaser shall have a valid and fully
perfected first priority security interest in all right, title and interest of
Seller in the Purchased Items described therein.

(D) Each of the representations and warranties made in respect of each
Purchased Asset pursuant to Exhibit V are true, complete and correct, except
to the extent disclosed in a Requested Exceptions Report.

(E) Upon the filing of financing statements on Form UCC-1 naming Purchaser as
“Secured Party”, Seller as “Debtor” and describing the Collateral,
in the jurisdiction and recording office listed on Exhibit XI attached
hereto, the security interests granted hereunder in that portion of the Collateral
that can be perfected by filing under the UCC will constitute fully perfected
security interests under the UCC in all right, title and interest of Seller in, to
and under such Collateral.

(F) Upon execution and delivery of the Account Control Agreement by all parties
thereto, Purchaser shall either be the owner of, or have a valid and fully perfected
first priority security interest in the Collection Account and all “financial
assets” (as defined in the UCC) at any time credited thereto.

(xi) Adequate Capitalization; No Fraudulent Transfer. Seller has, as of such
Purchase Date, adequate capital for the normal obligations foreseeable in a business of its
size and character and in light of its contemplated business operations. Seller is
generally able to pay, and as of the date hereof is paying, its debts as they come due.

(xii) Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or exemption by,
any Governmental Authority or any third party is required to authorize, or is required in
connection with, (i) the execution, delivery and performance by Seller of any Transaction
Document to which Seller is or will be a party, (ii) the legality, validity, binding effect
or enforceability of any such Transaction Document against Seller or (iii) the consummation
of the transactions contemplated by this Agreement (other than the filing of certain
financing statements in respect of certain security interests). Seller has all necessary
licenses, permits and other consents from Governmental Authorities necessary to acquire,
originate, own and sell the Purchased Assets and other Purchased Items.

(xiii) Organizational Documents. Seller has delivered to Purchaser certified
copies of its organization documents, together with all amendments thereto, if any.

(xiv) No Encumbrances. There are (i) no outstanding rights, options, warrants
or agreements on the part of Seller for a purchase, sale or issuance, in connection with the
Purchased Assets, (ii) no agreements on the part of Seller to issue, sell or distribute the
Purchased Assets, and (iii) no obligations on the part of Seller (contingent or otherwise)
to purchase, redeem or otherwise acquire any securities or interest therein, in each case,
except as contemplated by the Transaction Documents.

(xv) Federal Regulations. Seller is not required to register as an “investment
company,” or a company “controlled by an investment company,” within the meaning of the
Investment Company Act of 1940, as amended. Seller is not a “holding company,” or a
“subsidiary company of a holding company,” or an “affiliate” of either a “holding company”
or a “subsidiary company of a holding company,” as such terms are defined in the Public
Utility Holding Company Act of 2005, as amended.

(xvi) Taxes. Seller has filed or caused to be filed all tax returns that, to
the knowledge of Seller, would be delinquent if they had not been filed on or before the
date hereof and has paid all taxes shown to be due and payable on or before the date hereof
on such returns or on any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it and any of its assets by any Governmental
Authority except for any such taxes as (A) are being appropriately contested in good faith
by appropriate proceedings diligently conducted and with respect to which adequate reserves
have been provided in accordance with GAAP or (B) are de minimis in amount; no tax liens
have been filed against any of Seller’s assets and, no claims are being asserted with
respect to any such taxes, fees or other charges.

(xvii) ERISA. Seller does not have any Plans or any ERISA Affiliates and makes
no contributions to any Plans or any Multiemployer Plans. Seller is not, and is not using
any assets of, a “benefit plan investor” as defined in Department of Labor regulation 29
C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA (a “Benefit Plan
Investor”) in connection with any Transaction.

(xviii) Judgments/Bankruptcy. Except as disclosed in writing to Purchaser,
there are no judgments against Seller unsatisfied of record or docketed in any court located
in the United States of America and no Act of Insolvency has ever occurred with respect to
Seller.

(xix) Solvency. Neither the Transaction Documents nor any Transaction
thereunder are entered into in contemplation of insolvency or with intent to hinder, delay
or defraud any of Seller’s creditors. The transfer of the Purchased Assets subject hereto
and the obligation to repurchase such Purchased Assets is not undertaken with the intent to
hinder, delay or defraud any of Seller’s creditors. As of the Purchase Date, Seller is not
insolvent within the meaning of 11 U.S.C. Section 101(32) or any successor provision thereof
and the transfer and sale of the Purchased Assets pursuant hereto and the obligation to
repurchase such Purchased Asset (i) will not cause the liabilities of Seller to exceed the
assets of Seller, (ii) will not result in Seller having unreasonably small capital in light
of its stated business purpose, and (iii) will not result in debts that would be beyond
Seller’s ability to pay as the same mature. Seller received reasonably equivalent value in
exchange for the transfer and sale of the Purchased Assets and the Purchased Items subject
hereto. No petition in bankruptcy has been filed against Seller in the last ten (10) years,
and Seller has not in the last ten (10) years made an assignment for the benefit of
creditors or taken advantage of any debtors relief laws. Seller has only entered into
agreements on terms that would be considered arm’s length and otherwise on terms consistent
with other similar agreements with other similarly situated entities.

(xx) Use of Proceeds; Margin Regulations. All proceeds of each Transaction
shall be used by Seller for purposes permitted under Seller’s governing documents,
provided that no part of the proceeds of any Transaction will be used by Seller to
purchase or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock. Neither the entering into of any Transaction nor
the use of any proceeds thereof will violate, or be inconsistent with, any provision of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(xxi) Full and Accurate Disclosure. No information contained in the
Transaction Documents, or any written statement furnished by or on behalf of Seller pursuant
to the terms of the Transaction Documents, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.

(xxii) Financial Information. All financial data concerning Seller, Guarantor,
the Purchased Assets and the other Purchased Items, and to the knowledge of Seller with
respect to any financial data concerning the Purchased Assets and the other Purchased Items
that was provided to Seller by the related underlying borrower, that has been delivered by
or on behalf of Seller to Purchaser is true, complete and correct in all material respects.
All financial data concerning Seller and Guarantor has been prepared fairly in accordance
with GAAP. All financial data concerning the Purchased Assets and the other Purchased
Items, and to the knowledge of Seller with respect to any financial data concerning the
Purchased Assets and the other Purchased Items that was provided to Seller by the related
underlying borrower, has been prepared in accordance with standard industry practices.
Since the delivery of such data, except as otherwise disclosed in writing to Purchaser,
there has been no change in the financial position of Seller, Guarantor or in the results of
operations of Seller or Guarantor, or to the knowledge of Seller, in the financial position
of the Purchased Assets and the other Purchased Items, which change is reasonably likely to
result in a Material Adverse Effect.

(xxiii) Selection Process. The Purchased Assets under this Agreement were not
selected by Seller in a manner different from the manner in which Seller selects assets with
regard to any other facilities to which it is a party or, in any event, so as to affect
adversely the interests of Purchaser.

(xxiv) [Reserved].

(xxv) No Reliance. Seller has made its own independent decisions to enter into
the Transaction Documents and each Transaction and as to whether such Transaction is
appropriate and proper for it based upon its own judgment and upon advice from such advisors
(including without limitation, legal counsel and accountants) as it has deemed necessary.
Seller is not relying upon any advice from Purchaser as to any aspect of the Transactions,
including without limitation, the legal, accounting or tax treatment of such Transactions.

(xxvi) Patriot Act.

(A) Seller is in compliance, in all material respects, with the (i) the Trading
with the Enemy Act, as amended, and each of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other applicable enabling legislation or executive order relating thereto,
and (ii) the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001). No part of
the proceeds of any Transaction will be used by Seller or any of its Affiliates,
directly or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office, or
anyone else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States Foreign
Corrupt Practices Act of 1977, as amended.

(B) In order to enable Purchaser and its Affiliates to comply with any
anti-money laundering program and related responsibilities including, but not
limited to, any obligations under the USA Patriot Act of 2001 and regulations
thereunder, Seller on behalf of itself and its Affiliates represents that neither
Seller, nor, to Seller’s actual knowledge, any of its Affiliates, is a Prohibited
Investor, and Seller is not acting on behalf of or for the benefit of any Prohibited
Investor.

(xxvii) Environmental Matters.

(A) No properties owned or leased by Seller and no properties formerly owned or
leased by Seller, its predecessors, or any former Subsidiaries or predecessors
thereof (the “Properties”), contain, or have previously contained, any
Materials of Environmental Concern in amounts or concentrations which constitute or
constituted a violation of, or reasonably could be expected to give rise to
liability under, Environmental Laws;

(B) Seller is in compliance with all applicable Environmental Laws, and there
is no violation of any Environmental Laws which reasonably would be expected to
interfere with the continued operations of Seller;

(C) Seller has not received any written notice of violation, alleged violation,
non-compliance, liability or potential liability under any Environmental Law;

(D) Materials of Environmental Concern have not been transported or disposed by
Seller in violation of, or in a manner or to a location which reasonably would be
expected to give rise to liability under, any applicable Environmental Law, nor has
Seller generated, treated, stored or disposed of at, on or under any of the
Properties in violation of, or in a manner that reasonably would be expected to give
rise to liability under, any applicable Environmental Law;

(E) No judicial proceedings or governmental or administrative action under any
Environmental Law is pending or, to the knowledge of Seller, threatened in writing
to which Seller is or will be named as a party, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements arising out of judicial proceedings or
governmental or administrative actions, outstanding under any Environmental Law to
which Seller is a party;

(F) There has been no release of Materials of Environmental Concern in
violation of or in amounts or in a manner that reasonably would be expected to give
rise to liability under any Environmental Law for which Seller may become liable;
and

(G) Each of the representations and warranties set forth in the preceding
clauses (A) through (F) is true and correct with respect to each
parcel of real property owned or operated by Seller.

(xxviii) Insider. Seller is not an “executive officer,” “director,” or “person
who directly or indirectly or acting through or in concert with one or more persons owns,
controls, or has the power to vote more than 10% of any class of voting securities” (as
those terms are defined in 12 U.S.C. § 375(b) or in regulations promulgated pursuant
thereto) of Purchaser, of a bank holding company of which Purchaser is a Subsidiary, or of
any Subsidiary, of a bank holding company of which Purchaser is a Subsidiary, of any bank at
which Purchaser maintains a correspondent account or of any lender which maintains a
correspondent account with Purchaser.

(xxix) Office of Foreign Assets Control. Seller is not a person (i) whose
property or interest in property is blocked or subject to blocking pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (ii) who engages in any dealings or transactions prohibited by Section 2 of such
executive order, or to the best of Seller’s knowledge, is otherwise associated with any
such person in any manner in violation of Section 2 of such executive order, or (iii) on the
current list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.

(xxx) Notice Address; Jurisdiction of Organization. On the date of this
Agreement, Seller’s address for notices is as specified on Exhibit I, unless Seller
has provided a new address to Purchaser in writing. Seller’s jurisdiction of organization
is Delaware. The location where Seller keeps its books and records, including all computer
tapes and records relating to the Collateral, is its notice address, unless Seller has
provided a different address to Purchaser in writing.

(xxxi) Anti-Money Laundering Laws. Seller either (1) is entirely exempt from
or (2) has otherwise fully complied with all applicable anti-money laundering laws and
regulations (collectively, the “Anti-Money Laundering Laws”), by (A) establishing an
adequate anti-money laundering compliance program as required by the Anti-Money Laundering
Laws, (B) conducting the requisite due diligence in connection with the origination of each
Purchased Asset for purposes of the Anti-Money Laundering Laws, including with respect to
the legitimacy of the related obligor (if applicable) and the origin of the assets used by
such obligor to purchase the property in question, and (C) maintaining sufficient
information to identify the related obligor (if applicable) for purposes of the Anti-Money
Laundering Laws.

(xxxii) Ownership. Seller is and shall remain at all times a wholly-owned
direct or indirect subsidiary of Guarantor.

