Document:

exh10-1.htm

  
    Exhibit 10.1

     

    
 

    AMENDMENT
NO. 1 TO

    AMENDED
AND RESTATED

    WAREHOUSING
CREDIT AND SECURITY AGREEMENT

    

    This
Amendment No. 1 to Amended and Restated Warehousing Credit and Security
Agreement (this “Amendment”), is dated as of May 29, 2009, by and among
Centerline Mortgage Capital Inc., a Delaware corporation (“CMC”), Centerline
Mortgage Partners Inc., a Delaware corporation (“CMP,” and, collectively with
CMC, the “Borrowers”), the lenders from time to time party to the Credit
Agreement (as defined below) and Bank of America, N.A., as agent for the Lenders
(in such capacity, the “Agent”).

     

    R E C I T A L
S

    

    A.           The
Agent, the Lenders, and the Borrowers are parties to that certain Amended and
Restated Warehousing Credit and Security Agreement, dated as of May 30, 2008 (as
amended and/or restated from time to time, the “Credit
Agreement”).  Capitalized terms used herein and not otherwise defined
herein shall have the same meanings herein as ascribed to them in the Credit
Agreement.

     

    B.           Pursuant
to the terms of that certain Assignment and Acceptance, dated as of the date
hereof, between SunTrust Bank (“SunTrust”) and Bank of America, N.A. (“BofA”),
SunTrust irrevocably sold and assigned to BofA, and BofA irrevocably purchased
and assumed from SunTrust, 100% of SunTrust’s Commitment under the Credit
Agreement and 100% of the aggregate principal balance of all Obligations owed to
SunTrust under the Credit Agreement as of the date hereof (the
“Assignment”).

     

    C.           The
Borrowers have requested that the Agent and the Lenders extend the stated
Maturity Date of the Credit Agreement until June 30, 2009 and make certain other
amendments to the Credit Agreement as herein described; and

     

    D.           In
response to such request, the Agent and the Lenders have agreed to amend the
Credit Agreement solely upon the terms and conditions set forth
herein.

     

    NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the Agent, the Lenders, and the Borrowers, the
parties hereto agree as follows:

     

    Section
1.                                Extension of Maturity
Date.  The definition of “Maturity Date” set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
it with the following:

     

    “ ‘Maturity Date’ means
the earlier of June 30, 2009 or the date upon which the whole of the Commitments
are terminated or the Loan is accelerated in accordance with the applicable
provisions of this Agreement.”

     

    Section
2.                                Reduction of
Commitment.  In connection with the Assignment, the parties
hereby agree that the total Commitment under the Credit Agreement shall hereby
be reduced to $100,000,000.  In furtherance of the foregoing, the
Credit Agreement is hereby amended as follows:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a)           Amendment to
Commitment.  The definition of “Commitment” set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
it with the following:

     

    “ ‘Commitment’ means the
commitment of the Lenders to make Advances hereunder in an aggregate principal
amount at any time outstanding that shall not exceed an amount equal to ONE
HUNDRED MILLION AND NO/100 DOLLARS ($100,000,000), subject to any increases or
decreases of such amount pursuant to the terms of this Agreement; provided, however, that no
Lender’s portion of such Advances may ever exceed its Commitment
Amount.”

     

    (b)           Amendment to Schedule
1.  To reflect the Assignment and the reduction of the
Commitment hereunder, Schedule 1 to the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
in its stead the revised Schedule 1 attached
to this Amendment.

     

    Section
3.                                Amendments to Credit
Agreement.  In accordance with Section 11.4 of the
Credit Agreement, the Agent and the Lenders hereby agree that the Credit
Agreement is amended as follows:

     

    (a)           Amendment to Applicable
Rate.  The definition of “Applicable Rate” set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
it with the following:

     

    “ ‘Applicable Rate’
means, for any day, either (a) the Daily Floating LIBOR Rate for such day, plus
two and three-quarters percent (2.75%), or (b) if the Daily Floating LIBOR Rate
is unavailable (as described in the definition thereof), then the Prime Rate for
such day plus two and three-quarters percent (2.75%).”

     

    (b)           Amendment to definition of
FHA Construction Mortgage Loan.  The definition of “FHA
Construction Mortgage Loan” set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
it with the following:

     

    “ ‘FHA Construction Mortgage
Loan’ means a FHA fully insured Mortgage Loan for the construction or
rehabilitation of either (a) a Multifamily Property or other Mortgaged Property,
or (b) as described in Section 232 of the National Housing Act (12 U.S.C.
1715w), a nursing home, intermediate care facility, board and care home, or
assisted-living facility, in either case, originated in compliance with FHA
requirements applicable to such Mortgage Loan.”

     

    (c)           Amendment to definition of
Investor.  The definition of “Investor” set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
it with the following:

     

    “ ‘Investor’ means
Fannie Mae, Freddie Mac, or any of the entities listed on Exhibit G attached
hereto, which list may be amended from time to time by the Agent to reflect the
elimination or addition of certain approved Investors.  Absent
manifest error, the Agent’s records indentifying these Investors and reflecting
those Investors which have, from time to time, been removed from, or added to,
Exhibit G shall
be conclusive.  The Agent may from time to time, and, at the
reasonably request of the Borrower, shall, create an updated Exhibit G reflecting
the then current Investors and furnish such updated list to the Borrowers at the
address provided in Section 9 of the
Agreement.”

     

     

    
      
        
        

      

      
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    (d)           Amendment to definition of
Material Adverse Change.  The definition of “Material Adverse
Change” set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting subsection (a) thereof in its
entirety and replacing it with the following: “(a) in the financial condition,
business, affairs or operations of the Borrower, or Centerline Holding Company,
a Delaware statutory trust.”

     

    (e)           Amendment to Section
2.5(c)(1).  Section 2.5(c)(1) of
the Credit Agreement is hereby amended by deleting subsection (y) thereof in its
entirety and replacing it with the following:  “(y) the date which is
sixty (60) days from the date of the funding of such Advance.”

     

    (f)           Amendment to Section
2.5(c)(6).  Section 2.5(c)(6) of
the Credit Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:  “6.  On the date the
Pledged Loan or a Lien prior to the Pledged Loan is defaulted and, if the
default is non-monetary, remains in default for a period of thirty (30) days or
more.”

     

    (g)           Amendment to Section
2.8(b).  Section 2.8(b) of the
Credit Agreement is hereby amended by deleting the first sentence thereof in its
entirety and replacing it with the following: “An unused fee in the an amount
equal to the Daily Unused Amount (if a positive number), multiplied by
twenty-five (25) basis points per annum.”

     

    (h)           Amendment to Section
2.8(c).  Section 2.8(c) of the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
it with the following:

     

    “(c)           Miscellaneous
Fees.      The Borrower shall pay to the
Agent, promptly following an invoice therefor,  miscellaneous fees
including:

     

    (i)           Wire
transfer fees customarily charged by the Agent;

     

    (ii)           Customary
handling fees of $100 per transaction involving theCollateral;

     

    (iii)           Customary
handling fees of $50 per transaction involvingMortgage-backed Securities;
and

     

    (iv)           Custody
account fees based on the Agent’s schedule of chargesand fees that are customary
for similar services.”

     

    (i)           Amendment to Section
6.2.  Section 6.2 of the
Credit Agreement is hereby amended by adding a new subsection (j) thereto as
follows:

     

     

     

    
      
        
        

      

      
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    “(j)           Within
three (3) Business Day of the Borrower’s receipt thereof, copies of any letters
or communications from Freddie Mac or Fannie Mae informing the Borrower of
events resulting in a reduction or dilution of business arrangements with such
entity.”

     

    (j)           Amendment to Section
8.1.  Section 8.1 of the
Credit Agreement is hereby amended by deleting the word “or” at the end of
subsection (p) thereof in its entirety, deleting the period at the end of
subsection (q) thereof and replacing it with “; or” and adding a new subsection
(r) immediately thereafter as follows:

     

    “(r)           Failure
of Centerline Holding Company, a Delaware business trust, to pay, or any default
in the payment of any principal or interest on, any indebtedness for borrowed
money beyond any period of grace provided; or breach or default with respect to
any other material term of any other indebtedness for money borrowed under the
loan agreement, mortgage, indenture or other agreement relating thereto, if the
effect of such failure, default or breach is to cause, or to permit the holder
or holder thereof (or a trustee on behalf of such holder or holders) to cause,
such indebtedness of Centerline Holding Company to become or be declared due
prior to its stated maturity (upon the giving or receiving of Notice, lapse of
time, both or otherwise).

     

    (k)          Amendment to Exhibit
A.  Exhibit A to the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
in its stead the revised Exhibit A attached to
this Amendment.

     

    (l)           Amendment to Exhibit
B.  Exhibit B to the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
in its stead the revised Exhibit B attached to
this Amendment.

     

    (m)          Amendment to Exhibit
C.  Exhibit C to the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
in its stead the revised Exhibit C attached to
this Amendment.

     

    (n)           Amendment to Exhibit
G.  Exhibit G to the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
in its stead the revised Exhibit G attached to
this Amendment.

     

    (o)           Amendment to Disclosure
Schedules of Borrowers.  The Borrowers’ disclosure schedules to
the Credit Agreement, including, without limitation, Schedule 5.4, Schedule 5.22, Schedule 6.10, Schedule 7.16 and
Schedule 7.17,
are hereby amended by deleting them in their entirety and replacing in their
stead the revised disclosure schedules attached to this Amendment as Attachment
A.

     

    Section
4.                                Waiver of Compliance with
Section 7.18.  In accordance with Section 11.4 of the
Credit Agreement, and notwithstanding anything in the Credit Agreement to the
contrary, the Agent and the Lenders hereby agree to waive (i) compliance with
Section 7.18 of
the Loan Agreement and (ii) any Default under the Credit Agreement or any Loan
Document which may have resulted or may result from the Borrowers’
non-compliance with Section 7.18, solely
to the extent that such non-compliance relates to the Borrowers’ grant of a
security interest in existing and future Servicing Contracts to BofA in
connection with that certain Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of December 19, 2008, by and among Centerline Holding
Company and Centerline Capital Group Inc., as the borrowers, the guarantors and
lenders party thereto from time to time and BofA, as agent on behalf of the
lenders.  For the sake of clarity, the foregoing waiver does not and
shall not create, give rise to or permit the grant of a security interest in any
Servicing Contract if the grant of a security interest therein is prohibited
thereby or would constitute a breach or default thereunder or would result in
the termination thereof (including, by way of example, Servicing Contracts
pursuant to which CMC or CMP service Mortgage Loans transferred to Freddie Mac
or Fannie Mae). 

     

     

    
      
        
        

      

      
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    Section
5.        Consent to Transfer of
Assets from CMC to CMP.  In accordance with Section 7.12 of the
Credit Agreement, and in reliance upon the description of such transaction
provided to the Agent in that certain Letter Agreement re: Collateral for
Reimbursement Obligations under Master Agreements with Freddie Mac, dated as of
April 30, 2009, by and among Freddie Mac and CMC, a copy of which is attached
hereto as Attachment
B (the “Letter Agreement”), the Required Lenders hereby consent to CMC’s
transfer of those certain mortgage servicing rights of CMC relating to its
business with Freddie Mac, as set forth on Attachment C hereto
(the “Freddie MSRs”), to CMP in connection with Freddie Mac permitting CMP to
originate and service loans for Freddie Mac without obtaining additional letters
of credit or third party guarantees in support of CMP’s credit.

     

    Section
6.         Representations and
Warranties.  The Borrowers, jointly and severally, represent
and warrant to the Lenders as of the effective date of this Amendment that,
assuming the due execution and delivery of this Amendment: (a) no Default or
Event of Default is in existence, from and after, or will result from, the
execution and delivery of this Amendment or the consummation of any transactions
contemplated hereby; (b) each of the representations and warranties of the
Borrowers in the Credit Agreement and the other Loan Documents is true and
correct in all material respects on the effective date of this Amendment (except
for representations and warranties limited as to time or with respect to a
specific event, which representations and warranties shall continue to be
limited to such time or event); and (c) this Amendment and the Credit Agreement
(as amended by this Amendment) are legal, valid and binding agreements of the
Borrowers and are enforceable against them in accordance with their
terms.

     

    Section
7.         Ratification.  Except
as hereby amended, the Credit Agreement, all other Loan Documents and each
provision thereof are hereby ratified and confirmed in every respect and shall
continue in full force and effect, and this Amendment shall not be, and shall
not be deemed to be, a waiver of any Default or Event of Default or of any
covenant, term or provision of the Credit Agreement or the other Loan
Documents.