ARTICLE 10

NEGATIVE COVENANTS OF SELLER

On and as of the date hereof and each Purchase Date and until this Agreement is no longer in
force with respect to any Transaction, Seller shall not without the prior written consent of
Purchaser:

(a) take any action that would directly or indirectly impair or adversely affect Purchaser’s
title to the Purchased Assets and the other Purchased Items;

(b) transfer, assign, convey, grant, bargain, sell, set over, deliver or otherwise dispose of,
or pledge or hypothecate, directly or indirectly, any interest in any Purchased Assets and the
other Purchased Items to any Person other than Purchaser, or engage in repurchase transactions or
similar transactions with respect to any Purchased Assets and the other Purchased Items with any
Person other than Purchaser;

(c) create, incur, assume or suffer to exist any Lien, encumbrance or security interest in or
on any of its property, assets, revenue, the Purchased Assets, the other Collateral, whether now
owned or hereafter acquired, other than the Liens and security interest granted by Seller pursuant
to the Transaction Documents;

(d) create, incur, assume or suffer to exist any Indebtedness or other obligation not
otherwise permitted under this Agreement, secured or unsecured, direct or indirect, absolute or
contingent (including guaranteeing any obligation) if the same would cause the Seller to violate
the covenants contained in Article 12 or the Guarantor to violate the financial covenants
contained in the Guaranty;

(e) permit (through the giving of consent, waiver, failure to object (if Seller has such
right) or otherwise) any Mortgaged Property or Mortgagor to create, incur, assume or suffer to
exist any Liens or Indebtedness, including without limitation, junior mortgage debt or mezzanine
debt without the consent of the Purchaser (in each case, unless expressly permitted by the
applicable Purchased Asset Documents and excluding non-consensual Liens against the related
Mortgaged Property);

(f) enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind
up or dissolve itself (or suffer any liquidation, winding up or dissolution), sell all or
substantially all of its assets (except to Purchaser) without the consent of Purchaser in its sole
and absolute discretion, unless it will result in the satisfaction of the Repurchase Obligations;

(g) permit a Change of Control of Seller;

(h) except to the extent expressly authorized in or required by such documents, consent or
assent to any amendment, modification, waiver or supplement to, or termination of, any note, loan
agreement, mortgage or guarantee relating to the Purchased Assets or other agreement or instrument
relating to the Purchased Assets other than in accordance with Article 27 and the Interim Servicing
Agreement;

(i) permit the organizational documents or organizational structure of Seller to be amended
without the prior written consent of Purchaser in its sole and absolute discretion;

(j) after the occurrence and during the continuance of a Default or an Event of Default, make
any distribution, payment on account of, or set apart assets for, a sinking or other analogous fund
for the purchase, redemption, defeasance, retirement or other acquisition of any Capital Stock of
Seller, whether now or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of Seller;

(k) acquire or maintain any right or interest in any Purchased Asset or Mortgaged Property
that is senior to or pari passu with the rights and interests of Purchaser therein under this
Agreement and the other Transaction Documents; and

(l) use any part of the proceeds of any Transaction hereunder for any purpose which violates,
or would be inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of
the Federal Reserve System.

ARTICLE 11

AFFIRMATIVE COVENANTS OF SELLER

On and as of the date hereof and each Purchase Date and until this Agreement is no longer in
force with respect to any Transaction, Seller covenants that:

(a) Seller shall promptly notify Purchaser of any material adverse change in its business
operations and/or financial condition; provided, however, that nothing in this
Article 11 shall relieve Seller of its obligations under this Agreement.

(b) Seller shall provide Purchaser with copies of such documents as Purchaser may reasonably
request evidencing the truthfulness of the representations set forth in Article 9.

(c) Seller shall (1) defend the right, title and interest of Purchaser in and to the Purchased
Assets and other Collateral against, and take such other action as is necessary to remove, the
Liens, security interests, claims and demands of all Persons (other than security interests by or
through Purchaser) and (2) at Purchaser’s reasonable request, take all action Purchaser deems
necessary or desirable to ensure that Purchaser will have a first priority security interest in the
Purchased Assets and other Collateral subject to any of the Transactions in the event such
Transactions are recharacterized as secured financings.

(d) Seller shall notify Purchaser, Account Bank, Servicer and Custodian of the occurrence of
any Default or Event of Default with respect to Seller as soon as possible but in no event later
than the immediately succeeding Business Day after obtaining actual knowledge of such event.

(e) Seller shall promptly (and in any event not later than two (2) Business Days after
knowledge thereof, notify Purchaser: (i) of any default or event of default under any Purchased
Asset; (ii) any default or event of default (or similar event) on the part of Seller or Guarantor
under any Indebtedness or other contractual obligations, which default (A) involves the failure to
pay a matured obligation or (B) permits the acceleration of the maturity of obligations by any
other party to, or beneficiary with respect to, such Indebtedness or contract, in either case, if
the aggregate amount of the Indebtedness or obligations in respect of which such default or
defaults shall have occurred is at least $100,000 with respect to Seller or $2,500,000 with respect
to Guarantor; and (iii) of the commencement of, settlement of or judgment in any litigation,
action, suit, arbitration, investigation or other legal or arbitrable proceeding involving Seller
or Guarantor that could have a Materially Adverse Effect.

(f) Seller shall promptly (and in any event not later than two (2) Business Days following
receipt) deliver to Purchaser (i) any notice of the occurrence of an event of default under, or
report received by Seller pursuant to, the Purchased Asset Documents; and (ii) any other
information with respect to the Purchased Assets that may be reasonably requested by Purchaser from
time to time.

(g) Seller shall permit Purchaser and any of its agents, representatives or permitted assigns
to perform due diligence reviews and inspections in accordance with Article 26.

(h) If Seller shall at any time become entitled to receive or shall receive any rights,
whether in addition to, in substitution of, as a conversion of, or in exchange for a Purchased
Asset, or otherwise in respect thereof, Seller shall accept the same as Purchaser’s agent, hold the
same in trust for Purchaser and deliver the same forthwith to Purchaser (or the Custodian, as
appropriate) in the exact form received, duly endorsed by Seller to Purchaser, if required,
together with an undated bond power covering such certificate duly executed in blank to be held by
Purchaser hereunder as additional collateral security for the Transactions. If any sums of money
or property so paid or distributed in respect of the Purchased Assets shall be received by Seller,
Seller shall, until such money or property is paid or delivered to Purchaser, hold such money or
property in trust for Purchaser, segregated from other funds of Seller, as additional collateral
security for the Transactions.

(i) At any time from time to time upon the commercially reasonable request of Purchaser, at
the sole expense of Seller, Seller shall promptly and duly execute and deliver such further
instruments and documents and take such further actions as Purchaser may deem necessary or
desirable to (A) obtain or preserve the security interest granted hereunder, (B) ensure that such
security interest remains fully perfected at all times and remains at all times first in priority
as against all other creditors of Seller (whether or not existing as of the Closing Date or in the
future) and (C) obtain or preserve the rights and powers herein granted (including, among other
things, filing such UCC financing statements as Purchaser may request). If any amount payable
under or in connection with any of the Collateral shall be or become evidenced by any promissory
note, other instrument or certificated security, such note, instrument or certificated security
shall be promptly delivered to Purchaser, duly endorsed in a manner satisfactory to Purchaser, to
be itself held as Collateral pursuant to the Transaction Documents.

(j) Seller shall provide, or to cause to be provided, to Purchaser the following financial and
reporting information:

(i) Purchased Asset Information. Within two (2) business days after receipt
thereof, copies of property level information made available to Seller and all other
required reports, rent rolls, financial statements, certificates and notices it receives
pursuant to the Purchased Asset Documents relating to each Purchased Asset;

(ii) Monthly Purchased Asset Reports. No later than the 15th day of
each month, a summary property performance report for each Purchased Asset in a form
acceptable to Purchaser, which shall include, without limitation, net operating income, a
debt service coverage ratio calculation, occupancy, revenue per available unit (for
hospitality properties) and sales per square foot (for retail properties) for the preceding
calendar month. For any portfolio, the report shall include a summary of the performance of
the portfolio on a consolidated basis;

(iii) Quarterly Reports. Within forty-five (45) days after the end of each
calendar quarter, consolidated unaudited financial statements (including balance sheets and
income statements) of Seller and Guarantor presented fairly in accordance with GAAP;

(iv) Annual Reports. Within ninety (90) days after the end of each calendar
year, consolidated audited financial statements (including balance sheets and income
statements) of Guarantor and consolidated unaudited financial statements (including balance
sheets and income statements) of Seller, in each case, presented fairly in accordance with
GAAP; and

(v) Covenant Compliance Certificate. Along with each delivery pursuant to
Article 11(j)(ii), 11(j)(iii) and 11(j)(iv), a completed and
executed Covenant Compliance Certificate.

(k) Seller shall make a representative available to Purchaser once every month for attendance
at a telephone conference, the date of which to be mutually agreed upon by Purchaser and Seller,
regarding the status of each Purchased Asset, Seller’s compliance with the requirements of
Articles 11 and 12, and any other matters relating to the Transaction Documents or
Transactions that Purchaser, in its reasonable discretion, wishes to discuss with Seller.

(l) Seller shall and shall cause Guarantor to at all times (i) comply with all material
contractual obligations, (ii) comply in all respects with all laws, ordinances, rules, regulations
and orders (including, without limitation, environmental laws) of any Governmental Authority or any
other federal, state, municipal or other public authority having jurisdiction over Seller and
Guarantor or any of its assets and Seller and Guarantor shall do or cause to be done all things
necessary to preserve and maintain in full force and effect its legal existence, and all licenses
material to its business and (iii) maintain and preserve its legal existence and all of its
material rights, privileges, licenses and franchises necessary for the operation of its business
(including, without limitation, preservation of all lending licenses held by Seller and of Seller’s
status as a “qualified transferee” (however denominated) under all documents which govern the
Purchased Assets).

(m) Seller shall and shall cause Guarantor to at all times keep proper books of records and
accounts in which full, true and correct entries shall be made of its transactions fairly in
accordance with GAAP, and set aside on its books from its earnings for each fiscal year all such
proper reserves in accordance with GAAP.

(n) Seller shall observe, perform and satisfy all the terms, provisions and covenants required
to be observed, performed or satisfied by it, and shall pay when due all costs, fees and expenses
required to be paid by it, under the Transaction Documents. Seller shall pay and discharge all
taxes, levies, liens and other charges on its assets and on the Collateral that, in each case, in
any manner would create any lien or charge upon the Collateral, other than any such taxes that are
being appropriately contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves have been provided in accordance with GAAP.

(o) Seller shall advise Purchaser in writing of the opening of any new chief executive office
or the closing of any such office of Seller or Guarantor and of any change in Seller’s or
Guarantor’s name or the places where the books and records pertaining to the Purchased Assets are
held not less than fifteen (15) Business Days prior to taking any such action.

(p) Seller shall maintain records with respect to the Collateral and Purchased Items and the
conduct and operation of its business with no less a degree of prudence than if the Collateral and
Purchased Items were held by Seller for its own account and shall furnish Purchaser, upon
reasonable request by Purchaser or its designated representative, with reasonable information
obtainable by Seller with respect to the Collateral and Purchased Items and the conduct and
operation of its business.

(q) Seller shall continue to engage in business of the same general type as now conducted by
it or otherwise as approved by Purchaser prior to the date hereof.

(r) Seller shall pay and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which
is being contested in good faith and by proper proceedings and against which adequate reserves are
being maintained.

(s) Seller shall be solely responsible for the fees and expenses of Custodian, Account Bank
and Servicer in carrying out their respective duties and obligations in connection with the
Transaction Documents or any Transaction hereunder.

(t) Seller shall cause Guarantor to at all times comply with the terms of the Guaranty,
including without limitation, the financial covenants contained therein.

(u) Seller shall at all times maintain hedging arrangements satisfactory to Purchaser in its
reasonable discretion, either as a direct trade with Purchaser or through fully executed
assignments of trade with Purchaser through a hedge counterparty approved by Purchaser in its
reasonable discretion.

(v) Seller agrees that, from time to time upon the prior written request of Purchaser, it
shall (i) execute and deliver such further documents, provide such additional information and
reports and perform such other acts as Purchaser may request in its commercially reasonable
discretion in order to insure compliance with the USA Patriot Act of 2001 and (ii) provide such
opinions of counsel concerning matters relating to the USA Patriot Act of 2001 as Purchaser may
request in its commercially reasonable discretion; provided, however, that nothing
in this Article 11(v) shall be construed as requiring Purchaser to conduct any inquiry or
decreasing Seller’s responsibility for its statements, representations, warranties or covenants
hereunder. Seller agrees to promptly notify Purchaser or a person appointed by Purchaser to
administer Purchaser’s anti-money laundering program, if applicable, if Seller or, to Seller’s
actual knowledge, any of its Affiliates is or becomes a Prohibited Investor, or if Seller is acting
on behalf of or for the benefit of any Prohibited Investor.

ARTICLE 12

SINGLE PURPOSE ENTITY

Seller hereby covenants with Purchaser, that as of the date hereof and for so long as any of
the Transaction Documents shall remain in effect:

(a) Seller shall own no assets, and shall not engage in any business, other than the assets
and transactions specifically contemplated by this Agreement and any other Transaction Document;

(b) Seller shall not make any loans or advances to any Affiliate and shall not acquire
obligations or securities of its Affiliates;

(c) Seller shall pay its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) only from its own assets;

(d) Seller shall comply with the provisions of its organizational documents;

(e) Seller shall do all things necessary to observe its organizational formalities and to
preserve its existence;

(f) Seller shall maintain all of its books, records, financial statements and bank accounts
separate from those of its Affiliates (except that such financial statements may be consolidated to
the extent consolidation is required under GAAP or as a matter of Requirements of Law;
provided, that (i) appropriate notation shall be made on such financial statements to
indicate the separateness of the Seller from such Affiliate and to indicate that the Seller’s
assets and credit are not available to satisfy the debts and other obligations of such Affiliate or
any other Person and (ii) such assets shall also be listed on the Seller’s own separate balance
sheet) and file its own tax returns (except to the extent consolidation is required or permitted
under Requirements of Law);

(g) Seller shall be, and at all times shall hold itself out to the public as, a legal entity
separate and distinct from any other entity (including any Affiliate), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct business in its own name,
and shall not identify itself or any of its Affiliates as a division of the other;

(h) Seller shall maintain adequate capital for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated business operations and
shall remain solvent;

(i) Seller shall not commingle its funds or other assets with those of any Affiliate or any
other Person and shall maintain its properties and assets in such a manner that it would not be
costly or difficult to identify, segregate or ascertain its properties and assets from those of
others;

(j) Seller shall maintain its properties, assets and accounts separate from those of any
Affiliate or any other Person;

(k) Seller shall not hold itself out to be responsible for the debts or obligations of any
other Person;

(l) Seller shall not, without the prior unanimous written consent of all of its Independent
Managers, take any action that will result in an Act of Insolvency;

(m) Seller shall, at all times, have at least one (1) Independent Manager;

(n) Seller’s organizational documents shall provide (i) that Purchaser be given at least two
(2) Business Days prior notice of the removal and/or replacement of any Independent Manager,
together with the name and contact information of the replacement Independent Manager and evidence
of the replacement’s satisfaction of the definition of Independent Manager and (ii) that any
Independent Manager of Seller shall not have any fiduciary duty to anyone including the holders of
the equity interest in Seller and any Affiliates of Seller except Seller and the creditors of
Seller with respect to taking of, or otherwise voting on, any Act of Insolvency; provided,
that the foregoing shall not eliminate the implied contractual covenant of good faith and fair
dealing;

(o) Seller shall not enter into any transaction with an Affiliate of the Seller except on
commercially reasonable terms similar to those available to unaffiliated parties in an arm’s length
transaction;

(p) Seller shall maintain a sufficient number of employees in light of contemplated business
operations;

(q) Seller shall use separate invoices and checks bearing its own name, and allocate fairly
and reasonably any overhead for shared office space and for services performed by an employee of an
Affiliate;

(r) Seller shall not pledge its assets to secure the obligations of any other Person;

(s) Seller shall not form, acquire or hold any Subsidiary or own any equity interest in any
other entity; and

(t) Seller shall not create, incur, assume or suffer to exist any Lien, encumbrance or
security interest in or on any of its property, assets, revenue, the Purchased Assets, the other
Collateral, whether now owned or hereafter acquired, other than the Liens and security interest
granted by Seller pursuant to the Transaction Documents.

ARTICLE 13

EVENTS OF DEFAULT; REMEDIES

(a) Each of the following events shall constitute an “Event of Default” under this
Agreement:

(i) Seller shall fail to repurchase Purchased Assets upon the applicable Repurchase
Date;

(ii) Purchaser shall fail to receive on or before any Remittance Date the accrued and
unpaid Purchase Price Differential due for the immediately preceding Pricing Rate Period;

(iii) Seller shall fail to cure any Margin Deficit within the period specified in
Article 4;

(iv) any Principal Payment received with respect to a Purchased Assets is not applied
to repay the Repurchase Price for such Purchased Asset in accordance with Article
5(c);

(v) Seller shall fail to make any payment not otherwise enumerated that is owing to
Purchaser that has become due, whether by acceleration or otherwise, which failure is not
remedied within five (5) Business Days of notice thereof;

(vi) an Act of Insolvency occurs with respect to Seller or Guarantor;

(vii) Seller or Guarantor shall admit in writing to any Person its inability to, or its
intention not to, perform any of its respective obligations under any Transaction Document;

(viii) the Custodial Agreement, the Account Control Agreement or any other Transaction
Document or a replacement therefor acceptable to Purchaser shall for whatever reason be
terminated or cease to be in full force and effect, other than as a result of any action or
inaction of Purchaser, or the enforceability thereof shall be contested by Seller;

(ix) Seller or Guarantor shall be in default (after the expiration of any applicable
grace, notice and/or cure periods) under (A) any Indebtedness of Seller or Guarantor, as
applicable, which default (1) involves the failure to pay a matured obligation in excess of
$100,000, with respect to Seller or $2,500,000 with respect to Guarantor or (2) permits the
acceleration of the maturity of obligations by any other party to or beneficiary with
respect to such Indebtedness, if the aggregate amount of the Indebtedness in respect of
which such default or defaults shall have occurred is at least $100,000, with respect to
Seller or $2,500,000, with respect to Guarantor; or (B) any other material contract to which
Seller or Guarantor is a party which default (1) involves the failure to pay a matured
obligation or (2) permits the acceleration of the maturity of obligations by any other party
to or beneficiary of such contract if the aggregate amount of such obligations is $100,000,
with respect to Seller or $2,500,000, with respect to Guarantor;

(x) (A) Seller or an ERISA Affiliate shall engage in any “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan that is not
exempt from such Sections of ERISA and the Internal Revenue Code, (B) failure to satisfy the
minimum funding standard (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived, or the filing pursuant to Section 412(d) of the Code or Section
303(d) of ERISA of an application for a waiver of the minimum funding standard, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the
assets of Seller or any ERISA Affiliate, (C) a Reportable Event (as referenced in Section
4043(b)(3) of ERISA), excluding those for which the 30-day notice period is waived, shall
occur with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Plan, (D) any Plan shall
terminate for purposes of Title IV of ERISA, (E) Seller or any ERISA Affiliate shall, or in
the reasonable opinion of Purchaser is likely to, incur any liability in connection with a
withdrawal or partial withdrawal from, or the insolvency or reorganization of, a
Multiemployer Plan, or (F) Seller is a Benefit Plan Investor and its entering into any
transaction in connection with this Agreement or any other Transaction Document constitutes
or results in a prohibited transaction (as defined in Section 406 of ERISA or Section 4975
of the Code) if that transaction will not be covered by and exempt under Prohibited
Transaction Class Exemption (“PTCE”) 84-1, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE
96-23, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code, or another similar
prohibited transaction exemption applicable thereto; and in each case in clauses (A)
through (F) above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse Effect;

(xi) either (A) the Transaction Documents shall for any reason not cause, or shall
cease to cause, Purchaser to be the owner free of any adverse claim of any of the Purchased
Assets and other Purchased Items, and such condition is not cured by Seller within three (3)
Business Days after the earlier of notice thereof from Purchaser to Seller or actual
knowledge thereof by Seller, or (B) if a Transaction is recharacterized as a secured
financing, and the Transaction Documents with respect to any Transaction shall for any
reason cease to create and maintain a valid first priority security interest in favor of
Purchaser in any of the Collateral;

(xii) any governmental, regulatory, or self regulatory authority shall have taken any
action to remove, limit, restrict, suspend or terminate the rights, privileges, or
operations of Seller or Guarantor, which suspension has a Material Adverse Effect in the
commercially reasonable determination of Purchaser;

(xiii) any condition shall exist that constitutes a Material Adverse Effect in
Purchaser’s sole discretion exercised in good faith;

(xiv) a Change of Control, without the consent of Purchaser, shall occur with respect
to Seller;

(xv) any representation made by Seller to Purchaser (other than those contained in
Article 9(b)(x)(D)) shall have been incorrect or untrue in any respect when made or
repeated or deemed to have been made or repeated;

(xvi) a final non appealable judgment by any competent court in the United States of
America for the payment of money (a) rendered against Seller in an amount greater than
$100,000 or (b) rendered against Guarantor in an amount greater than $2,500,000, and
remained undischarged or unpaid for a period of sixty (60) days, during which period
execution of such judgment is not effectively stayed by bonding over or other means
reasonably acceptable to Purchaser;

(xvii) if Seller shall breach or fail to perform any of the terms, covenants or
obligations under this Agreement, other than as specifically otherwise referred to in this
definition of “Event of Default”, and such breach or failure to perform is not remedied
within the earlier of ten (10) days after (a) delivery of written notice thereof to Seller
by Purchaser, or (b) actual knowledge on the part of Seller of such breach or failure to
perform;

(xviii) the Guaranty or a replacement thereof acceptable to Purchaser shall for
whatever reason be terminated or cease to be in full force and effect, other than as a
result of any action or inaction of Purchaser, or the enforceability thereof shall be
contested by Guarantor or Seller;

(xix) the Interim Servicing Agreement or a replacement thereof acceptable to Purchaser
shall for whatever reason be terminated or cease to be in full force and effect, other than
as a result of any action or inaction of Purchaser, or the enforceability thereof shall be
contested by Servicer or Seller;

(xx) the breach by any Servicer affiliated with Seller or Guarantor of any term set
forth in the Interim Servicing Agreement or of any representation, warranty, certification
or covenant made or deemed made in the Interim Servicing Agreement by such Servicer (after
the expiration of any applicable grace, notice, and/or cure periods) or if any certificate
furnished by such Servicer to Purchaser pursuant to the provisions hereof or thereof or any
information with respect to the Purchased Assets furnished in writing on behalf of such
Servicer shall prove to have been false or misleading in any material respect as of the time
made or furnished; and

(xxi) the breach by Guarantor of any term set forth in the Guaranty or of any
representation, warranty, certification or covenant made or deemed made in the Guaranty by
Guarantor (after the expiration of any applicable grace, notice, and/or cure periods) or if
any certificate furnished by Guarantor to Purchaser pursuant to the provisions hereof or
thereof or any information with respect to the Purchased Assets furnished in writing on
behalf of Guarantor shall prove to have been false or misleading in any material respect as
of the time made or furnished.

(b) After the occurrence and during the continuance of an Event of Default, Seller hereby
appoints Purchaser as attorney-in-fact of Seller for the purpose of taking any action and executing
or endorsing any instruments that Purchaser may deem necessary or advisable to accomplish the
purposes of this Agreement, which appointment as attorney-in-fact is irrevocable and coupled with
an interest. If an Event of Default shall occur and be continuing with respect to Seller, the
following rights and remedies shall be available to Purchaser:

(i) at the option of Purchaser, exercised by written notice to Seller (which option
shall be deemed to have been exercised, even if no notice is given, immediately upon the
occurrence of an Act of Insolvency with respect to Seller or Guarantor), the Repurchase Date
for each Transaction hereunder shall, if it has not already occurred, immediately occur
(such date, the “Accelerated Repurchase Date”);

(ii) if Purchaser exercises or is deemed to have exercised the option referred to in
Article 13(b)(i):

(A) Seller’s obligations hereunder to repurchase all Purchased Assets shall
become immediately due and payable on and as of the Accelerated Repurchase Date;

(B) to the extent permitted by applicable law, the Repurchase Price with
respect to each Transaction (determined as of the Accelerated Repurchase Date) shall
be increased by the aggregate amount obtained by daily application of, on a 360 day
per year basis for the actual number of days during the period from and including
the Accelerated Repurchase Date to but excluding the date of payment of the
Repurchase Price (as so increased), (x) the Pricing Rate for such Transaction
multiplied by (y) the Repurchase Price for such Transaction (decreased by (I) any
amounts actually remitted to Purchaser by the Account Bank or Seller from time to
time pursuant to Article 5 and applied to such Repurchase Price, and (II)
any amounts applied to the Repurchase Price pursuant to Article 13(b)(iii));

(C) the Custodian shall, upon the request of Purchaser, deliver to Purchaser
all instruments, certificates and other documents then held by the Custodian
relating to the Purchased Assets; and

(D) Purchaser may (I) immediately sell, at a public or private sale in a
commercially reasonable manner and at such price or prices as Purchaser may deem
satisfactory any or all of the Purchased Assets, and/or (II) in its sole and
absolute discretion elect, in lieu of selling all or a portion of such Purchased
Assets, to give Seller credit for such Purchased Assets in an amount equal to the
Market Value of such Purchased Assets against the aggregate unpaid Repurchase Price
for such Purchased Assets and any other amounts owing by Seller under the
Transaction Documents. The proceeds of any disposition of Purchased Assets effected
pursuant to this Article 13(b)(iii) shall be applied, (w) first, to the
costs and expenses incurred by Purchaser in connection with Seller’s default;
(x) second, to actual, out-of-pocket damages incurred by Purchaser in connection
with Seller’s default, (y) third, to the Repurchase Price; and (z) fourth, to return
any excess to Seller.