     

    Section
8.         Conditions
Precedent.  The agreements set forth in this Amendment are
conditional and this Amendment shall not be effective until receipt by the Agent
of the following: (i) a fully-executed counterpart original of this Amendment
and (ii) payment by the Borrowers of the fees referenced in the side letter of
even date herewith between the Borrowers and the Agent, and all of the Agent’s
other fees, costs and expenses associated with the preparation, negotiation,
execution and delivery and administration of this Amendment and the Credit
Agreement accrued through the date hereof, including, without limitation, the
Agent’s attorneys’ fees.

     

     

    
      
        
        

      

      
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    Section
9.          Counterparts.  This
Amendment may be executed and delivered in any number of counterparts with the
same effect as if the signatures on each counterpart were upon the same
instrument.

     

    Section
10.        Amendment as Loan
Document.  Each party hereto agrees and acknowledges that this
Amendment constitutes a “Loan Document” under and as defined in the Credit
Agreement.

     

    Section
11.        Governing
Law.  This Amendment shall in all respects be governed,
construed, applied and enforced in accordance with the internal laws of the
State of New York without regard to principles of conflicts of
laws.

     

    Section
12.        Successors and
Assigns.  This Amendment shall be binding upon each of the
Borrowers, the Lenders, the Agent and their respective successors and assigns,
and shall inure to the benefit of each of the Borrowers, the Lenders and the
Agent.

     

    Section
13.         Headings.  Section
headings in this Amendment are included herein for convenience of reference only
and shall not constitute a part of this Amendment for any other
purpose.

     

    Section
14.         Expenses.  Each
Borrower jointly and severally agrees to promptly reimburse the Agent and the
Lenders for all expenses, including, without limitation, reasonable fees and
expenses of outside legal counsel, it has heretofore or hereafter incurred or
incurs in connection with the preparation, negotiation and execution of this
Amendment and all other instruments, documents and agreements executed and
delivered in connection with this Amendment.

     

    Section
15.         Integration.  This
Amendment contains the entire understanding of the parties hereto with regard to
the subject matter contained herein.  This Amendment supersedes all
prior or contemporaneous negotiations, promises, covenants, agreements and
representations of every nature whatsoever with respect to the matters referred
to in this Amendment, all of which have become merged and finally integrated
into this Amendment.  Each of the parties hereto understands that in
the event of any subsequent litigation, controversy or dispute concerning any of
the terms, conditions or provisions of this Amendment, no party shall be
entitled to offer or introduce into evidence any oral promises or oral
agreements between the parties relating to the subject matter of this Amendment
not included or referred to herein and not reflected by a writing included or
referred to herein.

     

    Section
16.          No Course of
Dealing.  The Agent and the Lenders have entered into this
Amendment on the express understanding with the Borrowers that in entering into
this Amendment the Agent and the Lenders are not establishing any course of
dealing with the Borrowers.  The Agent’s and the Lenders’ rights to
require strict performance with all of the terms and conditions of the Credit
Agreement and the other Loan Documents shall not in any way be impaired by the
execution of this Amendment.  None of the Agent and the Lenders shall
be obligated in any manner to execute any further amendments or waivers and if
such waivers or amendments are requested in the future, assuming the terms and
conditions thereof are satisfactory to them, the Agent and the Lenders may
require the payment of fees in connection therewith.  Each of the
Borrowers agrees that none of the ratifications and reaffirmations set forth
herein, nor the Agent’s nor any Lender’s solicitation of such ratifications and
reaffirmations, constitutes a course of dealing giving rise to any obligation or
condition requiring a similar or any other ratification or reaffirmation from
the Borrowers with respect to any subsequent modification, consent or waiver
with respect to the Credit Agreement or any other Loan Document.

     

     

    
      
        
        

      

      
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    Section
17.           Waiver and
Release.

    

    (a)           The
Borrowers acknowledge and agree that, to their knowledge, as of the date
hereof:  (i) none of the Borrowers have any claim or cause of action
against the Agent or the Lenders arising out of, under or in any way relating to
the Credit Agreement or the Loan Documents (including this Amendment), any
documents, instruments, agreements, dealings or other matters in connection with
the Loan Documents, the transactions contemplated by the Loan Documents, or any
actions taken or not taken by the Agent or the Lenders in connection therewith;
(ii) none of the Borrowers have any offset rights, counterclaims or defenses of
any kind against payment and performance of the obligations under the Loan
Documents; and (iii) the Agent and the Lenders have heretofore properly
performed and satisfied in a timely manner all of their obligations to the
Borrowers under the Loan Documents.

    

    (b)           In
consideration of the amendments provided by and the covenants of the Agent and
the Lenders herein, the Borrowers agree to eliminate any possibility that any
past conditions, acts, omission, events, circumstances or matters, of which any
of the Borrowers have knowledge as of the date hereof, would impair or otherwise
adversely affect any of the rights, interests, contracts, collateral security or
rights and remedies of the Agent or the Lenders under the Loan
Documents.  Therefore, each of the Borrowers, on their own behalf and
on behalf of each of their respective successors and assigns, hereby waives,
releases and discharges the Agent and the Lenders, from any and all claims,
demands, actions or causes of action of which any of the Borrowers have
knowledge on or before the date hereof and arising out of, under or in any way
relating to the Loan Documents (including this Amendment), any documents
instruments, agreements, dealings or other matters connected with the Loan
Documents, the transactions contemplated by the Loan Documents or any actions
taken or not taken by the Agent or the Lenders in connection therewith,
including, without limitation, all matters, claims, transactions or things
occurring on or prior to the date hereof of which any of the Borrowers have
knowledge.  The waivers, releases and discharges in this paragraph
shall be effective regardless of any other event that may occur or not occur
prior to, or on or after the date hereof.

     

     

    
      
        
        

      

      
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    Section
18.           Jury Trial
Waiver.  THE BORROWERS, THE AGENT AND THE LENDERS BY ACCEPTANCE
OF THIS AMENDMENT MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AMENDMENT, THE CREDIT AGREEMENT, OR ANY
OTHER CREDIT DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF AGENT OR ANY LENDER RELATING TO THE
ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT
NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

     

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appear on next page]

    
      
         

      

      
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    in witness
whereof, the
undersigned have executed and delivered this Amendment as of the date first set
forth above.

    

    
 

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              	
                                                                                      BORROWERS:

                                                                                       

                                                                                    	 
      	
                                                                                      CENTERLINE
      MORTGAGE CAPITAL INC.

                                                                                       

                                                                                    
	 
      	 
      	
                                                                                      By:

                                                                                    	 
      
	 
      	 
      	 
      	
                                                                                      (Signature)

                                                                                       

                                                                                    
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                                                                      (Printed
      Name and Title)

                                                                                       

                                                                                    
	 
      	 
      	
                                                                                      CENTERLINE
      MORTGAGE PARTNERS INC.

                                                                                       

                                                                                    
	 
      	 
      	
                                                                                      By:

                                                                                    	 
      
	 
      	 
      	 
      	
                                                                                      (Signature)

                                                                                       

                                                                                    
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                                                                      (Printed
      Name and Title)

                                                                                       

                                                                                    
	 
      	 
      	 
      	 
      
	
                                                                                      AGENT
      AND LENDER:

                                                                                       

                                                                                    	 
      	
                                                                                      BANK
      OF AMERICA, N.A.

                                                                                       

                                                                                    
	 
      	 
      	
                                                                                      By:

                                                                                    	 
      
	 
      	 
      	 
      	
                                                                                      (Signature)

                                                                                       

                                                                                    
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                                                                      (Printed
      Name and Title)

                                                                                       

                                                                                    

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

     

    
      
        
          Signature Page to Amendment No. 1 to
Amended and Restated Warehousing Credit and Security Agreement

        

         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
1:  LENDERS AND
COMMITMENTS

    

     

    
      
        
          	
                   

                  Lender

                   

                	
                   

                  Commitment
      Amount

                   

                	
                   

                  Address
      for Notices

                   

                	
                   

                  Address
      for Advance Requests

                   

                
	
                   

                  Bank
      of America, N.A.

                   

                	
                   

                  $100,000,000.00

                   

                	
                   

                  Bank
      of America, N.A.

                  One
      Federal Street, 4th
      Floor

                  Mail
      Code :  MA5-503-04-16

                  Boston,
      Massachusetts 02110

                  Attn::
      Mr. John F. Simon

                    Senior Vice
      President

                  email:
      john.f.simon@bankofamerica.com

                  telephone:
      617-346-4272

                   

                	
                   

                  Bank
      of America, N.A.

                  One
      Federal Street, 4th
      Floor

                  Mail
      Code :  MA5-503-04-16

                  Boston,
      Massachusetts 02110

                   

                   

                  Attn:  Pauline
      Lettieri

                            Assistant
      Vice President

                  email:  pauline.lettieri@bankofamerica.com

                  telephone:
      617-346-4008

                   

                   

                  Attn:   Jordan
      A. Casella

                             Vice
      President

                  email: 
      jordan.a.casella@bankofamerica.com

                  telephone: 
      617-346-0733

                   

                   

                

        

         

         

         

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A:  ADVANCE
REQUEST

     

    ______________________________________________________________________________

     

    Centerline
Mortgage Capital Inc. and Centerline Mortgage Partners Inc.

     

    Date of
Request: _____________ ___, 2008

     

    The
undersigned hereby gives Notice pursuant to that certain Warehousing Credit and
Security Agreement dated as of May 30, 2008 (as amended and/or restated from
time to time) of its request to have the following Advance made to it on
______________, 2009.

     

    ELIGIBLE
LOAN
TYPE:                
 □ FANNIE MAE DUS MORTGAGE LOAN

        □ OTHER
FANNIE MAE MORTGAGE LOAN

        □ FREDDIE MAC
MORTGAGE LOAN

        □ FHA
CONSTRUCTION MORTGAGE LOAN

        □ FHA PROJECT
MORTGAGE LOAN

    

    STATUS OF
ELIGIBLE LOAN:       □ FIRST MORTGAGE
LOAN

        □ SECOND
MORTGAGE LOAN (if permitted)

        □ THIRD
MORTGAGE LOAN (if permitted)

    

     

    Loan No.:
____________________________                                                                                     Warehouse
Date: _____________________

    Project
Name:
_________________________                                                                                     Contract/Pool
No.: ____________________

    Project
State and Zip Code: ______________

     

    Mortgage
Note Amount:
________________                                                                                     Interest
Rate: ________________________

    Mortgage
Note Date: ___________________

    Advance
Amount: __________

     

    Approved
Warehouse Amount:
___________                                                                                     Endorsement
Amount: _________________

    Cumulative
Endorsement Amount: ________

     

    Investor:
___________________________                                                                                     Expiration
Date: ______________________

    Committed
Purchase Price: ______________

     

    Title
Company/Closing Agent:
____________________________________________________

    Title
Contact
Person:  __________________                                                                           Phone
No.: __________________________

    Title
Company Address:
_________________________________________________________

     

    Security
Rate:
___________                                                      Issue
Rate:
______________                                                      Maturity
Date: _________________

     

    WIRE TRANSFER
INFORMATION

     

    

     

    WIRE #1

     

    Wire
Amount:
________________________                                                                                     Date
of Wire: ________________________

     

    Receiving
Bank:
______________________                                                                                     ABA
No.: ___________________________

     

    City
& State: _________________________

     

    Credit
Account Name:
__________________                                                                                     Number:
____________________________

     

    Advise:
______________________________                                                                                     Phone:
_____________________________

     

    Email
Address:

     

    

     

    WIRE #2

     

    Wire
Amount:
________________________                                                                                     Date
of Wire: ________________________

     

    Receiving
Bank:
______________________                                                                                     ABA
No.: ___________________________

     

    City
& State: _________________________

     

    Credit
Account Name:
__________________                                                                                     Number:
____________________________

     

    Advise:
______________________________                                                                                     Phone:
_____________________________

     

    Email
Address:

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    As
applicable, ______________________________ (the “Borrower”) hereby grants a
security interest to Bank of America, N.A., as Agent (the “Agent”) for a
syndicate of Lenders (the “Lenders”), in all of Borrower’s right, title and
interest in and to the Mortgage Loan described above and all related Collateral
pursuant to Section 3.1 of that certain Amended and Restated Warehousing Credit
and Security Agreement, dated as of May 30, 2008, among the Borrower, the Agent
and the Lenders (as amended, restated, renewed or replaced, the “Agreement”).
Capitalized terms used in this Advance Request without further definition have
the meanings set forth in the Agreement.

     

    The
undersigned represents and warrants as follows:

     

    (a)           The
Advance requested hereby complies with the requirements of the
Agreement.

     

    (b)           Each
representation and warranty made under Section 5 of the Agreement is true and
correct at and as of the date hereof and (except to the extent the undersigned
gives Notice to the Agent to the contrary prior to 5:00 p.m. on the Business Day
before the requested date for the making of the Advance) will be true and
correct at and as of the time the Advance is made, in each case both with and
without giving effect to the Advance and the application of the proceeds
thereof, except to the extent of changes resulting from transactions
contemplated and permitted by this Agreement and the other Loan Documents and
changes occurring in the ordinary course of business that singly or in the
aggregate could not reasonably be expected to result in a Material Adverse
Change and except to the extent that such representations and warranties relate
expressly to an earlier date.

     

    (c)           No
Default has occurred and is continuing as of the date hereof or would result
from the making of the Advance or from the application of the proceeds thereof
if the Advance was made on the date hereof, and (except to the extent the
undersigned gives Notice to the Agent to the contrary prior to 5:00 p.m. on the
Business Day before the requested date for the making of the Advance) no Default
will have occurred and be continuing at the time the Advance is to be made or
would result from the making of the Advance or from the application of the
proceeds thereof.

     

    (d)           Borrower
agrees to cause the Mortgage Note(s) and all other required Collateral Documents
to be delivered to the Agent no later than the first Business Day after the date
of the Advance made to fund the Mortgage Loan or the second Business Day after
the date of the Advance if delivery is not practical due to the time of the
settlement; provided that the foregoing is not applicable where Freddie Mac is
the Investor, as Freddie Mac requires the Mortgage Note and all required
Collateral Documents to be delivered to their office on or before the delivery
date.  The Mortgage Note will be forwarded to the Agent for
endorsement immediately following closing.  The Agent will then
forward the original Mortgage Note to Freddie Mac.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
              CENTERLINE
      MORTGAGE CAPITAL INC.

              By:           ________________________________

                        (Signature)

              Its:           ________________________________

              (Printed Name and
      Title)

               

            	
                    CENTERLINE
      MORTGAGE PARTNERS INC.

                    By:                      ________________________________

                                  
              (Signature)

                    Its:                      ________________________________

                                  (Printed Name and
      Title)

            

    

     

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

      EXHIBIT
B:  ELIGIBLE LOANS AND OTHER
ASSETS

       

      Lenders’
obligation to make Advances under Section 2 of the Agreement is subject to the
following limitations (in addition to all other limitations, terms and
conditions set forth in the Agreement):

       

      
        	
                 
      

              	
                1.

              	
                No
      Advance will be made against any Mortgage Loan that has been previously
      sold or pledged to obtain financing (whether or not such financing
      constitutes Debt) under another warehousing financing arrangement or a
      Gestation Agreement.

              

      

       

      
        	
                 
      

              	
                2.

              	
                No
      Advance will be made against any Mortgage Loan that Agent reasonably
      believes may be based on untrue, incomplete or inaccurate or fraudulent
      information or may otherwise be subject to
  fraud.

              

      

       

      
        	
                 
      

              	
                3.

              	
                No
      Advance will be made against a Mortgage Loan if the Advance will exceed
      the Advance Rate applicable to that type of Eligible Loan at the time it
      is pledged.

              

      

       

      
        	
                 
      

              	
                4.

              	
                No
      Advance will be made against any Mortgage Loan originated and funded by a
      third party (other than with funds provided by Borrower at closing to
      purchase the Mortgage Loan) and subsequently purchased by such
      Borrower.

              

      

       

      
        	
                 
      

              	
                5.

              	
                No
      Advance will be made against a Special Fannie Mae Mortgage
      Loan.

              

      

       

      
        	
                 
      

              	
                6.

              	
                No
      Advance will be made against an FHA Construction Mortgage Loan unless (A)
      Agent has at one time had or will obtain (as provided in Exhibit C-3)
      possession of the related Mortgage Note and (B) the related Mortgage Note
      is in the possession of a Person other than the Borrower or an Affiliate
      of the Borrower.

              

      

       

    

    ELIGIBLE
LOANS AND TERMS OF ADVANCES

     

    
      Subject
to compliance with the terms and limitations set forth below and the terms,
representations and warranties and the covenants in the Agreement (including
applicable Exhibits), each of the following Mortgage Loans is an Eligible Loan
for purposes of the Agreement:

       

      1.         Fannie
Mae DUS Mortgage Loan

       

      
        	
                 
      

              	
                (a)

              	
                Definition.

              	
                A
      permanent Mortgage Loan on a Multifamily Property originated under Fannie
      Mae’s Delegated Underwriting and Servicing Guide, including, without
      limitation, a Mortgage Loan secured by a mobile/manufactured home
      park.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Subordinate Mortgage
      Loan:

              	
                Permitted.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Sublimit:

              	
                No
      Limit.

              

      

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 
      

              	
                (d)

              	
                Committed/Uncommitted:

              	
                Purchase
      Commitment required.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Advance
      Rate:

              	
                100%
      of the lesser of (i) the Mortgage Note Amount or (ii) the Committed
      Purchase Price.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Warehouse
      Period:

              	
                60
      days for cash transactions.  60 days for an Agency Security
      issued by Fannie Mae.

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Shipped
      Period:

              	
                45
      days for cash transactions.  60 days for an Agency Security
      issued by Fannie Mae.

              

      

       

      2.        Other
Fannie Mae Mortgage Loan

       

      
        	
                 
      

              	
                (a)

              	
                Definition.

              	
                A
      permanent Mortgage Loan on a Multifamily Property covered by a Purchase
      Commitment issued by Fannie Mae (other than a Fannie Mae DUS Mortgage Loan
      or a Special Fannie Mae Mortgage Loan), including, without limitation, a
      Mortgage Loan secured by a mobile/manufactured home
  park.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Subordinate Mortgage
      Loan:

              	
                Permitted.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Sublimit:

              	
                No
      limit.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Committed/Uncommitted:

              	
                Purchase
      Commitment required.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Advance
      Rate:

              	
                100%
      of the lesser of (i) the Mortgage Note Amount or (ii) the Committed
      Purchase Price.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Warehouse
      Period:

              	
                60
      days for cash transactions.  60 days for an Agency Security
      issued by Fannie Mae.

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Shipped
      Period:

              	
                45
      days for cash transactions.  60 days for an Agency Security
      issued by Fannie Mae.

              

      

       

      3.           FHA
Project Mortgage Loan

       

      
        	
                 
      

              	
                (a)

              	
                Definition. A
      permanent FHA fully-insured Mortgage Loan on a Multifamily
      Property.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Subordinate Mortgage
      Loan:

              	
                Second
      Mortgage Loans permitted.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Sublimit:

              	
                No
      limit.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Committed/Uncommitted:

              	
                Purchase
      Commitment required.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Advance
      Rate:

              	 	
                100%
      of the lesser of (i) the Mortgage Note Amount or (ii) the Committed
      Purchase Price.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Warehouse
      Period:

              	
                60
      days.

              

      

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 
      

              	
                (g)

              	
                Shipped
      Period:

              	
                45
      days.

              

      

       

      4.           FHA
Construction Mortgage Loan

       

      
        	
                 
      

              	
                (a)

              	
                Definition.

              	
                An
      FHA fully insured Mortgage Loan for the construction or rehabilitation of
      either (a) a Multifamily Property or other Mortgaged Property, or (b) as
      described in Section 232 of the National Housing Act (12 U.S.C. 1715w), a
      nursing home, intermediate care facility, board and care home, or
      assisted-living facility, in either case, originated in compliance with
      FHA requirements applicable to such Mortgage
  Loan.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Subordinate Mortgage
      Loan:

              	
                Not
      permitted.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Sublimit:

              	
                No
      limit.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Committed/Uncommitted:

              	
                Purchase
      Commitment required.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Advance
      Rate:

              	
                100%
      of the lesser of (i) the Mortgage Note Amount or (ii) the Committed
      Purchase Price.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Warehouse
      Period:

              	
                60
      days.

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Shipped
      Period:

              	
                45
      days.

              

      

       

      5.           Freddie
Mac Mortgage Loan

       

      
        	
                 
      

              	
                (a)

              	
                Definition.

              	
                A
      permanent Mortgage Loan on a Multifamily Property covered by a Purchase
      Commitment issued by Freddie Mac.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Subordinate Mortgage
      Loan:

              	
                Permitted.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Sublimit:

              	
                No
      limit.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Committed/Uncommitted:

              	
                Purchase
      Commitment required.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Advance
      Rate:

              	
                100%
      of the lesser of (i) the Mortgage Note Amount or (ii) the Committed
      Purchase Price.

              

      

       

      
        
          	
                   
      

                	
                  (f)

                	
                  Warehouse
      Period:

                	
                  60
      days.

                

        

         

        
          	
                   
      

                	
                  (g)

                	
                  Shipped
      Period:

                	
                  45
      days

                

        

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

    

    EXHIBIT
C:  PROCEDURES AND
DOCUMENTATION

     

    

    
      	
              ·  

            	
              Exhibit
      C-1:                                Procedures
      and Documentation for Warehousing Freddie Mac Mortgage
    Loans

            

    

     

    
      	
              ·  

            	
              Exhibit
      C-2:                                Procedures
      and Documentation for Warehousing Fannie Mae Mortgage
  Loans

            

    

     

    
      	
              ·  

            	
              Exhibit
      C-3:                                Procedures
      and Documentation for Warehousing FHA Mortgage
  Loans

            

    

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C-1

     

    PROCEDURES AND DOCUMENTATION
FOR WAREHOUSING FREDDIE MAC MORTGAGE LOANS

     

    Capitalized
terms used in this Exhibit without further definition have the meanings set
forth in the Amended and Restated Mortgage Warehousing Credit and Security
Agreement dated as of May 30, 2008 (as amended and/or restated from time to
time, and as any provision thereof may be waived, the “Agreement”) among
Centerline Mortgage Capital Inc., a Delaware corporation, Centerline Mortgage
Partners Inc., a Delaware corporation, the lenders from time to time party
hereto as defined on Schedule
1 (together with any successors and assigns thereof, being hereinafter
referred to individually as a “Lender” and collectively as the “Lenders”) and
Bank of America, N.A., in its capacity as one of the Lenders and as agent (it
and its successors in that capacity called the “Agent”) for the
Lenders

     

    All
documentation delivered pursuant to this Exhibit must be satisfactory to the
Agent in its sole discretion.

     

    Freddie
Mac form numbers used in this Exhibit are for convenience only and Borrower must
use the equivalent forms required at the time of delivery of a Pledged
Loan.

     

    I.           AT LEAST 3 BUSINESS DAYS
PRIOR TO THE ADVANCE DATE:

     

    The Agent
must receive an electronic mail from an Authorized Representative of Borrower,
providing the following information on the Pledged Loan:

     

    
      	
               
      

            	
              (a)

            	
              Mortgagor’s
      name.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Project
      name.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Borrower’s
      case/loan number.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Expected
      Advance date.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Mortgage
      Note Amount.

            

    

     

    
      	
               
      

            	
              (f)

            	
              Name,
      street address, e-mail address, telephone number and telecopier number of
      Borrower’s closing attorney, title company or settlement attorney and
      contact person.  Must identify who will be responsible for
      custody of closing documents and delivery of required items to
      Agent.

            

    

     

    Upon
receipt of such electronic mail, in form and substance satisfactory to Agent,
Agent will issue its escrow instructions letter to the specified Borrower’s
closing attorney, title company and/or the settlement attorney, which will
include wiring information, bailee clauses and contact information at the Agent
for the delivery of the original Mortgage Note and related Collateral
Documents.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    II.        AT LEAST 1 BUSINESS DAY
PRIOR TO THE ADVANCE DATE:

     

    The Agent
must receive the following:

     

    
      	
               
      

            	
              (a)

            	
              An
      original, facsimile or electronic copy of an Advance Request
      (Exhibit A to the Agreement) executed by an Authorized Representative
      of Borrower (facsimile or electronic copy is acceptable for funding, with
      the original to be forwarded via overnight
  mail).

            

    

     

    
      	
               
      

            	
              (b)

            	
              A
      copy of the executed Purchase Commitment for the Pledged Loan (which must
      conform to requirements of the
Agreement).