(iii) the parties acknowledge and agree that (A) the Purchased Assets subject to any
Transaction hereunder are not instruments traded in a recognized market, (B) in the absence
of a generally recognized source for prices or bid or offer quotations for any Purchased
Asset, the Purchaser may establish the source therefor in its sole and absolute discretion
and (C) all prices, bids and offers shall be determined together with accrued Net Cash Flow
(except to the extent contrary to market practice with respect to the relevant Purchased
Assets). The parties recognize that it may not be possible to purchase or sell all of the
Purchased Assets on a particular Business Day, or in a transaction with the same purchaser,
or in the same manner because the market for such Purchased Assets may not be liquid. In
view of the nature of the Purchased Assets, the parties agree that liquidation of a
Transaction or the Purchased Assets does not require a public purchase or sale and that a
good faith private purchase or sale shall be deemed to have been made in a commercially
reasonable manner. Accordingly, Purchaser may elect, in its sole and absolute discretion,
the time and manner of liquidating any Purchased Assets, and nothing contained herein shall
(A) obligate Purchaser to liquidate any Purchased Assets on the occurrence and during the
continuance of an Event of Default or to liquidate all of the Purchased Assets in the same
manner or on the same Business Day or (B) constitute a waiver of any right or remedy of
Purchaser;

(iv) Seller shall be liable to Purchaser and its Affiliates and shall indemnify
Purchaser and its Affiliates for the amount (including in connection with the enforcement of
this Agreement) of all losses, costs and expenses, including reasonable legal fees and
expenses, actually incurred by Purchaser in connection with or as a consequence of an Event
of Default with respect to Seller (but excluding any losses, costs or expenses incurred as a
result of Purchaser’s gross negligence or willful misconduct);

(v) Purchaser shall have, in addition to its rights and remedies under the Transaction
Documents, all of the rights and remedies provided by applicable federal, state, foreign
(where relevant), and local laws (including, without limitation, if the Transactions are
recharacterized as secured financings, the rights and remedies of a secured party under the
UCC, to the extent that the UCC is applicable, and the right to offset any mutual debt and
claim), in equity, and under any other agreement between Purchaser and Seller. Without
limiting the generality of the foregoing, Purchaser shall be entitled to set off the
proceeds of the liquidation of the Purchased Assets against all of Seller’s obligations to
Purchaser under this Agreement, without prejudice to Purchaser’s right to recover any
deficiency;

(vi) Purchaser may exercise any or all of the remedies available to Purchaser
immediately upon the occurrence of an Event of Default with respect to Seller and at any
time during the continuance thereof. All rights and remedies arising under the Transaction
Documents, as amended from time to time, are cumulative and not exclusive of any other
rights or remedies that Purchaser may have; and

(vii) to the extent permissible by law, Purchaser may enforce its rights and remedies
hereunder without prior judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Purchaser to enforce its rights by judicial
process. Seller also waives, to the extent permitted by law, any defense Seller might
otherwise have arising from the use of nonjudicial process, disposition of any or all of the
Purchased Assets, or from any other election of remedies. Seller recognizes that
nonjudicial remedies are consistent with the usages of the trade, are responsive to
commercial necessity and are the result of a bargain at arm’s length.

ARTICLE 14

SINGLE AGREEMENT

Purchaser and Seller acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions
hereunder constitute a single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of Purchaser and Seller agrees (i) to perform all
of its obligations in respect of each Transaction hereunder, and that a default in the performance
of any such obligations shall constitute a default by it in respect of all Transactions hereunder,
(ii) that each of them shall be entitled to set off claims and apply property held by them in
respect of any Transaction against obligations owing to them in respect of any other Transactions
hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect
of any Transaction shall be deemed to have been made in consideration of payments, deliveries and
other transfers in respect of any other Transactions hereunder, and the obligations to make any
such payments, deliveries and other transfers may be applied against each other and netted.

ARTICLE 15

RECORDING OF COMMUNICATIONS

EACH OF PURCHASER AND SELLER SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) FROM TIME TO TIME
TO MAKE OR CAUSE TO BE MADE TAPE RECORDINGS OF COMMUNICATIONS BETWEEN ITS EMPLOYEES, IF ANY, AND
THOSE OF THE OTHER PARTY WITH RESPECT TO TRANSACTIONS; PROVIDED, HOWEVER, THAT SUCH RIGHT TO RECORD
COMMUNICATIONS SHALL BE LIMITED TO COMMUNICATIONS OF EMPLOYEES TAKING PLACE ON THE TRADING FLOOR OF
THE APPLICABLE PARTY. EACH OF PURCHASER AND SELLER HEREBY CONSENTS TO THE ADMISSIBILITY OF SUCH
TAPE RECORDINGS IN ANY COURT, ARBITRATION, OR OTHER PROCEEDINGS, AND AGREES THAT A DULY
AUTHENTICATED TRANSCRIPT OF SUCH A TAPE RECORDING SHALL BE DEEMED TO BE A WRITING CONCLUSIVELY
EVIDENCING THE PARTIES’ AGREEMENT.

ARTICLE 16

NOTICES AND OTHER COMMUNICATIONS

Unless otherwise provided in this Agreement, all notices, consents, approvals and requests
required or permitted hereunder shall be given in writing and shall be effective for all purposes
if sent by (a) hand delivery, with proof of delivery, (b) certified or registered United States
mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States
Postal Service, with proof of delivery, (d) by telecopier (with answerback acknowledged)
provided that such telecopied notice must also be delivered by one of the means set forth
in (a), (b) or (c) above, or (e) by electronic mail provided that such electronic mail
notice must also be delivered by one of the means set forth in (a), (b) or (c) above, to the
address specified in Exhibit I hereto or at such other address and person as shall be
designated from time to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Article 16. A notice shall be
deemed to have been given: (v) in the case of hand delivery, at the time of delivery, (w) in the
case of registered or certified mail, when delivered or the first attempted delivery on a Business
Day, (x) in the case of expedited prepaid delivery upon the first attempted delivery on a Business
Day, (y) in the case of telecopier, upon receipt of answerback confirmation, provided that
such telecopied notice was also delivered as required in this Article 16 or (z) in the case
of electronic mail, upon receipt of a verbal or electronic communication confirming receipt
thereof, provided that such electronic mail notice was also delivered as required in this
Article 16. A party receiving a notice that does not comply with the technical
requirements for notice under this Article 16 may elect to waive any deficiencies and treat
the notice as having been properly given.

ARTICLE 17

ENTIRE AGREEMENT; SEVERABILITY

This Agreement shall supersede any existing agreements between the parties containing general
terms and conditions for repurchase transactions. Each provision and agreement herein shall be
treated as separate and independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision or agreement.

ARTICLE 18

NON-ASSIGNABILITY

Seller may not assign any of its rights or obligations under this Agreement without the prior
written consent of Purchaser and any attempt by Seller to assign any of its rights or obligations
under this Agreement without the prior written consent of Purchaser shall be null and void.
Subject to the terms of this Agreement, Purchaser may, without consent of Seller, but with five (5)
Business Days prior notice to Seller, sell to one or more banks, financial institutions or other
entities (“Participants”) participating interests in any Transaction, its interest in the
Purchased Assets, or any other interest of Purchaser under this Agreement. Subject to the terms of
this Agreement, Purchaser may, at any time and from time to time, assign to any Person (an
“Assignee” and together with Participants, each a “Transferee” and collectively,
the “Transferees”) all or any part of its rights and its interest in the Purchased Assets,
or any other interest of Purchaser under this Agreement. Seller agrees, at Purchaser’s sole cost
and expense, to cooperate with Purchaser in connection with any such assignment, transfer or sale
of participating interest and to enter into such restatements of, and amendments, supplements and
other modifications to, this Agreement in order to give effect to such assignment, transfer or
sale; provided, however, that, (i) such restatements, amendments, supplements
and/or modifications shall be subject to Seller’s prior written approval as to form and substance
and shall not materially alter any of Seller’s duties or obligations hereunder, (ii) Purchaser
shall act as exclusive agent for all Transferees in any dealings with Seller in with any such
proposed transactions and (iii) Seller shall not be obligated to deal directly with any party other
than Purchaser in connection with such transactions, or to pay or reimburse Purchaser for any costs
that would not have been incurred by Purchaser had no interest in such proposed transaction been
issued.

ARTICLE 19

GOVERNING LAW

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND
THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN
SECTION 5-140 1 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

ARTICLE 20

NO WAIVERS, ETC.

No express or implied waiver of any Event of Default by either party shall constitute a waiver
of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute
a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the parties hereto. Without
limitation of any of the foregoing, the failure to give a notice pursuant to Articles 4(a)
hereof will not constitute a waiver of any right to do so at a later date.

ARTICLE 21

INTENT

(a) The parties recognize that (i) each Transaction is a “repurchase agreement” as that term
is defined in Section 101(47) of Title 11 of the United States Code, as amended (except insofar as
the type of Assets subject to such Transaction or the term of such Transaction would render such
definition inapplicable), and a “securities contract” as that term is defined in Section 741 of
Title 11 of the United States Code, as amended (except insofar as the type of assets subject to
such Transaction would render such definition inapplicable) and (ii) each of the Purchased Assets
constitutes either a “mortgage loan” or “an interest in a mortgage” as such terms are used in Title
11 of the United States Code.

(b) The parties intend and acknowledge that either party’s right to cause the termination,
liquidation or acceleration of, or to set-off or net termination values, payment amounts or other
transfer obligations arising under, or in connection with, this Agreement or any Transaction
hereunder or to exercise any other remedies pursuant to Article 13 is in each case a
contractual right to cause or exercise such right as described in Sections 555, 559 and 561 of
Title 11 of the United States Code, as amended.

(c) The parties intend and acknowledge that if a party hereto is an “insured depository
institution,” as such term is defined in the Federal Deposit Insurance Act, as amended
(“FDIA”), then each Transaction hereunder is a “qualified financial contract,” as that term
is defined in the FDIA and any rules, orders or policy statements thereunder (except insofar as the
type of assets subject to such Transaction would render such definition inapplicable).

(d) The parties intend and acknowledge that this Agreement constitutes a “netting contract” as
defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of
1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction
hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual
payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or
both of the parties is not a “financial institution” as that term is defined in FDICIA).

(e) The parties intend and acknowledge that this Agreement constitutes a “master netting
agreement” as defined in Section 101(38A) of Title 11 of the United States Code, as amended, and as
used in Section 561 of Title 11 of the United States Code, as amended.

(f) The parties intend and acknowledge that any provisions hereof or in any other document,
agreement or instrument that is related in any way to this Agreement shall be deemed “related to”
this Agreement within the meaning of Section 741 of the Bankruptcy Code.

(g) It is the intention of the parties that, for U.S. Federal, state and local income and
franchise tax purposes and for accounting purposes, each Transaction constitute a financing to
Seller, and that Seller be (except to the extent that Purchaser shall have exercised its remedies
following an Event of Default) the owner of the Purchased Assets for such purposes. Unless
prohibited by applicable law, Seller and Purchaser agree to treat the Transactions as described in
the preceding sentence on any and all filings with any U.S. Federal, state, or local taxing
authority.

ARTICLE 22

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

The parties acknowledge that they have been advised that:

(a) in the case of Transactions in which one of the parties is a broker or dealer registered
with the Securities and Exchange Commission (“SEC”) under Section 15 of the Exchange Act,
the Securities Investor Protection Corporation has taken the position that the provisions of the
Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with
respect to any Transaction hereunder;

(b) in the case of Transactions in which one of the parties is a government securities broker
or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA
will not provide protection to the other party with respect to any Transaction hereunder; and

(c) in the case of Transactions in which one of the parties is a financial institution, funds
held by the financial institution pursuant to a Transaction hereunder are not a deposit and
therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union
Share Insurance Fund, as applicable.

ARTICLE 23

CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

(a) Each party irrevocably and unconditionally (i) submits to the non-exclusive jurisdiction
of any United States Federal or New York State court sitting in Manhattan, and any appellate court
from any such court, solely for the purpose of any suit, action or proceeding brought to enforce
its obligations under this Agreement or relating in any way to this Agreement or any Transaction
under this Agreement and (ii) waives, to the fullest extent it may effectively do so, any defense
of an inconvenient forum to the maintenance of such action or proceeding in any such court and any
right of jurisdiction on account of its place of residence or domicile.

(b) To the extent that either party has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set
off or any legal process (whether service or notice, attachment prior to judgment, attachment in
aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of
its property, such party hereby irrevocably waives and agrees not to plead or claim such immunity
in respect of any action brought to enforce its obligations under this Agreement or relating in any
way to this Agreement or any Transaction under this Agreement.

(c) The parties hereby irrevocably waive, to the fullest extent each may effectively do so,
the defense of an inconvenient forum to the maintenance of such action or proceeding and
irrevocably consent to the service of any summons and complaint and any other process by the
mailing of copies of such process to them at their respective address specified herein. The
parties hereby agree that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Article 23 shall affect the right of either party to serve legal
process in any other manner permitted by law or affect the right of either party to bring any
action or proceeding against the other party or its property in the courts of other jurisdictions.