            

    

     

    
      	
               
      

            	
              (c)

            	
              A
      copy of the Agent’s escrow instructions letter to the title company and/or
      the settlement attorney, countersigned by an authorized representative of
      the title company or the settlement attorney involved with the
      transaction.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Original
      assignment of the Mortgage, endorsed by Borrower in blank, in recordable
      form but unrecorded (copy is acceptable for funding, with the original to
      be forwarded via overnight mail).

            

    

     

    
      	
               
      

            	
              (e)

            	
              Original
      assignment of security agreement, if applicable, endorsed by Borrower in
      blank, in recordable form but unrecorded (copy is acceptable for funding,
      with original to be forwarded via overnight
  mail).

            

    

     

    
      	
               
      

            	
              (f)

            	
              Copies
      of the UCC financing statements to be filed by Borrower against the
      mortgagor(s).

            

    

     

    
      	
               
      

            	
              (g)

            	
              Closing
      settlement statement, if available (otherwise must be delivered on the
      date of the Advance, prior to
funding).

            

    

     

    No
Advance will be made by the Lenders prior to the Agent’s receipt of all
Collateral Documents required under Section II above or otherwise required
under the Agreement.  The Agent shall have a reasonable time (1
Business Day under ordinary circumstances) to examine the Advance Request and
the applicable Collateral Documents before the Lenders shall fund the requested
Advance, and the Agent may reject any Mortgage Loans that does not meet the
requirements of this Exhibit, the Agreement or of the related Purchase
Commitment.

     

    Borrower
must hold or cause the applicable title company, settlement attorney or
Borrower’s closing attorney to hold, in trust and as agent and bailee for Agent,
those original Collateral Documents of which only copies are required to be
delivered to the Agent under this Exhibit.  Promptly upon request by
Agent or, if the recorded Collateral Documents have not yet been returned from
the recording office, promptly upon receipt by Borrower or its custodian of
those recorded Collateral Documents, Borrower must deliver or cause its
custodian to deliver to Agent any or all of the original Collateral
Documents.

     

    Agent
will, upon compliance by the Borrower with the terms of the Loan Documents,
deposit the Advance into the Funding Account, for disbursement by Borrower to
the title company or settlement attorney.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    The
Advance, when wired by the Borrower to the title company or the settlement
attorney, shall be held in an escrow account of the title company or the
settlement attorney and disbursed in accordance with the closing letter of the
Borrower or its counsel when authorized by the Agent in its escrow instruction
letter.

     

    Disbursement
will be authorized only after the Borrower’s closing attorney, title company or
settlement attorney, as applicable, takes possession, on behalf of the Agent,
for the benefit of the Lenders, of the signed Mortgage Note, endorsed by the
Borrower in blank and without recourse, and the title company is prepared to
issue its title insurance policy.  Immediately after disbursement,
Borrower’s closing attorney, the title company or settlement attorney, as
applicable, shall be required to transmit the Mortgage Note and certified true
copy of the title insurance policy directly to the Agent.  In the
event the Pledged Loan is not closed and the related Mortgage recorded by 3:00
p.m. on the date of the Advance, the title company or the settlement attorney
must return the Advance to the Cash Collateral Account promptly and in any event
no later than the 1st
Business Day following the date of the Advance.

     

    The
foregoing arrangements, permitting funding of the Advance when the Mortgage Note
has been delivered to a third person on behalf of, and as agent and bailee for,
the Agent, and before the Mortgage Note is received by the Agent, for the
benefit of the Lenders, are for the convenience of the Borrower.  All
risk of loss or nondelivery of the Mortgage Note is that of the Borrower, and
neither the Agent nor the Lenders shall have any liability or responsibility
therefor.

     

    
      	
              III.

            	
              ON THE FIRST BUSINESS
      DAY AFTER THE ADVANCE DATE (or the Second Business Day after the date of
      the Advance if delivery is not practical due to the time of the
      settlement):

            

    

     

    The Agent
must receive the following:

     

    
      	
               
      

            	
              (a)

            	
              The
      original Mortgage Note, endorsed by Borrower in blank and without
      recourse.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Originals
      of assignment of the Mortgage and assignment of the security agreement (if
      not previously delivered).

            

    

     

    
      	
               
      

            	
              (c)

            	
              A
      copy of the title insurance policy or the title insurance commitment to
      issue a policy marked to show the final policy exceptions,
      which:

            

    

     

    
      	
               
      

            	
              (1)

            	
              Contains
      recording information filed on the schedules pertaining to the Pledged
      Loan and, if applicable, UCC financing
  statements;

            

    

     

    
      	
               
      

            	
              (2)

            	
              Names
      as insured Borrower and/or the Investor, and their successors and assigns,
      as their interests may appear;

            

    

     

    
      	
               
      

            	
              (3)

            	
              Shows
      effective date and time which is as of the date and time of disbursement
      of the Advance from escrow; and

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (4)

            	
              Sets
      forth an insured amount which is equal to or greater than the Advance
      amount.

            

    

     

    
      	
              IV.

            	
              AT LEAST 1
      BUSINESS DAYS BEFORE
      INVESTOR/APPROVED CUSTODIAN MUST RECEIVE PLEDGED
    LOAN:

            

    

     

    The Agent
must receive the following:

     

    
      	
               
      

            	
              (a)

            	
              Signed
      shipping instructions from the Borrower to the Agent for the delivery of
      the Pledged Loan, including the
following:

            

    

     

    
      	
               
      

            	
              (1)

            	
              Name
      and address of the contact person at Investor or the Approved Custodian to
      which the Collateral Documents are to be shipped, the desired shipping
      date and the preferred method of
delivery;

            

    

     

    
      	
               
      

            	
              (2)

            	
              Name
      of project securing the Pledged
Loan;

            

    

     

    
      	
               
      

            	
              (3)

            	
              Date
      by which the Investor or the Approved Custodian must receive the Pledged
      Loan;

            

    

     

    
      	
               
      

            	
              (4)

            	
              Instructions
      for endorsement of the Mortgage
Note;

            

    

     

    
      	
               
      

            	
              (5)

            	
              For
      cash payments, the signed original Wire Transfer Authorization for a Cash
      Warehouse Delivery (Multifamily) (Freddie Mac Form 987), showing Lender as
      warehouse lender and specifying the Cash Collateral Account as the
      receiving account for loan purchase proceeds;
  and

            

    

     

    
      	
               
      

            	
              (6)

            	
              Completed,
      but not signed, Warehouse Lender Release of Security Interest
      (Multifamily) (Freddie Mac Form 996), to be signed by
    Lender.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      remainder of the documents required for shipping to the Investor or the
      Approved Custodian as specified by the Investor or the Approved Custodian
      or in the Freddie Mac Seller/Servicer
Guide.

            

    

     

    Unless
otherwise agreed in writing with Borrower, the Agent exclusively will deliver
the Mortgage Note and other original Collateral Documents required by this
Exhibit evidencing the Pledged Loan to an Investor or an Approved
Custodian.  Upon instruction by Borrower, the Agent will complete the
endorsement of the Mortgage Note.  The Agent will deliver the Mortgage
Note and the other documents required for shipping to the Investor or the
Approved Custodian as specified by the Investor or Approved Custodian or in the
Freddie Mac Seller/Servicer Guide to the Investor that issued the Purchase
Commitment for the Pledged Loan or to an Approved Custodian for the
Investor.

     

    Cash
proceeds of the sale of a Pledged Loan will be deposited into the Cash
Collateral Account and applied to the related Advances.  As long as no
Default or Event of Default exists, Agent will return any excess proceeds from
the sale of a Pledged Loan, after repayment of the related Advances, to Borrower
(by transfer to the Operating Account), unless otherwise instructed in writing
by Borrower.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C-2

     

    PROCEDURES AND DOCUMENTATION
FOR WAREHOUSING FANNIE MAE DUS AND OTHER FANNIE MAE MORTGAGE
LOANS

     

    Capitalized
terms used in this Exhibit without further definition have the meanings set
forth in the Amended and Restated Mortgage Warehousing Credit and Security
Agreement dated as of May 30, 2008 (as amended and/or restated from time to
time, and as any provision thereof may be waived, the “Agreement”) among
Centerline Mortgage Capital Inc., a Delaware corporation, Centerline Mortgage
Partners Inc., a Delaware corporation, the lenders from time to time party
hereto as defined on Schedule
1 (together with any successors and assigns thereof, being hereinafter
referred to individually as a “Lender” and collectively as the “Lenders”) and
Bank of America, N.A., in its capacity as one of the Lenders and as agent (it
and its successors in that capacity called the “Agent”) for the
Lenders

     

    All
documentation delivered pursuant to this Exhibit must be satisfactory to the
Agent in its sole discretion.

     

    Fannie
Mae form numbers used in this Exhibit are for convenience only and Borrower must
use the equivalent forms required at the time of delivery of a Pledged
Asset.

    
I.          AT LEAST THREE (3) BUSINESS
DAYS PRIOR TO THE ADVANCE DATE:

    
       

      The Agent
must receive an electronic mail from an Authorized Representative of Borrower,
providing the following information on the Pledged Loan:

       

      (a)        Mortgagor’s
name;

       

      (b)        Project
name;

       

      (c)        The
Borrower’s case/loan number;

       

      (d)        Expected
Advance date;

       

      (e)        Mortgage
Note Amount;

       

      
        	
                 
      

              	
                (f)

              	
                Name,
      address, telephone and facsimile of title company or settlement attorney
      and contact person.  Must identify who will be responsible for
      custody of closing documents and delivery of required items to
      Agent.

              

      

       

    

    Upon
receipt of such electronic mail, in form and substance satisfactory to Agent,
Agent will issue its escrow instructions letter to the specified title company
and/or the settlement attorney, which will include wiring information, bailee
clauses and contact information at the Agent for the delivery of the original
Mortgage Note and related Collateral Documents.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    II.         AT LEAST 1 BUSINESS DAY
PRIOR TO THE ADVANCE DATE:

     

    The Agent
must receive the following:

     

    
      	
               
      

            	
              (a)

            	
              An
      original, facsimile or electronic copy of an Advance Request
      (Exhibit A to the Agreement) executed by an Authorized Representative
      of Borrower (facsimile or electronic copy is acceptable for funding, with
      the original to be forwarded via overnight
  mail).

            

    

     

    
      	
               
      

            	
              (b)

            	
              A
      copy of the confirmed Fannie Mae Multifamily Commitment and Delivery
      printed from the C&D System for either a cash or Mortgage-Backed
      Security transaction.

            

    

     

    
      	
               
      

            	
              (c)

            	
              If
      a Mortgage-backed Security is to be issued, a copy of the executed
      Purchase Commitment for the Pledged Security (which must conform to the
      requirements of the Agreement).

            

    

     

    
      	
               
      

            	
              (d)

            	
              A
      copy of the Agent’s escrow instructions letter to the title company and/or
      the settlement attorney, countersigned by an authorized representative of
      the title company or the settlement attorney involved with the
      transaction.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Original
      assignment of the Mortgage, endorsed by Borrower in blank, in recordable
      form but unrecorded (copy is acceptable for funding, with the original to
      be forwarded via overnight mail).

            

    

     

    
      	
               
      

            	
              (f)

            	
              Original
      assignment of security agreement, if applicable, endorsed by Borrower in
      blank, in recordable form but unrecorded (copy is acceptable for funding,
      with original to be forwarded via overnight
  mail).

            

    

     

    
      	
               
      

            	
              (g)

            	
              Copies
      of the UCC financing statements to be filed by Borrower against the
      mortgagor(s).

            

    

     

    
      	
               
      

            	
              (h)

            	
              Closing
      settlement statement, if available (otherwise must be delivered on the
      date of the Advance, prior to
funding).

            

    

     

    No
Advance will be made by the Lenders prior to the Agent’s receipt of all
Collateral Documents required under Section II above or otherwise required
under the Agreement.  The Agent shall have a reasonable time (1
Business Day under ordinary circumstances) to examine the Advance Request and
the applicable Collateral Documents before the Lenders shall fund the requested
Advance, and the Agent may reject any Mortgage Loans that does not meet the
requirements of this Exhibit, the Agreement or of the related Purchase
Commitment.

     

    Borrower
must hold or cause the applicable title company or settlement attorney to hold,
in trust and as agent and bailee for Agent, those original Collateral Documents
of which only copies are required to be delivered to the Agent under this
Exhibit.  Promptly upon request by Agent or, if the recorded
Collateral Documents have not yet been returned from the recording office,
immediately upon receipt by Borrower or its custodian of those recorded
Collateral Documents, Borrower must deliver or cause its custodian to deliver to
Agent any or all of the original Collateral Documents.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Agent
will, upon compliance by the Borrower with the terms of the Loan Documents,
deposit the Advance into the Funding Account, for disbursement by Borrower to
the title company or settlement attorney.

     

    The
Advance, when wired by the Borrower to the title company or the settlement
attorney, shall be held in an escrow account of the title company or the
settlement attorney and disbursed in accordance with the closing letter of the
Borrower or its counsel when authorized by the Agent in its escrow instruction
letter.

     

    Disbursement
will be authorized only after the title company or settlement attorney takes
possession, on behalf of the Agent, for the benefit of the Lenders, of the
signed Mortgage Note, endorsed by the Borrower in blank and without recourse,
and the title company is prepared to issue its title insurance
policy.  Immediately after disbursement, the title company or
settlement attorney shall be required to transmit the Mortgage Note and
certified true copy of the title insurance policy directly to the
Agent.  In the event the Pledged Loan is not closed and the related
Mortgage recorded by 3:00 p.m. on the date of the Advance, the title company or
the settlement attorney must return the Advance to the Cash Collateral Account
promptly and in any event no later than the 1st
Business Day following the date of the Advance.

     

    The
foregoing arrangements, permitting funding of the Advance when the Mortgage Note
has been delivered to a third person on behalf of, and as agent and bailee for,
the Agent, and before the Mortgage Note is received by the Agent, for the
benefit of the Lenders, are for the convenience of the Borrower.  All
risk of loss or nondelivery of the Mortgage Note is that of the Borrower, and
neither the Agent nor the Lenders shall have any liability or responsibility
therefor.

     

    
      	
              III.

            	
              ON THE FIRST BUSINESS
      DAY AFTER THE ADVANCE DATE (or the Second Business Day after the date of
      the Advance if delivery is not practical due to the time of the
      settlement):

            

    

     

    The Agent
must receive the following:

     

    
      	
               
      

            	
              (a)

            	
              The
      original Mortgage Note, endorsed by Borrower in blank and without
      recourse.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Originals
      of assignment of the Mortgage and assignment of the security agreement (if
      not previously delivered).

            

    

     

    
      	
               
      

            	
              (c)

            	
              A
      copy of the title insurance policy or the title insurance commitment to
      issue a policy marked to show the final policy exceptions,
      which:

            

    

     

    
      	
               
      

            	
              (1)

            	
              Contains
      recording information filed on the schedules pertaining to the Pledged
      Loan and, if applicable, UCC financing
  statements;

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (2)

            	
              Names
      as insured Borrower and/or the Investor, and their successors and assigns,
      as their interests may appear;

            

    

     

    
      	
               
      

            	
              (3)

            	
              Shows
      effective date and time which is as of the date and time of disbursement
      of the Advance from escrow; and

            

    

     

    
      	
               
      

            	
              (4)

            	
              Sets
      forth an insured amount which is equal to or greater than the Advance
      amount.

            

    

     

    
      	
              IV.

            	
              AT LEAST 1
      BUSINESS DAYS BEFORE
      INVESTOR/APPROVED CUSTODIAN MUST RECEIVE PLEDGED
    LOAN):

            

    

     

    The Agent
must receive the following:

     

    
      	
               
      

            	
              (a)

            	
              Signed
      shipping instructions for the delivery of the Pledged Loan including the
      following:

            

    

     

    
      	
               
      

            	
              (1)

            	
              Name
      and address of the Investor or the Approved Custodian to which the
      Collateral Documents are to be shipped, the desired shipping date and the
      preferred method of delivery.

            

    

     

    
      	
               
      

            	
              (2)

            	
              Name
      of project securing the Pledged
Loan.

            

    

     

    
      	
               
      

            	
              (3)

            	
              Date
      the Investor or the Approved Custodian must receive the Pledged
      Loan.

            

    

     

    
      	
               
      

            	
              (4)

            	
              Instructions
      for endorsement of the Mortgage
Note.

            

    

     

    
      	
               
      

            	
              (5)

            	
              For
      cash payments, the signed original Wire Transfer Request (Fannie Mae Form
      4639) or Fannie Mae Wiring Instructions from the C&D System,
      specifying the applicable Cash Collateral Account as the receiving account
      for loan purchase proceeds.

            

    

     

    
      	
               
      

            	
              (6)

            	
              Executed
      bailee letter with the appropriate applicable Schedule A (in form approved
      by Fannie Mae and the Agent).

            

    

     

    
      	
               
      

            	
              (7)

            	
              If
      a Mortgage-backed Security is to be issued by Fannie Mae, a copy of the
      Fannie Mae Wiring Instructions from the C&D system, instructing Fannie
      Mae to issue the Mortgage-backed Security in Borrower’s name and to
      deliver the Pledged Security to Agent’s custody
  account.

            

    

     

    
      	
               
      

            	
              (8)

            	
              If
      a Mortgage-backed Security is to be issued, completed and signed Security
      Delivery Instructions, in the form attached as Schedule I to this
      Exhibit.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      remainder of the documents required for shipping to Investor/Approved
      Custodian as specified by Investor or in Fannie Mae’s Delegated
      Underwriting and Servicing Guide.

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Agent
exclusively will deliver the Mortgage Note and other original Collateral
Documents evidencing the Pledged Loan to Investor/Approved Custodian, unless
otherwise agreed in writing with Borrower or as otherwise directed by Borrower
to comply with the requirements of Fannie Mae’s ASAP Plus
program.  Upon instruction by Borrower, Agent will complete the
endorsement of the Mortgage Note.  If no Mortgage-backed Security is
to be issued, Agent will deliver the Mortgage Note and the other documents
required for shipping to Investor/Approved Custodian as specified by
Investor/Approved Custodian or in Fannie Mae’s Delegated Underwriting and
Servicing Guide with an executed bailee letter to the Investor that issued the
Purchase Commitment for the Pledged Loan or to its Approved
Custodian.  If a Mortgage-backed Security is to be issued, Agent will
deliver the Mortgage Note and the other documents required for
shipping.

     

    Cash
proceeds of the sale of a Pledged Loan or a Pledged Security will be deposited
into the Cash Collateral Account and applied to the related
Advances.  As long as no Default or Event of Default exists, Agent
will return any excess proceeds from the sale of a Pledged Loan or a Pledged
Security, after repayment of the related Advances, to Borrower (by transfer to
the Operating Account), unless otherwise instructed in writing by
Borrower.

     

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
I TO EXHIBIT C-2

    SECURITY DELIVERY
INSTRUCTIONS

     

    _____________________________________________________________________________

    
 

    
 

    Custodial
Account
Number:                                                                                                
     ______________________

    Custodial
Account
Name:                                                                                                    
    ______________________

    Cash
Collateral Account
No:                                                                                                ______________________

    INSTRUCTIONS
MUST BE RECEIVED 2 BUSINESS DAYS IN ADVANCE OF PICK-UP/DELIVERY

     

    BOOK-ENTRY
DATE:
_________________                                                                                                SETTLEMENT
DATE: ____________

    ISSUER:
_____________________________                                                                                                SECURITY:
_____________________

    NO. OF
CERTIFICATES:
_______________                                                                                                1)
_________________________________

    2) _________________________________

    

    PURCHASE
PRICE @
_________%                                                                                                           =           _______________________

     

    ACCRUED
INTEREST (_____DAYS @
_______%)                                                                                  =           _______________________

     

    TOTAL
PURCHASE
PRICE                                                                                                                         =           $______________________

     

    

     

    CUSIP NO.
__________________________

     

    Pool No.
_______________                                                                                                           Coupon
Rate: __________________

     

    Issue
Date (M/D/Y):
____________________                                                                                                           Maturity
Date M/D/Y):__________

     

    POOL TYPE
(circle one):

     

    Fannie
Mae:                                           FIXED
ARM                                           DISCOUNT
NOTE                                                      DEBENTURES

     

    DELIVER
TO:                                __________________                                                      (  )
Versus Payment

     

    __________________                                                      DVP
AMOUNT $_____________________

     

    __________________

    DELIVER
TO:                                __________________                                                      (  )
Versus Payment

    __________________                                                      DVP
AMOUNT $_____________________

    __________________

    PROJECT
NAME:                                                         ____________________________________________________

    AUTHORIZED
SIGNATURE: ____________________________________________________

    PRINTED
NAME AND TITLE: ___________________________________________________

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C-3

     

    PROCEDURES AND DOCUMENTATION
FOR WAREHOUSING

     

    FHA PROJECT LOANS AND FHA
CONSTRUCTION MORTGAGE LOANS

     

    Capitalized
terms used in this Exhibit without further definition have the meanings set
forth in the Amended and Restated Mortgage Warehousing Credit and Security
Agreement dated as of May 30, 2008 (as amended and/or restated from time to
time, and as any provision thereof may be waived, the “Agreement”) among
Centerline Mortgage Capital Inc., a Delaware corporation, Centerline Mortgage
Partners Inc., a Delaware corporation, the lenders from time to time party
hereto as defined on Schedule
1 (together with any successors and assigns thereof, being hereinafter
referred to individually as a “Lender” and collectively as the “Lenders”) and
Bank of America, N.A., in its capacity as one of the Lenders and as agent (it
and its successors in that capacity called the “Agent”) for the
Lenders

     

    All
documentation delivered pursuant to this Exhibit must be satisfactory to the
Agent in its sole discretion.

     

    HUD form
numbers used in this Exhibit are for convenience only and Borrower must use the
equivalent forms required at the time of delivery of a Pledged
Asset.

     

    
      	
              I.

            	
              AT LEAST 3 BUSINESS
      DAYS PRIOR TO THE ADVANCE
DATE:

            

    

     

    The Agent
must receive an electronic mail from an Authorized Representative of Borrower,
providing the following information on the Pledged Asset:

     

    
      	
               
      

            	
              (a)

            	
              Mortgagor’s
      name;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Project
      name;

            

    

     

    
      	
               
      

            	
              (c)

            	
              Borrower’s
      case/loan number;

            

    

     

    
      	
               
      

            	
              (d)

            	
              Expected
      Advance date;

            

    

     

    
      	
               
      

            	
              (e)

            	
              Mortgage
      Note Amount; and

            

    

     

    
      	
               
      

            	
              (f)

            	
              Name,
      street address, email address, telephone and facsimile of title company or
      settlement attorney and contact person.  Must identify who will
      be responsible for custody of closing documents and delivery of required
      items to Agent.

            

    

     

    Upon
receipt of such electronic mail, in form and substance satisfactory to Agent,
Agent will issue its escrow instructions letter to the specified title company
and/or the settlement attorney, which will include wiring information, bailee
clauses and contact information at the Agent for the delivery of the original
Mortgage Note and related Collateral Documents.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              II.

            	
              AT LEAST 1 BUSINESS
      DAY PRIOR TO THE ADVANCE
DATE:

            

    

     

    Agent
must receive the following:

     

    
      	
               
      

            	
              (a)

            	
              An
      original, facsimile or electronic copy of an Advance Request
      (Exhibit A to the Agreement) executed by an Authorized Representative
      of Borrower (facsimile or electronic copy is acceptable for funding, with
      the original to be forwarded via overnight
  mail).

            

    

     

    
      	
               
      

            	
              (b)

            	
              Copy
      of FHA Firm Commitment to insure.

            

    

     

    
      	
               
      

            	
              (c)

            	
              If
      no Mortgage-backed Security is to be issued, a copy of the executed
      Purchase Commitment for the Pledged
Loan.

            

    

     

    
      	
               
      

            	
              (d)

            	
              If
      a Mortgage-backed Security is to be issued, a copy of the executed
      Purchase Commitment (which must conform to the requirements of the
      Agreement) for the Mortgage-backed Security (consisting, in the case of a
      tax-exempt FHA Construction Mortgage Loan, of a trust indenture for the
      sale of the related securities and an agreement of the issuer and trustee
      to purchase the Mortgage-backed
Security).

            

    

     

    
      	
               
      

            	
              (e)

            	
              If
      a participation certificate is to be issued, a copy of the participation
      and servicing agreement.

            

    

     

    
      	
               
      

            	
              (f)

            	
              A
      copy of the Agent’s escrow instructions letter to the title company and/or
      the settlement attorney, countersigned by an authorized representative of
      the title company or the settlement attorney involved with the
      transaction.

            

    

     

    
      	
               
      

            	
              (g)

            	
              For
      FHA Construction Mortgage Loans, a copy of the Application for Insurance
      of Advance of Mortgage Proceeds (HUD Form 92403) to be submitted to
      HUD.