(d) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

ARTICLE 24

NO RELIANCE

Seller and Purchaser hereby acknowledges, represents and warrants (as to itself) to the other
that, in connection with the negotiation of, the entering into, and the performance under, the
Transaction Documents and each Transaction thereunder:

(a) It is not relying (for purposes of making any investment decision or otherwise) upon any
advice, counsel or representations (whether written or oral) of the other party to the Transaction
Documents, other than the representations expressly set forth in the Transaction Documents;

(b) It has consulted with its own legal, regulatory, tax, business, investment, financial and
accounting advisors to the extent that it has deemed necessary, and it has made its own investment,
hedging and trading decisions (including decisions regarding the suitability of any Transaction)
based upon its own judgment and upon any advice from such advisors as it has deemed necessary and
not upon any view expressed by the other party;

(c) It is a sophisticated and informed Person that has a full understanding of all the terms,
conditions and risks (economic and otherwise) of the Transaction Documents and each Transaction
thereunder and is capable of assuming and willing to assume (financially and otherwise) those
risks;

(d) It is entering into the Transaction Documents and each Transaction thereunder for the
purposes of managing its borrowings or investments or hedging its assets or liabilities and not for
purposes of speculation; and

(e) It is not acting as a fiduciary or financial, investment or commodity trading advisor for
the other party and has not given the other party (directly or indirectly through any other Person)
any assurance, guarantee or representation whatsoever as to the merits (either legal, regulatory,
tax, business, investment, financial accounting or otherwise) of the Transaction Documents or any
Transaction thereunder.

ARTICLE 25

INDEMNITY

Seller hereby agrees to indemnify Purchaser, Purchaser’s Affiliates and each of its officers,
directors, employees and agents (“Indemnified Parties”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, taxes (including
stamp, excise, sales or other taxes that may be payable or determined to be payable with respect to
any of the Purchased Assets, Purchased Items or Collateral or in connection with any of the
transactions contemplated by this Agreement and the documents delivered in connection herewith,
other than income, withholding or other taxes imposed upon Purchaser), fees, costs, expenses
(including attorneys’ fees and disbursements) or disbursements (all of the foregoing, collectively
“Indemnified Amounts”) that are at any time (including, without limitation, such time as
this Agreement shall no longer be in effect and the Transactions shall have been repaid in full)
imposed on or asserted against any Indemnified Party in any way whatsoever arising out of or in
connection with, or relating to, or as a result of, this Agreement or any Transactions hereunder,
the other Transaction Documents, an Event of Default with respect to Seller or any action taken or
omitted to be taken by any Indemnified Party under or in connection with any of the foregoing;
provided that Seller shall not be liable for Indemnified Amounts resulting from the gross
negligence, illegal acts, fraud or willful misconduct of any Indemnified Party or from any default
under any of the Transaction Documents by an Indemnified Party. Without limiting the generality of
the foregoing, Seller agrees to hold Purchaser harmless from and indemnify Purchaser against all
Indemnified Amounts with respect to all Purchased Assets relating to or arising out of any
violation or alleged violation of any environmental law, rule or regulation or any consumer credit
laws, including without limitation ERISA, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than Purchaser’s gross
negligence, fraud or willful misconduct. In any suit, proceeding or action brought by Purchaser in
connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of
any Purchased Asset, Seller will save, indemnify and hold Purchaser harmless from and against all
expense (including attorneys’ fees), loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by Seller of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in favor of such account debtor
or obligor or its successors from Seller. Seller also agrees to reimburse Purchaser as and when
billed by Purchaser for all Purchaser’s reasonable costs and out-of-pocket expenses incurred in
connection with the enforcement or the preservation of Purchaser’s rights under this Agreement, any
Transaction Documents or Transaction contemplated hereby, including without limitation the
reasonable fees and disbursements of its counsel. Seller hereby acknowledges that the obligation
of Seller hereunder is a recourse obligation of Seller.

If an Indemnified Party claims indemnification under this Agreement, the Indemnified Party
shall promptly notify Seller of such indemnification claim. After notice by any Indemnified Party,
Seller shall defend such Indemnified Party against such indemnification claim (if requested by any
Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals
approved, in writing, by the Indemnified Party, which approval shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, any Indemnified Party may, in its sole
discretion and at the expense of Seller, engage its own attorneys and other professionals to defend
or assist it if such Indemnified Party determines that the defense as conducted by Seller is not
proceeding or being diligently conducted in a commercially reasonable manner or that a conflict of
interest exists between any of the parties represented by Seller’s counsel in such action or
proceeding.

ARTICLE 26

DUE DILIGENCE

Seller acknowledges that, at reasonable times and upon reasonable notice to Seller, Purchaser
has the right to perform continuing due diligence reviews with respect to the Purchased Assets, the
Seller, the Guarantor and any Servicer affiliated with Seller for purposes of verifying compliance
with the representations, warranties and specifications made hereunder, or otherwise. Seller
agrees that upon reasonable prior notice, Seller, Guarantor and such Servicer shall provide
reasonable access to Purchaser and any of its agents, representatives or permitted assigns to the
offices of Seller, Guarantor and such Servicer during normal business hours and permit them to
examine, inspect, and make copies and extracts of the Purchased Asset Files, Servicing Records and
any and all documents, records, agreements, instruments or information relating to such Purchased
Assets in the possession or under the control of Seller, Guarantor, and such Servicer and during
such visit make available to them a knowledgeable financial or accounting officer of Seller,
Guarantor or such Servicer, as the case may be, for the purpose of answering questions about any of
the foregoing; provided however, unless an Event of Default (after all applicable
grace, notice and/or cure period) has occurred and is continuing, such on-site inspections shall be
limited to once per year.

Seller further agrees that, upon reasonable request from Purchaser, Seller shall provide
Purchaser and any of its agents, representatives or permitted assigns with copies of the Purchased
Asset Files, Servicing Records and any and all documents, records, agreements, instruments or
information relating to the Purchased Assets and Seller, Guarantor and any Servicer affiliated with
Seller in the possession or under the control of Seller, Guarantor and/or such Servicer in order to
allow Purchaser to complete any continuing due diligence and make available to them by phone a
knowledgeable financial or accounting officer of Seller, Guarantor or such Servicer, as the case
may be, for the purpose of answering questions about any of the foregoing.

Without limiting the generality of the foregoing, Seller acknowledges that Purchaser may enter
into Transactions with Seller based solely upon the information provided by Seller to Purchaser and
the representations, warranties and covenants contained herein, and that Purchaser, at its option,
has the right at any time to conduct a partial or complete due diligence review on some or all of
the Purchased Assets. Purchaser may underwrite such Purchased Assets itself or engage a third
party underwriter to perform such underwriting. Seller agrees to reasonably cooperate with
Purchaser and any third party underwriter in connection with such underwriting, including, but not
limited to, providing Purchaser and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such Purchased Assets in the
possession, or under the control, of Seller. Seller further agrees to reimburse Purchaser for any
and all reasonable attorneys’ fees, costs and expenses incurred by Purchaser in connection with
continuing due diligence pursuant to this Article 26, which amounts shall be paid by Seller
to Purchaser within five (5) Business Days after receipt of an invoice therefor, provided
however, unless an Event of Default (after all applicable grace, notice and/or cure period)
has occurred and is continuing, Seller shall not be required to reimburse continuing due diligence
costs in excess of $10,000 per year.

ARTICLE 27

SERVICING

(a) Seller agrees that Purchaser is owner of all Servicing Rights so long as the Purchased
Assets are subject to this Agreement. Notwithstanding the foregoing, Seller shall be granted a
revocable license (which license shall automatically be revoked (a) every thirty days unless
Purchaser provides written notice to Seller that such license is extended for another thirty days
or (b) upon the occurrence of an Event of Default) to cause Servicer to service the Purchased
Assets pursuant to the Interim Servicing Agreement and in accordance with this Article 27
at Seller’s sole cost and for the benefit of Purchaser in accordance with Accepted Servicing
Practices approved by Purchaser in the exercise of its reasonable business judgment and maintained
by other prudent mortgage lenders with respect to assets similar to the Purchased Assets.
Purchaser agrees to renew Seller’s license to cause the Purchased Assets to be serviced so long as
no Event of Default has occurred under this Agreement. Notwithstanding the foregoing, neither
Seller nor such Servicer shall take any action or effect any modification or amendment to any
Purchased Asset without first having given prior notice thereof to Purchaser in each such instance
and receiving the prior written consent of Purchaser.

(b) The obligation of Servicer (or Seller to cause Servicer) to service any of the Purchased
Assets shall cease upon the earliest of (i) Purchaser’s termination of Servicer in accordance with
Article 27(c), (ii) Purchaser not extending Seller’s revocable license in accordance with
Article 27(a), or (iii) the transfer of servicing to any other Servicer and the assumption
of such servicing by such other Servicer. In such case, Seller shall take all actions necessary to
effectuate the underlying servicing transfer as expeditiously as possible. Upon any termination of
Servicer, if no Event of Default shall have occurred and be continuing, Seller shall at its sole
cost and expense transfer the servicing of the effected Purchased Assets to another Servicer as
expeditiously as possible.

(c) Purchaser may, in its sole discretion, terminate Servicer or any sub-servicer with respect
to some or all of the Purchased Assets (i) upon the occurrence and during the continuance of an
Event of Default under, and as defined in, the Interim Servicing Agreement, (ii) [reserved] or
(iii) upon the occurrence and during the continuance of an Event of Default hereunder, either for
cause or without cause, in each case, without payment of any penalty or termination fee and upon
such termination, Servicer shall be required to transfer servicing of the effected Purchased Assets
to such successor designated by Purchaser at no cost or expense to Purchaser. Upon the occurrence
and during the continuance of an Event of Default, Purchaser may, in its sole discretion, sell its
right to the Purchased Assets on a servicing released basis. Seller agrees to cooperate with
Purchaser in connection with the termination of Servicer.

(d) Seller agrees that Purchaser is the owner of all servicing records, including but not
limited to the Interim Servicing Agreement, files, documents, records, data bases, computer tapes,
copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other
closing documentation, payment history records, and any other records relating to or evidencing the
servicing of Purchased Assets (the “Servicing Records”) so long as the Purchased Assets are
subject to this Agreement. Seller covenants to safeguard such Servicing Records and to deliver
them promptly to Purchaser or its designee (including the Custodian) at Purchaser’s request.

(e) The payment of servicing fees shall be subordinate to payment of amounts outstanding under
any Transaction and this Agreement.

(f) For the avoidance of doubt, Seller does not retain economic or other beneficial rights to
the Servicing Rights, other than Seller’s rights under the Interim Servicing Agreement. As such,
Seller expressly acknowledges that the Purchased Assets are sold to Purchaser on a “servicing
released” basis, subject to the terms of this Agreement.

ARTICLE 28

MISCELLANEOUS

(a) All rights, remedies and powers of Purchaser hereunder and in connection herewith are
irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all other
rights, remedies and powers of Purchaser whether under law, equity or agreement. In addition to
the rights and remedies granted to it in this Agreement, to the extent this Agreement is determined
to create a security interest, Purchaser shall have all rights and remedies of a secured party
under the UCC.

(b) The Transaction Documents may be executed in counterparts, each of which so executed shall
be deemed to be an original, but all of such counterparts shall together constitute but one and the
same instrument.

(c) The headings in the Transaction Documents are for convenience of reference only and shall
not affect the interpretation or construction of the Transaction Documents.

(d) Without limiting the rights and remedies of Purchaser under the Transaction Documents,
Seller shall pay Purchaser’s reasonable actual out-of-pocket costs and expenses, including
reasonable fees and expenses of accountants, attorneys and advisors, incurred in connection with
the preparation, negotiation, execution and consummation of, and any amendment, supplement or
modification to, the Transaction Documents and the Transactions thereunder, whether or not such
Transaction Document (or amendment thereto) or Transaction is ultimately consummated. Seller
agrees to pay Purchaser promptly all costs and expenses (including reasonable expenses for legal
services of every kind) of any subsequent enforcement of any of the provisions hereof, or of the
performance by Purchaser of any obligations of Seller in respect of the Purchased Assets, or any
actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in
respect of any of the Collateral or Purchased Items and for the custody, care or preservation of
the Collateral or Purchased Items (including insurance costs) and defending or asserting rights and
claims of Purchaser in respect thereof, by litigation or otherwise. In addition, Seller agrees to
pay Purchaser promptly all reasonable costs and expenses (including reasonable expenses for legal
services) incurred in connection with the maintenance of the Collection Account and registering the
Collateral and Purchased Items in the name of Purchaser or its nominee. All such expenses shall be
recourse obligations of Seller to Purchaser under this Agreement.