            

    

     

    
      	
               
      

            	
              (h)

            	
              Original
      assignment of the Mortgage, endorsed by borrower in blank, in recordable
      form but unrecorded (copy is acceptable for funding, with the original to
      be forwarded via overnight mail).

            

    

     

    
      	
               
      

            	
              (i)

            	
              Original
      assignment of the security agreement, if applicable, endorsed by Borrower
      in blank, in recordable form but unrecorded (copy is acceptable for
      funding, with the original to be forwarded via overnight
      mail).

            

    

     

    
      	
               
      

            	
              (j)

            	
              Copies
      of UCC financing statements to be filed by Borrower against the
      mortgagor(s).

            

    

     

    
      	
               
      

            	
              (k)

            	
              Closing
      settlement statement, if available (otherwise must be delivered on the
      date of the Advance, prior to
funding).

            

    

     

    No
Advance will be made by the Lenders prior to the Agent’s receipt of all
Collateral Documents required under Section II. Agent has a reasonable time (1
Business Day under ordinary circumstances) to examine Borrower’s Advance Request
and the Collateral Documents to be delivered by Borrower before the Lenders
shall fund the requested Advance, and the Agent may reject any Mortgage Loan
that does not meet the requirements of this Exhibit, the Credit Agreement or of
the related Purchase Commitment.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Borrower
must hold or cause its custodian to hold, in trust and as agent and bailee for
Agent, those original Collateral Documents of which only copies are required to
be delivered to Agent under this Exhibit. Promptly upon request by Agent or, if
the recorded Collateral Documents have not yet been returned from the recording
office, immediately upon receipt by Borrower or its custodian of those recorded
Collateral Documents, Borrower must deliver or cause its custodian to deliver to
the Agent any or all of the original Collateral Documents.

     

    Agent
will, upon compliance by the Borrower with the terms of the Loan Documents,
deposit the Advance into Borrower’s Funding Account, for disbursement by
Borrower to the title company or settlement attorney.

     

    The
Advance, when wired by Borrower to the title company or the settlement attorney,
must be held in an escrow account of the title company or the settlement
attorney and disbursed in accordance with the closing letter of Borrower or its
counsel and when authorized by the terms of the escrow instructions letter of
Agent.

     

    At
closing, the title company or the settlement attorney must take possession on
behalf of, and as agent and bailee for, Agent (for the benefit of the Lenders)
of (a) the signed Mortgage Note, endorsed by Borrower in blank and without
recourse, and (b) a copy of the title insurance policy, after which the title
company or the settlement attorney may release the Mortgage Note and the title
insurance policy to Borrower’s counsel pursuant to an executed bailee letter
countersigned by Borrower’s counsel, in a form provided by Agent. In the bailee
letter, Borrower’s counsel must (a) acknowledge receipt of the Mortgage Note,
(b) acknowledge Agent’s security interest in the Mortgage Note (for the benefit
of the Lenders), (c) agree that the Mortgage Note is being delivered to
Borrower’s counsel solely for the purpose of obtaining HUD’s endorsement, and
(d) agree to deliver the Mortgage Note, endorsed by HUD, and the title insurance
policy directly to the Agent.  The title company or the settlement
attorney may disburse the Advance from escrow upon advice of Borrower’s counsel
(which may be telephonic) that HUD has endorsed the Mortgage Note.  In
the event the Pledged Loan is not closed and the related Mortgage recorded on
the date of the Advance, the title company or the settlement attorney must
return the Advance to Borrower’s Cash Collateral Account, promptly and in any
event within one (1) Business Day after the date of the Advance.

     

    The
foregoing arrangements, which permit the Agent and the Lenders to fund the
Advance after the Mortgage Note has been delivered to a third person on behalf
of, and as agent and bailee for, Agent (for the benefit of the Lenders), and
before the Mortgage Note is received by Agent, are for the convenience of
Borrower. Borrower retains all risk of loss or nondelivery of the Mortgage Note,
and neither the Agent nor the Lenders have any liability or responsibility for
those risks.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              III.

            	
              ON THE FIRST BUSINESS
      DAY AFTER THE ADVANCE DATE (or the Second Business Day after the date of
      the Advance if delivery is not practical due to the time of the
      settlement):

            

    

     

    Agent
must receive the following:

     

    
      	
               
      

            	
              (a)

            	
              Original
      signed Mortgage Note, endorsed by Borrower in blank and without recourse
      and endorsed for insurance by HUD.

            

    

     

    
      	
               
      

            	
              (b)

            	
              A
      copy of the title insurance policy,
which:

            

    

     

    
      	
               
      

            	
              (1)

            	
              contains
      recording information filled in on the schedules pertaining to the Pledged
      Loan, UCC financing statements (if applicable), and regulatory
      agreement;

            

    

     

    
      	
               
      

            	
              (2)

            	
              names
      as insured the “Mortgagee and/or the Secretary of the Department of
      Housing and Urban Development, and their successors and assigns, as their
      interests may appear”;

            

    

     

    
      	
               
      

            	
              (3)

            	
              shows
      an effective date and time that is on or after the date and time of
      disbursement of the Advance from escrow;
and

            

    

     

    
      	
               
      

            	
              (4)

            	
              sets
      forth an insured amount that is equal to or greater than the Advance
      amount.

            

    

     

    
      	
               
      

            	
              (c)

            	
              For
      FHA Construction Mortgage Loans, a copy of the Application for Insurance
      of Advance of Mortgage Proceeds (HUD Form 92403), signed by an authorized
      representative of HUD.

            

    

     

    
      	
               
      

            	
              (d)

            	
              If
      a participation certificate has been
issued:

            

    

     

    
      	
               
      

            	
              (1)

            	
              the
      original participation certificate evidencing one hundred percent (100%)
      of the undivided interests in the pool of Pledged Loans;
    and

            

    

     

    
      	
               
      

            	
              (2)

            	
              original
      signed stock/bond power or equivalent assignment for the participation
      certificate issued from Borrower to the Agent (or from the Investor to the
      Agent if the participation certificate was issued in the name of the
      Investor).

            

    

     

    
      	
               
      

            	
              (e)

            	
              Originals
      of assignment of the Mortgage and assignment of the security agreement (if
      not previously delivered).

            

    

     

    
      	
              IV.

            	
              AT LEAST 1
      BUSINESS DAYS BEFORE
      INVESTOR/APPROVED CUSTODIAN MUST RECEIVE PLEDGED
    LOAN):

            

    

     

    Agent
must receive signed shipping instructions from Borrower to the Agent for the
delivery of the Pledged Loan, including the following:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
               
      

            	
              (a)

            	
              Name
      and address of contact person at Investor/Approved Custodian to whom the
      Collateral Documents are to be shipped, the desired shipping date and the
      preferred method of delivery, with courier
  number.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Name
      of project securing the Pledged
Loan.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Date
      by which Investor/Approved Custodian must receive the Pledged
      Loan.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Instructions
      for endorsement of the Mortgage Note, if applicable.  For an FHA
      Construction Mortgage Loan, Lender will endorse and deliver the Mortgage
      Note following the initial Advance for that Mortgage
  Loan.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Completed
      but not signed Release of Security Interest (HUD Form 1171 1A), to be
      signed and delivered by Agent.  For an FHA Construction Mortgage
      Loan, Agent will only sign and deliver such a Release of Security Interest
      for the initial and last Advances for that Mortgage
  Loan.

            

    

     

    
      	
               
      

            	
              (f)

            	
              For
      delivery of a participation certificate, the name and address of the
      contact person at Investor/Approved Custodian to whom the participation
      certificate is to be delivered.

            

    

     

    Agent
exclusively will deliver the Mortgage Note, any Participation Certificates and
other original Collateral Documents required by this Exhibit evidencing the
Pledged Loan, together with a bailee letter, to an Investor or an Approved
Custodian, unless otherwise agreed in writing with Borrower. Upon instruction by
Borrower, Agent will complete the endorsement of the Mortgage Note. If no
Mortgage- backed Security is to be issued, Agent will deliver the Mortgage Note
with a bailee letter to the Investor that issued the Purchase Commitment for the
Pledged Loan or an Approved Custodian for the Investor. If a Mortgage-backed
Security is to be issued, Agent will deliver the Mortgage Note and the Release
of Security Interest, with an executed bailee letter to an Approved Custodian
for Ginnie Mae.

     

    
      	
              V.

            	
              FOR EACH SUBSEQUENT
      ADVANCE ON FHA CONSTRUCTION MORTGAGE
  LOANS:

            

    

     

    
      	
               
      

            	
              (a)

            	
              At
      least 1 Business Day prior to the date of the Advance, the Agent must
      receive:

            

    

     

    
      	
               
      

            	
              (1)

            	
              An
      original, facsimile or electronic copy of an Advance Request
      (Exhibit A to the Agreement) executed by an Authorized Representative
      of Borrower (facsimile or electronic copy is acceptable for funding, with
      the original to be forwarded via overnight mail).;
  and

            

    

     

    
      	
               
      

            	
              (2)

            	
              Copy
      of an Application for Insurance of Advance of Mortgage Proceeds (HUD Form
      92403), signed by an authorized representative of
  HUD.

            

    

     

    
      	
               
      

            	
              (b)

            	
              On
      the day of the Advance, Agent must receive evidence of title insurance
      coverage in an amount equal to the aggregate amount of all Advances
      (including the requested Advance).

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (c)

            	
              By
      the first Business Day following the date of the Advance, if a
      participation certificate has been issued in connection with a subsequent
      Advance, the agent must receive:

            

    

     

    
      	
               
      

            	
              (1)

            	
              the
      original participation certificate evidencing one hundred percent (100%)
      of the undivided interests in the pool of Pledged Loans;
    and

            

    

     

    
      	
               
      

            	
              (2)

            	
              original
      signed stock/bond power or equivalent assignment for the participation
      certificate issued from Borrower to the Agent (or from the Investor to the
      Agent if the participation certificate was issued in the name of the
      Investor).

            

    

     

    
      	
              VI.

            	
              IF A GINNIE MAE
      MORTGAGE-BACKED SECURITY IS TO BE ISSUED, NO LATER THAN 1 BUSINESS
      DAY PRIOR TO SETTLEMENT DATE FOR THE PLEDGED
    SECURITY:

            

    

     

    Agent
must receive:

     

    
      	
               
      

            	
              (a)

            	
              Copy
      of as-submitted Schedule of Subscribers (HUD Form 11705), instructing
      Ginnie Mae to issue the Mortgage-backed Security in Borrower’s name and
      designating Agent as the subscriber, and to deliver the Pledged Security
      to Agent’s custody account at Bank of America, N.A. and bearing the
      following instructions: “These instructions may not be changed without
      prior written approval of Bank of America,
N.A.”

            

    

     

    
      	
               
      

            	
              (b)

            	
              Completed
      but not signed Release of Security Interest (HUD Form 11711A), to be
      signed by Agent.  For an FHA Construction Mortgage Loan, Agent
      will only sign and deliver such a Release of Security Interest for the
      initial and last Advances for that Mortgage
  Loan.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Completed
      and signed Security Delivery Instructions, in the form attached as
      Schedule I to this Exhibit.

            

    

     

    Upon
receipt of a Pledged Security, Agent will deliver the Pledged Security to the
Investor that issued the Purchase Commitment for the Pledged Security. The
Pledged Security will be released to the Investor only upon payment of the
purchase proceeds to Agent.

     

    Cash
proceeds of the sale of a Pledged Loan or a Pledged Security will be deposited
into the Cash Collateral Account and applied to the related
Advances.  As long as no Default or Event of Default exists, Agent
will return any excess proceeds from the sale of a Pledged Loan or a Pledged
Security, after repayment of the related Advances, to Borrower (by transfer to
the Operating Account), unless otherwise instructed in writing by
Borrower.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
I TO EXHIBIT C-3

     

    SECURITY
DELIVERY INSTRUCTIONS

     

    ______________________________________________________________________________

    

    Custodial
Account
Number:                                                                                                
     ______________________

    Custodial
Account
Name:                                                                                                    
    ______________________

    Cash
Collateral Account
No:                                                                                                ______________________

    

    INSTRUCTIONS
MUST BE RECEIVED 2 BUSINESS DAYS IN ADVANCE OF PICK-UP/DELIVERY

     

    BOOK-ENTRY
DATE:
_________________                                                                                                SETTLEMENT
DATE: _______________

    ISSUER:
_____________________________                                                                                                SECURITY:
________________________

    NO. OF
CERTIFICATES:
_______________                                                                                                1)
_________________________________

    2)
_________________________________

    

    PURCHASE
PRICE @
_________%                                                                                                           =           _______________________

     

    ACCRUED
INTEREST (_____DAYS @
_______%)                                                                                  =           _______________________

     

    TOTAL
PURCHASE
PRICE                                                                                                                          =           $______________________

     

    

     

    CUSIP NO.
___________________________

     

    Pool No.
_______________                                                                                                           Coupon
Rate: __________________

     

    Issue
Date (M/D/Y):
____________________                                                                                                           Maturity
Date (M/D/Y):_________

     

    POOL TYPE
(circle one):

     

    Ginnie
Mae:                                           GINNIE
MAE
I                                           GINNIE
MAE II

     

    DELIVER
TO:                                __________________                                                      (  )
Versus Payment

     

    __________________                                                      DVP
AMOUNT $_____________________

     

    __________________

     

    DELIVER
TO:                                __________________                                                      (  )
Versus Payment

     

    __________________                                                      DVP
AMOUNT $_____________________

     

    __________________

    PROJECT
NAME:                   ____________________________________________________

    AUTHORIZED
SIGNATURE: ____________________________________________________

    PRINTED
NAME AND TITLE:
___________________________________________________

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
G:  LIST OF APPROVED
INVESTORS

     

     

          Bank
of America, N.A.;

    
      
        
          Nomura;

          Credit
Suisse;

        

        
          
            Deutsche
Bank;
Citigroup;
RBS Securities, Inc.;
JP Morgan
Chase;

      Morgan
Stanley;

      Goldman
Sachs;

      Wachovia;

      Royal
Bank of Scotland;

      Duncan
Williams;

      Wells
Fargo;

      UBS
Investment Bank;

      BB&T
Corporation; and

    Any other
financially responsible private institution that Agent deems acceptable, in its
sole discretion, to issue Purchase Commitments with respect to a particular
category of Eligible Loans.EX-10.1

SECOND MODIFICATION AGREEMENT

This Second Modification Agreement (“Agreement”), dated as of May 29, 2009 is entered into by
and among Stem Cell Innovations, Inc., a Delaware corporation (the “Company”), Margie Chassman
(“Chassman”) and Alpha Capital Anstalt (“Alpha”).

WHEREAS, the Company and Alpha are parties to a subscription agreement dated November 16, 2006
relating to an aggregate secured investment of $2,000,000 by Alpha (the “Subscription Agreement”)
in Notes (“Notes”) convertible into $.01 par value Common Stock of the Company and Common Stock
Purchase Warrants related thereto (“Warrants”), which agreements and instruments were modified by a
Modification Agreement dated as of December 31, 2008 by and among the Company, Alpha and the
Lenders identified therein (the “First Modification Agreement”); and

WHEREAS, Alpha has made or agreed to make additional loans to the Company in the amount of
$300,000 pursuant to a Subscription Agreement dated as of December 31, 2008 (the “December
Subscription Agreement”); and

WHEREAS, Chassman has made loans to the Company in the amount of no less than $1,050,000 and
is willing to agree to make certain additional loans to the Company on the terms and conditions set
forth herein;

WHEREAS, the parties wish to provide for continued funding of the Company’s operations on the
terms and conditions set forth herein;

NOW THEREFORE, in consideration of the mutual covenants and other agreements contained in this
Agreement, the parties hereto hereby agree as follows:

1. Ratification and Incorporation of Agreements. Except as expressly modified by
this Agreement, (a) the Company hereby acknowledges, confirms and ratifies all of the terms and
conditions set forth in, and all of its obligations under the Subscription Agreement, the December
Subscription Agreement, the First Modification Agreement, the Notes and the Warrants and all
agreements and instruments contemplated thereby, which documents are valid, binding and in full
force and effect and (b) all of the terms and conditions set forth in the foregoing documents are
incorporated herein by this reference as if set forth in full herein.

2. Right of First Refusal Waiver. In connection with the loan to the Company
described in Section 3 below, and the other transactions contemplated hereby, Alpha waives its
right of first refusal granted pursuant to Section 10 of the December Subscription Agreement.

3. Chassman Loan. Not later than ten (10) days after the amendment of the Company’s
Certificate of Incorporation to permit the conversions contemplated by Section 4 hereof is approved
by the Company’s shareholders and the same day of each of the five (5) months thereafter, Chassman
agrees to loan the Company the sum of $500,000 in six equal monthly installments. The notes
representing Chassman’s loan shall be on the same terms as the notes contemplated by the December
Subscription Agreement, provided, however, that Chassman’s notes shall be unsecured and shall have
a term of three (3) years. Failure by Chassman to timely loan the Company said sum will be an
Event of Default under the Notes and the notes contemplated by the December Subscription Agreement.

4. Chassman Debt. Additionally, upon shareholder approval of amendements to the
Company’s Certificate of Incorporation to reduce the par value of the Company’s Common Stock and
increase the number of authorized shares of such Common Stock, which amendments the Company agrees
to diligently pursue to permit the conversions contemplated by this Section 4, Chassman will be
entitled, in lieu of the conversion adjustment set forth in Section 12 of the First Modification
Agreement, to convert $1,000,000 of debt owed by the Company to Chassman into 5,000,000,000 shares
of the Company’s Common Stock at a per share price of $.0002. In connection with this right, the
Company shall immediately convert such debt (or all rights with respect thereto currently held by
Chassman) into shares of the Company’s Series 3 Convertible Preferred Stock convertible into
5,000,000,000 shares of the Company’s Common Stock on the terms and conditions set forth in the
Certificate of Designations attached hereto as Exhibit 1.

5. Chassman Assignment   Additionally, upon approval of the amendments to the
Company’s Certificate of Incorporation to reduce the par value of the Company’s Common Stock and
increase the number of authorized shares of such Common Stock, Chassman will assign 100,000,000
shares of the Company’s Common Stock to Alpha and 50,000,000 shares of such Common Stock to Momona
Capital Corp. for no additional consideration.

6. Management Stock Options. It shall be a condition of the continuing obligation of
Chassman to make advances under the loan described in Section 3 hereof that, within 60 days after
the shareholder approval of the amendments to the Company’s Certificate of Incorporation to reduce
the par value of the Company’s Common Stock and increase the number of authorized shares of such
Common Stock, the Company take all necessary corporate actions to grant 5-year, fully vested stock
purchase options to James H. Kelly, the Company’s CEO, and Mark S. Germain, the Company’s Chairman
of the Board, to purchase Common Stock representing, respectively, 6% and 4% of the fully diluted
shares of Common Stock outstanding on the date of the grant at an exercise price equal to the
market value per share of such Common Stock on the date of the grant. Failure of the Company to
timely grant such options will be an Event of Default under the Notes and the notes contemplated by
the December Subscription Agreement.

7. Representations and Warranties. In order to induce Alpha and Chassman to enter
into this Agreement, the Company represents and warrants to each of them as follows:

A. Power and Action. The Company has all requisite corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated by, and perform its
obligations hereunder and thereunder.

B. Authorization and Agreement. The execution and delivery of this Agreement by the
Company and the performance hereunder and thereunder have been duly authorized by all necessary
action. This Agreement has been duly executed and delivered by the Company.

C. Enforceability. This Agreement constitutes the legal, valid and binding
obligations of the Company enforceable against the Company in accordance with its terms.

D. No Violation or Conflict. The execution and delivery by the Company of this
Agreement and the performance by the Company hereunder and thereunder do not and will not (i)
contravene, in any respect, any provision of any law, regulation, decree, ruling, judgment or order
that is applicable to the Company or its properties or other assets, or (ii) result in a breach of
or constitute a default under the charter, bylaws or other organizational documents of the Company
or any material agreement, indenture, lease or instrument binding upon the Company or its
properties or other assets.

E. Governmental Consents. No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body, other than the filing of
the Certificate of Designations and the Certificate of Amendment to the Company’s Certificate of
Incorporation contemplated by Section 4 hereof, is required for the due execution, delivery and
performance by the Company of this Agreement.

F. Effect on Agreements. Except as specifically provided herein, the Subscription
Agreement, the December Subscription Agreement, the First Modification Agreement, the Notes and the
Warrants and all agreements and instruments contemplated thereby remain in full force and effect in
accordance with their respective terms, including without limitation any Security Agreement and
Subsidiary Guaranty, each of which remain in full force and effect.

G. Governing Law: Consent to Jurisdiction and Venue. THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS AND DECISIONS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA. THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED WITHIN THE COUNTY OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN COMPANY AND LENDERS PERTAINING TO THIS AGREEMENT, THE
NOTES OR ANY OF THE OTHER AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.

8. Miscellaneous.

A.. The Company undertakes to make a public announcement on Form 8-K describing the terms of
this Agreement not later than the fourth business day after the execution of this Agreement.

B. This Agreement (i) contains the entire understanding of the parties with respect to the
subject matter hereof, (ii) may not be amended except in writing signed by all of the parties
hereto, (iii) shall inure to the benefit of the parties hereto and their respective successors and
assigns, (iv) may be executed in multiple counterparts, each of which shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement.

C. Any determination that any provision of this Agreement or any application thereof is
invalid, illegal, or unenforceable in any respect in any instance shall not affect the validity,
legality, or enforceability of such provision in any other instance, or the validity, legality, or
enforceability of any other provision of this Agreement. Section headings used herein are for
convenience of reference only, are not part of this Agreement, and are not to be taken into
consideration in interpreting this Agreement.

D. The Company represents and warrants that it (a) has engaged counsel and understands fully
the terms of this Agreement and the consequences of the execution and delivery of this Agreement,
(b) has been afforded an opportunity to have this Agreement reviewed by, and to discuss this
Agreement with such attorneys and other persons as the Company may wish, and (c) has entered into
this Agreement and executed and delivered all documents in connection herewith of its own free will
and accord and without threat, duress or other coercion of any kind by any person. The parties
hereto acknowledge and agree that neither this Agreement nor the other documents executed pursuant
hereto shall be construed more favorably in favor of one than the other based upon which party
drafted the same, it being acknowledged that all parties hereto contributed substantially to the
negotiation and preparation of this Agreement and the other documents executed pursuant hereto or
in connection herewith.

E. In making proof of this Agreement, it shall not be necessary to produce or account for more
than one counterpart thereof signed by each of the parties hereto. Delivery of any executed
counterpart of this Agreement by telefacsimile or electronic communication shall have the same
force and effect as delivery of an original executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile or electronic communication
also shall deliver an original executed counterpart of this Agreement, but the failure to deliver
an original executed counterpart shall not affect the validity, enforceability, and binding effect
of this Agreement as to such party or any other party.

8. Each of the undersigned states that he has read the foregoing Agreement and understands and
agrees to it and the terms set forth herein represents the entire agreement between the parties.

STEM CELL INNOVATIONS, INC.

By: /s/ JAMES H. KELLY      

James H. Kelly, CEO

ALPHA CAPITAL ANSTALT

By:/s/KONRAD ACKERMAN      

Konrad Ackerman, President

/s/MARGIE CHASSMAN      

Margie Chassman

1

EXHIBIT 1

CERTIFICATE OF DESIGNATIONS,

PREFERENCES AND RIGHTS OF

SERIES 3 CONVERTIBLE PREFERRED STOCK

OF

STEM CELL INNOVATIONS, INC.

A Delaware Corporation

Pursuant to Section 151 of the

Delaware General Corporation Law

1. Authorizing Resolutions.

Stem Cell Innovations, Inc., a corporation organized and existing under the laws of the State
of Delaware (the “Corporation”), hereby certifies that the following resolutions were duly adopted
on May 17, 2009 by the Board of Directors of the Corporation pursuant to the authority of the Board
of Directors as required by Section 151 of the Delaware General Corporation Law:

RESOLVED, that, pursuant to the authority conferred upon the Board of Directors by Article IV
of the Certificate of Incorporation of the Corporation, there is hereby established a series of
authorized preferred stock of the Corporation having a par value of $.01 per share (the “Preferred
Stock”), which series shall be designated as Series 3 Convertible

Preferred Stock (the “Series 3 Preferred Stock”) and shall consist of ten thousand (10,000) shares;

RESOLVED FURTHER, that the relative rights and preferences of the shares of the Series 3
Preferred Stock of the Corporation shall be as follows:

A. Rank. The Series 3 Preferred Stock shall, with respect to dividend rights and
rights on liquidation, winding up and dissolution, rank junior to any other series of Preferred
Stock hereafter established by the Board of Directors, unless the statement establishing such
series provides that it ranks on a parity with the Series 3 Preferred Stock and prior to the Common
Stock, par value $.01 per share (the “Common Stock”), of the Corporation.