(e) In addition to any rights now or hereafter granted under applicable law or otherwise, and
not by way of limitation of such rights, Seller hereby grants to Purchaser and its Affiliates a
right of offset, to secure repayment of all amounts owing to Purchaser or its Affiliates by Seller
under the Transaction Documents, upon any and all monies, securities, collateral or other property
of Seller and the proceeds therefrom, now or hereafter held or received by Purchaser or its
Affiliates or any entity under the control of Purchaser or its Affiliates and their respective
successors and assigns (including, without limitation, branches and agencies of Purchaser, wherever
located), for the account of Seller, whether for safekeeping, custody, pledge, transmission,
collection, or otherwise, and also upon any and all deposits (general or specified) and credits of
Seller at any time existing. Purchaser and its Affiliates are hereby authorized at any time and
from time to time upon the occurrence and during the continuance of an Event of Default, without
notice to Seller, to offset, appropriate, apply and enforce such right of offset against any and
all items hereinabove referred to against any amounts owing to Purchaser or its Affiliates by
Seller under the Transaction Documents, irrespective of whether Purchaser or its Affiliates shall
have made any demand hereunder and although such amounts, or any of them, shall be contingent or
unmatured and regardless of any other collateral securing such amounts. Seller shall be deemed
directly indebted to Purchaser and its Affiliates in the full amount of all amounts owing to
Purchaser and its Affiliates by Seller under the Transaction Documents, and Purchaser and its
Affiliates shall be entitled to exercise the rights of offset provided for above. ANY AND ALL
RIGHTS TO REQUIRE PURCHASER OR ITS AFFILIATES TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL OR PURCHASED ITEMS THAT SECURE THE AMOUNTS OWING TO PURCHASER OR ITS
AFFILIATES BY SELLER UNDER THE TRANSACTION DOCUMENTS, PRIOR TO EXERCISING THEIR RIGHT OF OFFSET
WITH RESPECT TO SUCH MONIES, SECURITIES, COLLATERAL, DEPOSITS, CREDITS OR OTHER PROPERTY OF SELLER,
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY SELLER.

(f) Each provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement shall be prohibited by or be
invalid under such law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the remaining provisions of
this Agreement.

(g) This Agreement contains a final and complete integration of all prior expressions by the
parties with respect to the subject matter hereof and thereof and shall constitute the entire
agreement among the parties with respect to such subject matter, superseding all prior oral or
written understandings.

(h) The parties understand that this Agreement is a legally binding agreement that may affect
such party’s rights. Each party represents to the other that it has received legal advice from
counsel of its choice regarding the meaning and legal significance of this Agreement and that it is
satisfied with its legal counsel and the advice received from it.

(i) Should any provision of this Agreement require judicial interpretation, it is agreed that
a court interpreting or construing the same shall not apply a presumption that the terms hereof
shall be more strictly construed against any Person by reason of the rule of construction that a
document is to be construed more strictly against the Person who itself or through its agent
prepared the same, it being agreed that all parties have participated in the preparation of this
Agreement.

(j) Unless otherwise specifically enumerated, wherever pursuant to this Agreement Purchaser
exercises any right given to it to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to, Purchaser in its sole discretion, Purchaser shall
decide to consent or not consent, or to approve or disapprove or to decide that arrangements or
terms are satisfactory or not satisfactory, in its sole and absolute discretion and such decision
by Purchaser shall be final and conclusive.

[REMAINDER OF PAGE LEFT BLANK]

IN WITNESS WHEREOF, the parties have executed this Agreement as a deed as of the day
first written above.

	 	 	 	PURCHASER:

	 	 	 	BARCLAYS BANK PLC, a public limited company
organized under the laws of England and
Wales

	 	 	 	By:
/s/ Michael Birajiclian

	 	 	Name: Michael Birajiclian

Title: Authorized Signatory

1

	 	 	 	SELLER:

	 	 	 	RAIT
CRE CONDUIT IV, LLC, a Delaware limited
liability company

	 	 	 	By:
RAIT PARTNERSHIP, L.P., a Delaware limited
partnership, its sole member and manager

	 	 	 	By:
RAIT GENERAL, INC., a Maryland
corporation, its sole general partner

	 	 	 	By:
/s/ James J. Sebra

	 	 	Name: James J. Sebra

Title: Chief Financial Officer

EXHIBIT I

NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES

	 	 	 	Purchaser: Barclays Bank PLC

	 	 	 
	745 7th Avenue

New York, New York 10019

	 	

	Attention: Francis X. Gilhool, Jr.

	Telephone: (212) 526-6970

	Fax: (646) 758-5334

	 	

	Email: francis.gilhool@barclayscapital.com

	with copies to:

	 	Dechert LLP

	 	 	 
	Cira Centre

2929 Arch Street

Philadelphia, PA 19104

	 	

	Attention: David W. Forti

	Telephone: (215) 994 2647

	Fax: (215) 655 2647

	 	

	Email: david.forti@dechert.com

	Seller:

	 	RAIT CRE Conduit IV, LLC

	 	 	 
	c/o RAIT Financial Trust

450 Park Avenue

New York, New York 10022

	 	

	Attention: Scott Davidson and Tony Butler

	Telephone: 215-243-9019

Fax: 215-405-2945

	 	

	Email: sdavidson@rait.com and tbutler@rait.com

	with copies to:

	 	RAIT Financial Trust

2929 Arch Street, 17th Floor

Philadelphia, Pennsylvania 19104

Attention: Jamie Reyle, Esq., SVP – Corporate Counsel

Telephone: 215-243-9019

Fax: 215-405-2945

Email: jreyle@rait.com

	 	 	 	and in the case of notices delivered under Section 4(a), with a copy to:

RAIT Financial Trust

2929 Arch Street, 17th Floor

Philadelphia, Pennsylvania 19104

Attention: James Sebra, Chief Accounting Officer

Telephone: 215-243-9000

Fax: 215-405-9097

Email: jsebra@rait.com

EXHIBIT II

FORM OF CONFIRMATION STATEMENT

[Date]

To: Barclays Bank PLC

Ladies and Gentlemen:

Reference is made hereby to the Master Repurchase Agreement, dated as of December 23, 2014
(the “Agreement”), between Barclays Bank PLC (“Purchaser”) and RAIT CRE Conduit IV,
LLC (“Seller”). This Confirmation is being delivered to you, as Purchaser, to request a
Transaction pursuant to which Purchaser will purchase from us, as Seller, the Eligible Asset
identified on the attached Schedule 1 in accordance with the terms of the Agreement.
Capitalized terms used herein without definition have the meanings given in the Agreement.

	 	 	 
	Purchase Date:

Eligible Asset:

Asset Type:

Aggregate Principal Amount of

Purchased Asset:

Repurchase Date:

Purchase Price:

Pricing Rate:

Purchase Price Percentage:

Governing Agreements:

Requested Wire Amount:

	 	     , 201_

[       Name]: As identified on attached Schedule 1

[Mortgage Loan][Senior Note][Senior Participation Interest]

[$]

     , 201_

[$]

As defined in the Agreement

[ %]

As identified on attached Schedule 1

	Requested Fund Date:

	 	

	Type of Funding:

Wiring Instructions:

	 	[Wet][Dry] Funding

	Name and address for

communications:

	 	

	Purchaser:

	 	Barclays Bank PLC

	 	 	 
	745 7th Avenue

	 	

	New York, New York 10019

	Attention: Francis X. Gilhool, Jr.

	Telephone: (212) 526-6970

	Fax: (646) 758-5334

	 	

	Email: francis.gilhool@barclayscapital.com

	Seller:

	 	RAIT CRE Conduit IV, LLC

c/o RAIT Financial Trust

450 Park Avenue

New York, New York 10022

Attention: Scott Davidson and Tony Butler

Telephone: 215-243-9019

Fax: 215-405-2945

Email: sdavidson@rait.com and tbutler@rait.com

If you agree to enter into the Transaction in accordance with the terms set forth in this
Confirmation, please return a countersigned copy of this Confirmation to Seller.

	 	 	 	RAIT
CRE CONDUIT IV, LLC, a Delaware limited
liability company

	 	 	 	By:
RAIT PARTNERSHIP, L.P., a Delaware limited
partnership, its sole member and manager

	 	 	 	By:
RAIT GENERAL, INC., a Maryland
corporation, its sole general partner

	 	 	 	By:

Name:

Title:

2

ACCEPTED AND AGREED:

BARCLAYS BANK PLC, a public limited company
organized under the laws of England and
Wales

By:       

Name:

Title:

Schedule 1 to Confirmation Statement

Purchased Asset:

Aggregate Principal Amount:

EXHIBIT III

AUTHORIZED REPRESENTATIVES OF SELLER

	 	 	 	 	 
	Name	 	Title	 	Specimen Signature
	Scott Schaeffer

	 	Chairman and CEO
	 	

	 

	 	 
	 	

	Scott Davidson

	 	President
	 	

	 

	 	 
	 	

	James Sebra

	 	CFO
	 	

	 

	 	 
	 	

	Jamie Reyle

	 	SVP – Corporate Counsel
	 	

	 

	 	 
	 	

EXHIBIT IV

FORM OF POWER OF ATTORNEY

Know All Men by These Presents, that RAIT CRE Conduit IV, LLC, a limited liability company
organized under the laws of the State of Delaware (“Seller”), does hereby appoint Barclays
Bank PLC (“Purchaser”), its attorney-in-fact to act in Seller’s name, place and stead, upon
the occurrence and during the continuance of an Event of Default, in any way that Seller could do
with respect to (i) the completion of the endorsements of the Purchased Assets, including without
limitation the Mortgage Notes, Assignments of Mortgages and Participation Certificates, and any
transfer documents related thereto, (ii) the recordation of the Assignments of Mortgages, (iii) the
preparation and filing, in form and substance satisfactory to Purchaser, of such financing
statements, continuation statements, and other uniform commercial code forms, as Purchaser may from
time to time, reasonably consider necessary to create, perfect, and preserve Purchaser’s security
interest in the Purchased Assets and (iv) the enforcement of Seller’s rights under the Purchased
Assets purchased by Purchaser pursuant to the Master Repurchase Agreement, dated as of December 23,
2014 (the “Repurchase Agreement”), between Purchaser and Seller, and to take such other
steps as may be necessary or desirable to enforce Purchaser’s rights against such Purchased Assets,
the related Purchased Asset Files and the Servicing Records to the extent that Seller is permitted
by law to act through an agent. Capitalized terms used but not otherwise defined herein shall have
the meanings assigned thereto in the Repurchase Agreement.

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER HEREBY AGREES THAT ANY THIRD PARTY
RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT
REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL
ACTUAL NOTICE OR KNOWLEDGE OR SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD
PARTY, AND SELLER ON ITS OWN BEHALF AND ON BEHALF OF SELLER’S ASSIGNS, HEREBY AGREES TO INDEMNIFY
AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST
SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND
THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN
SECTION 5-140 1 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

[SIGNATURE PAGE FOLLOWS]

3

IN WITNESS WHEREOF, Seller has caused this Power of Attorney to be executed as a deed this      
day of       , 20      .

4

	 
	RAIT CRE CONDUIT IV, LLC, a Delaware limited liability company

By: RAIT PARTNERSHIP, L.P., a Delaware limited partnership, its sole member and

manager

By: RAIT GENERAL, INC., a Maryland corporation, its sole general partner

	By:     

Name:

	Title:

	 	 	 
	STATE OF       

COUNTY OF       

	 	)

)

On       , 20      , before me,       , a Notary Public, personally appeared
     , who proved to me on the basis of satisfactory evidence to be the person whose
name is subscribed to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the        that the foregoing
paragraph is true and correct.

WITNESS my hand and official seal.

Signature       

(Seal)

EXHIBIT V

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

(attached)

EXHIBIT VI

FORM OF ESCROW AGREEMENT

[Date]

VIA FAX

Barclays Bank PLC

745 7th Avenue

New York, New York 10019

Attention: Francis X. Gilhool, Jr.

Fax: (646) 758-5334

Attention:

	 	 	 	Acquisition of [      ] (the “Asset”) by RAIT CRE Conduit IV, LLC
(“Seller”)

Ladies and Gentlemen:

This letter shall constitute the instructions to be followed by [SETTLEMENT AGENT] (the
“Settlement Agent”) in connection with Seller’s acquisition of the Asset, which shall be
financed pursuant to the terms of that certain Master Repurchase Agreement, dated as of December
23, 2014 (as amended, restated, supplemented, or otherwise modified and in effect from time to
time, the “Master Repurchase Agreement”) by and between Seller and Barclays Bank PLC
(“Purchaser”).

By its execution of this Letter, the Settlement Agent agrees to act as exclusive agent and bailee
for Purchaser with respect to the transaction described herein.

Upon or prior to notification that the Settlement Agent has received the Asset Documents (as
defined below), Purchaser will wire or cause to be wired to Settlement Agent on [Purchase Date]
(the “Purchase Date”) an amount equal to $[      ] (the “Proceeds”), which Proceeds
shall be disbursed by the Settlement Agent to the party entitled thereto as set forth on the
settlement statement executed by Seller and Purchaser, a copy of which is attached as Exhibit
A hereto (the “Disbursement Instructions”).