B. Dividends. 1. The holders of the shares of Series 3 Preferred Stock shall be
entitled to receive dividends when and as declared by the Board of Directors out of funds legally
available therefor, provided, that no dividends shall be declared with respect to the Series 1
Preferred Stock except as required by subparagraph B(4)(b) or B(5) hereof. Such dividends shall be
paid in cash or in the same property used for payment of any substantially concurrent dividend on
the Common Stock. Such dividends shall be paid to the holders of record of the Series 3 Preferred
Stock at the close of business on the date specified by the Board of Directors of the Corporation
at the time such dividend is declared; provided, however, that such date shall not
be more than 60 nor less than 10 days prior to the respective dividend payment date.

2. All dividends paid with respect to shares of Series 3 Preferred Stock pursuant to
paragraph B(1) shall be paid pro rata to the holders entitled thereto.

3. Notwithstanding anything contained herein to the contrary, no cash dividends on shares of
the Series 3 Preferred Stock shall be declared by the Board of Directors or paid or set apart for
payment by the Corporation at such time as the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness, specifically prohibits such
declaration, payment or setting apart for payment or provides that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default thereunder; provided,
however, that nothing herein contained shall in any way or under any circumstances, except as
expressly described herein, be construed or deemed to require the Board of Directors to declare or
the Corporation to pay or set apart for payment any dividends on shares of the Series 3 Preferred
Stock at any time, whether permitted by any of such agreements or not.

4. (a) Holders of shares of the Series 3 Preferred Stock shall be entitled to receive the
dividends provided for in paragraph B(1) hereof in preference to and in priority over any dividends
upon the Common Stock.

(b) So long as any shares of the Series 3 Preferred Stock are outstanding, the Corporation
shall not declare, pay or set apart for payment any dividend on any of the Common Stock or any
warrants, rights, calls or options exercisable for the Common Stock or make any distribution in
respect thereof, either directly or indirectly, and whether in cash, obligations or shares of the
Corporation or other property (other than distributions or dividends in Common Stock to the holders
of such stock), and shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase any of the Common Stock or warrants, rights, calls or
options exercisable for the Common Stock, unless prior to or concurrently with such declaration,
payment, setting apart for payment, purchase or distribution, as the case may be, a pro rata
payment or distribution is made on shares of the Series 3 Preferred Stock equal in the aggregate to
the amount the holders of the Series 3 Preferred Stock would have received had their shares been
converted to Common Stock on the basis set forth herein (without regard to whether or not such
Common Stock had yet been authorized for issuance) immediately prior to such declaration, payment,
setting apart for payment, purchase or distribution, as the case may be.

5. From and after the second anniversary of the first issuance of shares of Series 3 Preferred
Stock (the “Commencement Date”), holders of the shares of the Series 3 Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of funds legally available
for the payment of dividends, in addition to the dividends required pursuant to subparagraph
B(4)(b) hereof, cumulative cash dividends at the annual rate of $5.00 per share, in equal
semi-annual payments on the last business day of June and December (each of such dates being a
“dividend payment date”) in each year with respect to the six month period ending on the last day
of the month in which the dividend payment date occurs. Each of such semi-annual dividends shall be
fully cumulative and shall accrue (whether or not declared), without interest, from the first day
of the six-month period in which such dividend may be payable as herein provided, except that, with
respect to the first semi—annual dividend, such dividend shall accrue from the Commencement Date.

6. Subject to the foregoing provisions of this Section B, the Board of Directors may declare
and the Corporation may pay or set apart for payment dividends and other distributions on the
Common Stock and may purchase or otherwise redeem any warrants, rights or options exercisable for
Common Stock, and the holders of the shares of the Series 3 Preferred Stock shall not be entitled
to share therein.

C. Liquidation Preference. 1. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the holders of shares of
Series 3 Preferred Stock then outstanding shall be entitled to be paid ratably, out of the assets
of the Corporation available for distribution to its stockholders after the payment or provision
for any payment of amounts due to holders of securities ranking senior to the Series 1 Preferred
Stock (the “Liquidation Value”), before any payment shall be made or any assets distributed to the
holders of the Common Stock, to the extent available, an aggregate amount in cash equal to the
greater of (a) $100.00 per share of Series 3 Preferred Stock and (b) the amount the holders of the
Series 3 Preferred Stock would have received had their shares been converted to Common Stock on the
basis set forth herein (without regard to whether or not such Common Stock had yet been authorized
for issuance) immediately prior to such liquidation, dissolution or winding up.

2. For the purposes of this Section C, the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or any substantial part of
the property or assets of the Corporation or the consolidation or merger of the Corporation with
one or more corporations shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the affairs of the Corporation for purposes of determining the
relative amounts of consideration to be paid to the holders of any class of capital stock of the
Corporation.

D. Conversion. Immediately upon the date the Corporation first has a sufficient number
of authorized and unissued shares of Common Stock reserved and a par value on such Common Stock to
permit conversion of the Series 3 Preferred Stock in full, the Series 3 Preferred Stock shall be
convertible into fully paid and nonassessable shares of Common Stock, at the rate of five hundred
thousand (500,000) shares of Common Stock for each share of Series 3 Preferred Stock (the
“Conversion Rate”), which rate is subject to adjustment as provided in Section G below.

E. Mechanics of Conversion. The holders of any shares of Series 3 Preferred Stock
shall convert such Series 3 Preferred Stock in accordance with Section D hereof by surrendering to
the Corporation or any transfer agent of the Corporation the certificate or certificates for the
shares to be converted. The date on which the certificate or certificates representing any shares
of the Series 3 Preferred Stock are presented to the Corporation for conversion is referred to
herein as a “Conversion Date.” As promptly as practicable after any Conversion Date, the
Corporation shall issue and deliver to or upon the written order of such holder a certificate or
certificates for the number of full and fractional shares of Common Stock to which such holder is
entitled in connection with such conversion. The person or persons in whose names the certificate
or certificates for Common Stock are to be issued upon conversion shall be deemed to have become a
holder of record of such Common Stock on the applicable Conversion Date. If any holder of shares of
Series 3 Preferred Stock shall desire to have the certificate or certificates for shares issued in
a name or names other than the name or names of the holder or holders of record of such shares of
Series 3 Preferred Stock, such certificate or certificates shall be duly endorsed to the transferee
or in blank or shall be accompanied by a proper instrument or instruments of assignment to such
transferee or executed in blank; such certificate or certificates shall also be accompanied by
proof of payment of any applicable transfer taxes. From and after any Conversion Date, each share
of Series 3 Preferred Stock being converted to Common Stock on such date shall be deemed to have
been converted in accordance herewith, and each certificate representing such shares of Series 3
Preferred Stock shall for all purposes represent only the right to receive such shares of Common
Stock into which the Series 3 Preferred Stock represented thereby is convertible.

F. Voting Rights. Except as set forth in this Section F or as otherwise required
pursuant to the provisions of the Delaware General Corporation Law, the holders of the Series 3
Preferred Stock shall not be entitled to any vote with respect to matters presented to the
Corporation’s stockholders for a vote.

1. So long as any shares of the Series 3 Preferred Stock remain outstanding, the Corporation
will not, either directly or indirectly or through merger or consolidation with any other
corporation, without the affirmative vote at a meeting or the written consent with or without a
meeting of the holders of at least 66-2/3% of the shares of Series 3 Preferred Stock then
outstanding, amend, alter or repeal any of the provisions of the Certificate establishing the
Series 3 Preferred Stock or the Certificate of Incorporation, as amended, of the Corporation, or
authorize any reclassification of the Series 3 Preferred Stock, so as in any such case to affect
adversely the preferences, special rights or powers of the Series 3 Preferred Stock.

2. So long as any shares of the Series 3 Preferred Stock remain outstanding, the Corporation
will not, either directly or indirectly or through merger or consolidation with any other
corporation, without the affirmative vote at a meeting or the written consent with or without a
meeting of stockholders of at least 66-2/3% in voting power of shares of the Series 1 Preferred
Stock then outstanding, increase the authorized number of shares of Series 3 Preferred Stock or
create, or increase the authorized number of shares of, any other class of capital stock of the
Corporation ranking on a parity with the Series 3 Preferred Stock either as to payment of dividends
or upon liquidation, dissolution or winding up of the Corporation.

G. Adjustment of Conversion Rate. The Conversion Rate shall be subject to adjustment
from time to time as follows:

1. Stock Dividends, Subdivisions and Combinations. If the Corporation shall:

(a) declare a dividend payable in, or a distribution of, Common Stock, to the holders of such
Common Stock or any other class or series of the Corporation’s capital stock, or

(b) subdivide its outstanding shares of Common Stock into a larger number of shares of Common
Stock, or

(c) combine its outstanding shares of Common Stock into a smaller number of shares of Common
Stock,

then the Conversion Rate in effect at the time of the record date for such dividend or distribution
shall be adjusted, as of the effective date for such subdivision or combination, to that number
determined by multiplying such Conversion Rate by a fraction (x) the numerator of which shall be
the total number of outstanding shares of Common Stock immediately after such event, and (y) the
denominator of which shall be the total number of outstanding shares of Common Stock immediately
prior to such event.

2. Mergers and Consolidations. In case of any consolidation with or merger of the
Corporation with or into any other corporation, or in the case of a sale, lease, mortgage, pledge,
exchange, transfer or other disposition by the Corporation of all or substantially all of its
assets, or any reclassification of stock of the Corporation (other than a change in par value or
from no par value to par value or from par value to no par value, or a result of a stock dividend
or subdivision or a combination of shares), each share of Series 3 Preferred Stock shall thereafter
be convertible into the number of shares of stock or other securities or property to which a holder
of the number of shares of Common Stock deliverable upon conversion of such Series 3 Preferred
Stock (without regard to whether such Common Stock is then authorized) would have been entitled
upon such consolidation, merger, disposition or reclassification; and, in any such case,
appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the
application of the provisions herein set forth with respect to the rights and interests thereafter
of the holders of the Series 3 Preferred Stock, to the end that the provisions set forth herein
(including provisions with respect to adjustments of the Conversion Rate) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series 3 Preferred Stock, and any agreement
entered into by the Corporation with respect to any such consolidation, merger, disposition or
reclassification shall contain provisions giving effect to the adjustments provided for in this
subparagraph G(5).

3. Notice of Adjustments. Whenever the Conversion Rate of the Series 3 Preferred Stock
shall be adjusted pursuant to this Section G, the Corporation shall promptly prepare a certificate
signed by the president or the chief executive officer and the chief financial officer of the

Corporation setting forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated (including a description of the
basis on which the Board of Directors made any determination hereunder) and the Conversion Rate per
share of Series 3 Preferred Stock after giving effect to such adjustment, and shall promptly cause
copies of such certificate to be mailed (by first class mail postage prepaid) to each of the
holders of the Series 3 Preferred Stock.

H. Notice. The holders of shares of the Series 3 Preferred Stock shall receive notice
not less than ten (10) days before the occurrence of any of the following: (i) the declaration of
any record date; and (ii) any meeting of the holders of shares of the Common stock called by the

Corporation’s Board of Directors (which notice must set forth in

reasonable detail the business to be transacted at such meeting).

I. Limitation on Conversions. Notwithstanding any provision of Paragraphs D or E
hereof, no holder of Series 3 Preferred Stock shall be entitled to convert shares of Series 3
Preferred Stock into Common Stock of the Corporation if the effect of such conversion would be to
cause such holder to beneficially own 5% or more of the Common Stock of the Corporation calculated
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission promulgated thereunder, unless the holder
of such Series 3 Preferred Stock shall have given not less than sixty-one days’ notice to the
Corporation that the limitation set forth in this Paragraph I shall no longer apply to the Series 3
Preferred Stock held by such holder.

RESOLVED, FURTHER, that, before the Corporation shall issue any shares of the Series 3
Preferred Stock, a Certificate pursuant to Section 151 of the Delaware General Corporation Law
shall be made, executed, acknowledged and filed in accordance with the provisions of such law, and
the proper officers of the Corporation are hereby authorized and directed to do all acts and things
which may be necessary or proper in their opinion to carry into effect the purposes and intent of
this and the foregoing resolutions.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed on its
behalf by its duly authorized officer this        day of      , 2009.

STEM CELL INNOVATIONS, INC.

By:       

Name:

Title:

2

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