Before the Proceeds may be disbursed by the Settlement Agent, the Settlement Agent shall be
unconditionally obligated and prepared to comply with all requirements of this letter and shall
have received each of the following Asset Loan Documents (collectively, the “Asset
Documents”):

	 	 	 	[List documents to be collected by Settlement Agent]

Upon receipt by the Settlement Agent of the Asset Documents and the Proceeds, the Settlement Agent
shall do each of the following in the order specified:

	 	1.	 	Disburse the Proceeds in accordance with the Disbursement Instructions.

	 	2.	 	Deliver the Asset Documents via overnight mail to the Custodian at the following
address:

Wells Fargo Bank, National Association

1055 10th Avenue SE

Minneapolis, Minnesota 55414

Attention: Kathleen A. Marshall

Telephone: 612-667-8032

Fax: 612-466-5416

Email: kathleen.a.marshall@wellsfargo.com

	 	3.	 	Notify Purchaser that all of the foregoing actions have been completed.

Notwithstanding the foregoing, Settlement Agent shall be permitted to deliver recorded pages of the
following Asset Documents to Custodian within 2 Business Days of receipt thereof from the
applicable recording office:

[List permitted post-closing docs]

All costs and expenses incurred in carrying out these instructions shall be borne by Seller, and
the Settlement Agent shall not look to any other party for reimbursement of, or liability for, such
costs and expenses.

The Settlement Agent hereby agrees (i) that the Settlement Agent has obtained whatever assurances
it deems necessary from the appropriate parties to firmly bind itself to fully and completely carry
out the instructions set forth herein and (ii) that Purchaser is entitled to rely on the terms and
provisions of this agreement in wiring the Proceeds and shall be the intended beneficiary hereof.

If for any reason the Proceeds are funded by Purchaser to the Settlement Agent and the funds have
not been disbursed by the Settlement Agent as specified herein on or before 5:00 P.M. (New York
time) on the date that is two (2) Business Days after the Purchase Date, the Settlement Agent shall
contact Purchaser immediately for further instructions. In the event that the Settlement Agent is
advised to return the Proceeds to Purchaser, the Settlement Agent agrees to do so on demand in
accordance with the instructions provided by Purchaser, without regard to any contrary instructions
from Seller. If Seller’s acquisition of the Asset is delayed, the Settlement Agent will return the
Asset Documents to Seller unless otherwise instructed by Seller.

If Seller’s acquisition of the Asset is delayed and the Proceeds have been received by the
Settlement Agent, it is understood by Seller that interest shall accrue on the Proceeds at the rate
which would have applied under the Master Repurchase Agreement had the acquisition been completed,
from the time such amount is received by the Settlement Agent until it is returned to Purchaser,
and Seller shall be liable for all such accrued interest.

	 	 	 
	[SETTLEMENT AGENT]

	By:

	 	     

Name:

Title:

Notice Information

Address:

Attention:

Fax:

ACCEPTED AND AGREED:

	 	 	 	RAIT
CRE CONDUIT IV, LLC, a Delaware limited
liability company, as Seller

	 	 	 	By:
RAIT PARTNERSHIP, L.P., a Delaware limited
partnership, its sole member and manager

	 	 	 	By:
RAIT GENERAL, INC., a Maryland
corporation, its sole general partner

	 	 	 
	 	 	By:

	 	 	Name:

	 	 	Title:

	ACCEPTED AND AGREED:
	 	

	 
	BARCLAYS BANK PLC, a public limited company organized
	under the laws of England and Wales
	By:
	 	     

Name:

Title:

Notice Information

Address: 745 7th Avenue, New York, New York 10019

Fax: (646) 758-5334

EXHIBIT VII

ADVANCE PROCEDURES

Submission of Due Diligence Package. No less than ten (10) Business Days prior to the
each Purchase Date, Seller shall deliver to Purchaser for Purchaser’s review and approval a due
diligence package with respect to each Eligible Asset proposed to be purchased on such proposed
Purchase Date, which shall contain the following items (the “Due Diligence Package”):

(1) Purchased Asset Documents. With respect to each Eligible Asset:

(a) if such Eligible Asset is a Dry Purchased Asset, each of the Purchased Asset
Documents along with blacklines of the executed versions of such Purchased Asset Documents
against the approved form Purchased Asset Documents; provided, however, if
such Eligible Asset has not been originated and closed at the time of such delivery, Seller
shall deliver (i) copies of all draft Purchased Asset Documents, blacklined against the
approved form Purchased Asset Documents and (ii) no less than three (3) Business Days prior
to the proposed Purchase Date, executed copies of all Purchased Asset Documents along with
blacklines of the executed versions of such Purchased Asset Documents against the previously
delivered drafts;

(b) if such Eligible Asset is a Wet Purchased Asset, (i) copies of all draft Purchased
Asset Documents, blacklined against the approved form Purchased Asset Documents, (ii) no
later than 11:00 a.m. on the Business Day before the requested Purchase Date, execution
versions in final form of (A) the Mortgage Note endorsed by the Seller in blank, without
recourse (either on the face thereof or pursuant to a separate allonge), (B) the Mortgage,
(C) evidence satisfactory to Purchaser that all documents necessary to perfect Seller’s
(and, by means of assignment to Buyer on the Purchase Date, Buyer’s) interest in the
collateral and (D) such other components of the Purchased Asset File as Purchaser may
require on a case by case basis with respect to the particular Purchased Asset, in each
case, along with blacklines of such executed Purchased Asset Documents against the
previously delivered drafts and (iii) not later than the third (3rd) Business Day following
the related Purchase Date, executed copies of all Purchased Asset Documents along with
blacklines of such executed Purchased Asset Documents against the previously delivered
drafts.

(c) if such Eligible Asset is a Wet Purchased Asset, a fully executed and delivered
Escrow Agreement;

(d) certificates or other evidence of insurance demonstrating insurance coverage in
respect of the underlying real estate directly or indirectly securing or supporting such
Eligible Asset of types, in amounts, with insurers and otherwise in compliance with the
terms, provisions and conditions set forth in the Purchased Asset Documents;
provided, however, if such certificates or other evidence of insurance are
not available at least ten (10) Business Day prior to the related Purchase Date, Seller
shall deliver such certificates or other evidence of insurance to Purchaser (i) if such
Eligible Asset is a Dry Purchased Asset, no less than three (3) Business Days prior to the
related Purchase Date and in any case, prior to approval of such Eligible Asset by Purchaser
in accordance with paragraph (10) below or (ii) if such Eligible Asset is a Wet
Purchased Asset, no later than 11:00 a.m. on the Business Day before the requested Purchase
Date. Such certificates or other evidence shall indicate that Seller, will be named as an
additional insured as its interest may appear and shall contain a loss payee endorsement in
favor of such additional insured with respect to the policies required to be maintained
under the Purchased Asset Documents;

(e) all surveys of the underlying real estate directly or indirectly securing or
supporting such Eligible Asset that are in Seller’s possession;

(f) as reasonably requested by Purchaser, satisfactory reports of UCC, tax lien,
judgment and litigation searches and title updates conducted by search firms and/or title
companies reasonably acceptable to Purchaser with respect to the Eligible Asset, underlying
real estate directly or indirectly securing or supporting such Eligible Asset, Seller and
Mortgagor, such searches to be conducted in each location Purchaser shall reasonably
designate;

(g) an unconditional commitment to issue a Title Policy in favor of Seller and Seller’s
successors and/or assigns with respect to Seller’s interest in the related real property and
insuring the assignment of the Eligible Asset to Purchaser, with an amount of insurance that
shall be not less than the maximum principal amount of the Eligible Asset, or an endorsement
or confirmatory letter from the title insurance company that issued the existing title
insurance policy, in favor of Seller and Seller’s successors and/or assigns, that amends the
existing title insurance policy by stating that the amount of the insurance is not less than
the maximum principal amount of the Eligible Asset (taking into account the proposed
Advance); and

(h) certificates of occupancy and zoning reports certifying that the property is in
compliance with all applicable zoning laws, each issued by the appropriate Governmental
Authority.

(2) Transaction-Specific Due Diligence Materials. Each of the following:

(a) a summary memorandum outlining the proposed Transaction, including transaction
benefits and all material underwriting risks, all Underwriting Issues and all other
characteristics of the Eligible Asset that a reasonable loan buyer would consider material,

(b) the Seller Asset Schedule and, if available, maps and photos of the underlying real
estate directly or indirectly securing or supporting such Eligible Asset;

(c) a current rent roll and roll over schedule;

(d) a cash flow pro-forma, plus historical information;

(e) a description of the underlying real estate directly or indirectly securing or
supporting such Eligible Asset and any other collateral securing such Eligible Asset, the
related collateral securing such Eligible Asset, if any;

(f) indicative debt service coverage ratios;

(g) indicative loan-to-value ratios;

(h) a term sheet outlining the transaction generally;

(i) a description of the Mortgagor and sponsor, including experience with other
projects (real estate owned), their ownership structure (including, without limitation, the
board of directors, if applicable) and financial statements;

(j) a description of Seller’s relationship, if any, to the Mortgagor and sponsor; and

(k) copies of documents evidencing such Eligible Asset, or current drafts thereof,
including, without limitation, underlying debt and security documents, guaranties, the
underlying borrower’s and guarantor’s organizational documents, warrant agreements, and loan
and collateral pledge agreements, as applicable, provided that, if same are not
available to Seller at the time of Seller’s submission of the Due Diligence Package to
Purchaser, Seller shall deliver such items to Purchaser promptly upon Seller’s receipt of
such items.

(3) Environmental and Engineering. A “Phase 1” (and, if requested by Purchaser,
“Phase 2”) environmental report, an asbestos survey, if applicable, and an engineering
report, each in form reasonably satisfactory to Purchaser, by an engineer or environmental
consultant reasonably approved by Purchaser.

(4) Credit Memorandum. A credit memorandum, asset summary or other similar document
that details cash flow underwriting, historical operating numbers, underwriting footnotes, rent
roll and lease rollover schedule.

(5) Appraisal. An appraisal by a member of the Appraisal Institute performed in
accordance with The Federal Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
The related appraisal shall (A) be dated less than twelve (12) months prior to the origination of
the Eligible Asset and (B) not be ordered by the related borrower or an Affiliate of the related
borrower.

(6) Opinions of Counsel. An opinion of counsel addressed to Seller and its successors
and assigns from counsel to the underlying obligor on the underlying loan transaction as to
enforceability of the loan documents governing such transaction and such other matters as Purchaser
shall require (including, without limitation, opinions as to due formation, authority, choice of
law, bankruptcy and perfection of security interests).

(7) Additional Real Estate Matters. To the extent obtained by Seller from the
Mortgagor or the underlying obligor at the origination of the Eligible Asset, such other real
estate related certificates and documentation as may have been requested by Purchaser, such as
abstracts of all leases in effect at the real property relating to such Eligible Asset.

(8) Exceptions Report. A list of all exceptions to the representations and warranties
set forth in Exhibit V to this Agreement and any other eligibility criteria (the
“Requested Exceptions Report”).

(9) Other Documents. Any other documents as Purchaser or its counsel shall reasonably
deem necessary.

(10) Approval of Eligible Asset. Conditioned upon the timely and satisfactory
completion of Seller’s requirements in paragraph (1) above, Purchaser shall, no less than
five (5) Business Days prior to the proposed Purchase Date (i) notify Seller in writing (which may
take the form of electronic mail format) that Purchaser has not approved the proposed Eligible
Asset as a Purchased Asset or (ii) notify Seller in writing (which may take the form of electronic
mail format) that Purchaser has approved the proposed Eligible Asset as a Purchased Asset.
Purchaser’s failure to respond to Seller on or prior to five (5) Business Days prior to the
proposed Purchase Date, shall be deemed to be a denial of Seller’s request that Purchaser approve
the proposed Eligible Asset, unless Purchaser and Seller has agreed otherwise in writing.

(11) Assignment Documents. No less than one (1) Business Days prior to the proposed
Purchase Date, Seller shall have executed and delivered to Purchaser, in form and substance
reasonably satisfactory to Purchaser and its counsel, all applicable assignment documents assigning
to Purchaser the proposed Eligible Asset that shall be subject to no liens except as expressly
permitted by Purchaser. Each of the assignment documents shall contain such representations and
warranties as is customary for transactions of this nature.

EXHIBIT VIII

FORM OF MARGIN CALL

[DATE]

Via Electronic Transmission

RAIT CRE Conduit IV, LLC

c/o RAIT Financial Trust

450 Park Avenue

New York, New York 10022

Attention: Scott Davidson and Tony Butler

	 	 	 	Re: Master Repurchase Agreement, dated as of December 23, 2014 (as amended,
restated, supplemented, or otherwise modified and in effect from time to time, the
“Master Repurchase Agreement”), by and between Barclays Bank PLC
(“Purchaser”) and RAIT CRE Conduit IV, LLC (“Seller”)

Ladies and Gentlemen:

Pursuant to Article 4(a) of the Master Repurchase Agreement, Purchaser hereby notifies
Seller that a Margin Deficit Event has occurred as set forth below. Capitalized terms used but not
otherwise defined herein shall have the meanings assigned thereto in the Master Repurchase
Agreement.

	 	 	 
	Purchased Asset:

Repurchase Price for Purchased Asset:

	 	[      ]

$     

(a) Margin Amount for Purchased Asset: $     

(b) 98% multiplied by Repurchase Price for Purchased Asset $     

A Margin Deficit Event exists when the amount in (a) above is less than the amount in (b)
above.

	 	 	 
	MARGIN DEFICIT:

Accrued interest from [ ] to [ ]:

TOTAL WIRE DUE:

	 	$     

$     

$     

WHEN A MARGIN DEFICIT EVENT EXISTS, SELLER IS REQUIRED TO CURE THE MARGIN DEFICIT SPECIFIED
ABOVE IN ACCORDANCE WITH THE MASTER REPURCHASE AGREEMENT AND WITHIN THE TIME PERIOD SPECIFIED IN
ARTICLE 4(b) THEREOF.

5

	 	 	 	BARCLAYS BANK PLC, a public limited company
organized under the laws of England and
Wales

	 	 	 	By:

Name:

Title:

EXHIBIT IX

UCC FILING JURISDICTIONS

State of Delaware

EXHIBIT X

FORM OF RELEASE LETTER

[DATE]

Barclays Bank PLC

745 7th Avenue

New York, New York 10019

Attention: Francis X. Gilhool, Jr.

	 	 	 	Re: Master Repurchase Agreement, dated as of December 23, 2014 by and between
Barclays Bank PLC (“Purchaser”) and RAIT CRE Conduit IV, LLC (“Seller”)
(as amended, restated, supplemented, or otherwise modified and in effect from time to
time, the “Master Repurchase Agreement”)

Ladies and Gentlemen:

With respect to the Purchased Assets described in the attached Schedule A (the
“Purchased Assets”) (a) we hereby certify to you that the Purchased Assets are not subject
to a lien of any third party, and (b) we hereby release to you all rights, interests or claims of
any kind other than any rights, interests or claims under the Master Repurchase Agreement with
respect to such Purchased Assets, such release to be effective automatically without further action
by any party upon payment by Purchaser of the amount of the Purchase Price contemplated under the
Master Repurchase Agreement (calculated in accordance with the terms thereof) in accordance with
the wiring instructions set forth in the Master Repurchase Agreement. Capitalized terms used but
not otherwise defined herein shall have the meanings assigned thereto in the Master Repurchase
Agreement.

	 	 	 	Very
truly yours,

	 	 	 	RAIT
CRE CONDUIT IV, LLC, a Delaware limited
liability company

	 	 	 	By:
RAIT PARTNERSHIP, L.P., a Delaware limited
partnership, its sole member and manager

	 	 	 	By:
RAIT GENERAL, INC., a Maryland
corporation, its sole general partner

	 	 	 	By:

Name:

Title:

6

Schedule A

[List of Purchased Asset Documents]

EXHIBIT XI

FORM OF COVENANT COMPLIANCE CERTIFICATE

[DATE]

Barclays Bank PLC

745 7th Avenue

New York, New York 10019

Attention: Francis X. Gilhool, Jr.

	 	 	 	Re: Master Repurchase Agreement, dated as of December 23, 2014 (as amended,
restated, supplemented, or otherwise modified and in effect from time to time, the
“Master Repurchase Agreement”) by and between Barclays Bank PLC
(“Purchaser”) and RAIT CRE Conduit IV, LLC (“Seller”)

Ladies and Gentlemen:

This Covenant Compliance Certificate is furnished pursuant to that Master Repurchase
Agreement. Capitalized terms used but not otherwise defined herein shall have the meanings
assigned thereto in the Master Repurchase Agreement.

THE UNDERSIGNED HEREBY CERTIFIES (NOT IN ITS INDIVIDUAL CAPACITY BUT SOLEY IN ITS CAPACITY AS
A RESPONSIBLE OFFICER OF SELLER) THAT:

	 	(i)	 	I am a duly elected Responsible Officer of Seller.

	 	(ii)	 	All of the financial statements, calculations and other information set forth
in this Covenant Compliance Certificate, including, without limitation, in any exhibit
or other attachment hereto, are true, complete and correct as of the date hereof.

	 	(iii)	 	I have reviewed the terms of the Master Repurchase Agreement and I have made,
or have caused to be made under my supervision, a detailed review of the transactions
and financial condition of Seller during the accounting period covered by the financial
statements attached (or most recently delivered to Purchaser if none are attached).

	 	(iv)	 	I am not aware of any facts, or pending developments that have caused the
Market Value of any Purchased Asset to decline as of the date hereof.

	 	(v)	 	As of the date hereof, and since the date of the certificate most recently
delivered pursuant to Article 11(j)(v) of the Master Repurchase Agreement, Seller has
observed or performed all of its covenants and other agreements in all material
respects, and satisfied in all material respects (unless waived by Purchaser), every
condition, contained in the Master Repurchase Agreement and the related documents to be
observed, performed or satisfied by it.

	 	(vi)	 	[IF FINANCIAL STATEMENTS ARE NOT ATTACHED: The examinations described in
Paragraph 3 above did not disclose, and I have no knowledge of, the existence of any
condition or event which constitutes an Event of Default or Default as of the date of
this Covenant Compliance Certificate (including after giving effect to any pending
Transactions requested to be entered into), except as set forth below.] [IF FINANCIAL
STATEMENTS ARE ATTACHED: The examinations described in Paragraph 3 above did not
disclose, and I have no knowledge of, the existence of any condition or event which
constitutes an Event of Default or Default during or at the end of the accounting
period covered by the attached financial statements, or as of the date of this Covenant
Compliance Certificate (including after giving effect to any pending Transactions
requested to be entered into), except as set forth below.]

	 	(vii)	 	As of the date hereof, each of the representations and warranties made by
Seller in the Master Repurchase Agreement are true, correct and complete in all
material respects with the same force and effect as if made on and as of the date
hereof, except as disclosed in a Requested Exceptions Report approved by Purchaser.

	 	(viii)	 	Seller hereby representation and warrants that (i) it is in compliance with all of
the terms and conditions of the Master Repurchase Agreement and (ii) it has no claim or
offset against Purchaser under the Transaction Documents.

	 	(ix)	 	To the best of my knowledge, Seller has, during the period since the delivery
of the immediately preceding Covenant Compliance Certificate, observed or performed all
of its covenants and other agreements in all material respects, and satisfied in all
material respects every condition, contained in the Master Repurchase Agreement and the
related documents to be observed, performed or satisfied by it, and I have no knowledge
of the occurrence during such period, or present existence, of any condition or event
which constitutes an Event of Default or Default (including after giving effect to any
pending Transactions requested to be entered into), except as set forth below.

	 	(x)	 	[IF FINANCIAL SUMMARY PROPERTY PERFORMANCE REPORTS ARE ATTACHED: Attached
hereto are the summary property performance reports required to be delivered pursuant
to Article 11(j) of the Master Repurchase Agreement, which reports, to the best
of my knowledge after due inquiry, fairly and accurately present in all material
respects, the related Purchased Assets as of the date or with respect to the period
therein specified, determined in accordance with the requirements set forth in
Article 11(j) of the Master Repurchase Agreement.]

	 	(xi)	 	[IF FINANCIAL STATEMENTS ARE ATTACHED: Attached hereto are the financial
statements required to be delivered pursuant to Article 11(j) of the Master Repurchase
Agreement, which financial statements, to the best of my knowledge after due inquiry,
fairly and accurately present in all material respects, the financial condition and
operations of Seller as of the date or with respect to the period therein specified,
determined in accordance with the requirements set forth in Article 11(j) of the Master
Repurchase Agreement.]

	 	(xii)	 	[IF FINANCIAL STATEMENTS ARE ATTACHED: Attached hereto are the calculations
demonstrating compliance with the financial covenants set forth in the Guaranty.]

Described below are the exceptions, if any, to any of the foregoing, listing, in detail, the
nature of the condition or event, the period during which it has existed and the action which the
Guarantor or Seller has taken, is taking, or proposes to take with respect to each such condition
or event:

The foregoing certifications, together with the financial statements, updates, reports,
materials, calculations and other information set forth in any exhibit or other attachment hereto,
or otherwise covered by this Covenant Compliance Certificate, are made and delivered as of the date
first above written.

	 	 	 	RAIT
CRE CONDUIT IV, LLC, a Delaware limited
liability company

	 	 	 	By:
RAIT PARTNERSHIP, L.P., a Delaware limited
partnership, its sole member and manager

	 	 	 	By:
RAIT GENERAL, INC., a Maryland
corporation, its sole general partner

	 	 	 	By:

Name:

Title:

EXHIBIT XII

SELLER ASSET SCHEDULE

Asset ID #:

Asset Type: [Mortgage Loan][Senior Note][Senior Participation Interest]

Borrower Name:

Borrower Address:

Borrower City:

Borrower State:

Borrower Zip Code:

Recourse?

Guaranteed?

Related Borrower Name(s):

Original Principal Balance:

Note Date:

Loan Date:

Loan Type (e.g. fixed/arm):

Current Principal Balance:

Current Interest Rate (per annum):

Paid to date:

Annual P&I:

Next Payment due date:

Index (complete whether fixed or arm):

Gross Spread/Margin (complete whether fixed or arm):

Life Cap:

Life Floor:

Periodic Cap:

Periodic Floor:

Rounding Factor:

Lookback (in days):

Interest Calculation Method (e.g., Actual/360):

Interest rate adjustment frequency:

P&I payment frequency:

First P&I payment due:

First interest rate adjustment date:

First payment adjustment date:

Next interest rate adjustment date:

Next payment adjustment date:

Conversion Date:

Converted Interest Rate Index:

Converted Interest Rate Spread:

Maturity date:

ARD Loan?

Loan term:

7

Amortization term:

Hyper-Amortization Flag:

Hyper-Amortization Term:

Hyper-Amortization Rate Increase:

Balloon Amount:

Balloon LTV:

Prepayment Penalty Flag:

Prepayment Penalty Text:

Lockout Period:

Lien Position:

Fee/Leasehold:

Ground Lease Expiration Date:

CTL (Yes/No):

CTL Rating (Moody’s):

CTL Rating (Duff):

CTL Rating (S&P):

CTL Rating (Fitch):

Lease Guarantor:

CTL Lease Type (NNN, NN, Bondable):

Property Name:

Property Address:

Property City:

Property Zip Code:

Property Type (General):

Property Type (Specific):

Cross-collateralized (Yes/No):*

Property Size:

Year built:

Year renovated:

Actual Average Occupancy:

Occupancy Rent Roll Date:

Underwritten Average Occupancy:

Largest Tenant:

Largest Tenant SF:

Largest Tenant Lease Expiration:

2nd Largest Tenant:

2nd Largest Tenant SF:

2nd Largest Tenant Lease Expiration:

3rd Largest Tenant:

3rd Largest Tenant SF:

3rd Largest Tenant Lease Expiration:

Underwritten Average Rental Rate/ADR:

Underwritten Vacancy/Credit Loss:

Underwritten Other Income:

Underwritten Total Revenues:

Underwritten Replacement Reserves:

Underwritten Management Fees:

Underwritten Franchise Fees:

Underwritten Total Expenses:

Underwritten Leasing Commissions:

Underwritten Tenant Improvement Costs:

Underwritten NOI:

Underwritten NCF:

Underwritten Debt Service Constant:

Underwritten DSCR at NOI:

Underwritten DSCR at NCF:

Underwritten NOI Period End Date:

Hotel Franchise:

Hotel Franchise Expiration Date:

Appraiser Name:

Appraised Value:

Appraisal Date:

Appraisal Cap Rate:

Appraisal Discount Rate:

Underwritten LTV:

Environmental Report Preparer:

Environmental Report Date:

Environmental Report Issues:

Covered by Environmental Insurance (Yes/No):

Architectural and Engineering Report Preparer:

Architectural and Engineering Report Date:

Deferred Maintenance Amount:

Ongoing Replacement Reserve Requirement per A&E Report:

Immediate Repairs Escrow % (e.g. [      ]%):

Replacement Reserve Annual Deposit:

Replacement Reserve Balance:

Tenant Improvement/Leasing Commission Annual Deposits:

Tenant Improvement/Leasing Commission Balance:

Taxes paid through date:

Monthly Tax Escrow:

Tax Escrow Balance:

Insurance paid through date:

Monthly Insurance Escrow:

Insurance Escrow Balance:

Reserve/Escrow Balance as of Date:

Probable Maximum Loss %:

Covered by Earthquake Insurance (Yes/No):

Number of times 30 days late in last 12 months:

Number of times 60 days late in last 12 months:

Number of times 90 days late in last 12 months:

Servicing Fee:

Secondary Financing in Place (Yes/No)

Secondary Financing Amount

Secondary Financing Description

Future Supplemental Financing (Yes/No)

Future Supplemental Financing Description

Notes:

* If yes, give property information on each property
covered and in aggregate as appropriate. Loan ID’s should be denoted with a
suffix letter to signify loans/collateral.

8

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