THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT ”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR AFTER RECEIPT BY THE COMPANY
OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.
SENIOR SECURED
NOTE
Philadelphia,
Pennsylvania
Dated: July 31, 2009
$43,000,000.00
FOR VALUE RECEIVED AND INTENDING TO
BE LEGALLY BOUND, RAIT FINANCIAL TRUST, a Maryland real estate
investment trust (“ Company ”), hereby promises
to pay to the order of MOSES MARX (“ Holder ”),
the principal sum of Forty-Three Million and 00/100 Dollars
($43,000,000.00), together with interest thereon upon the terms and
conditions hereinafter set forth.
1. Interest Rate .
Interest on the unpaid principal balance hereof will accrue from
the date of this Note until final payment thereof at the fixed rate
of twelve and one half percent (12.5%) per annum.
2. Interest Payment
Dates . Interest on this Note shall be payable quarterly in
arrears on the January 15, April 15, July 15 and
October 15 in each year, commencing with October 15, 2009.
3. Maturity . Principal,
together with all accrued and unpaid interest thereon and all other
fees, costs and expenses payable hereunder or under the Transaction
Documents (as such term is defined in Section 9 hereof), is
due and payable on April 20, 2014 (the “ Maturity
Date ”).
4. Place of Payment .
Principal and interest hereunder shall be payable at the office of
Holder set forth in Section 19 hereof, or at such other place
as Holder, from time to time, may designate in writing.
5. Prepayment . The
Company may prepay all or any part of the principal balance hereof
at any time or from time to time, without notice, penalty or
additional payment, provided that any such prepayment shall be
accompanied by the payment of all accrued and unpaid interest on
this Note to the date of such prepayment and all other fees and
charges due hereunder and under the other Transaction Documents.
Any principal prepayment hereunder must be in an amount of not less
than $1,000,000 or any integral multiple of $1,000,000.
6. Payment Method . All
payments under this Note or the other Transaction Documents are to
be made in immediately available funds. If Holder accepts payment
in any other form, such payment shall not be deemed to have been
made until the funds comprising such payment have been actually
received or made available to Holder.
7. Application of
Payments. Any and all payments on account of this Note shall be
applied, first to accrued and unpaid interest, then to any unpaid
fees and charges due hereunder or under the Transaction Documents
and thereafter to outstanding principal. The Company agrees that,
to the extent it makes a payment or payments and such payment or
payments, or any part thereof, are subsequently invalidated,
declared to be fraudulent or preferential, set aside or are
required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or payments,
the obligations or part thereof hereunder intended to be satisfied
shall be revived and continued in full force and effect as if said
payment or payments had not been made.
8. Security . The full
and timely payment of all principal, interest and all other costs,
fees and expenses payable under this Note, as well as the full and
timely payment and performance of all other obligations,
indebtedness, liabilities and undertakings of the Company to
Holder, whether now or hereafter owing or existing, under this Note
and the other Transaction Documents (all such obligations and
indebtedness and undertakings being sometimes referred to herein
collectively as the “ Indebtedness ”) shall be
secured by the following collateral (collectively the “
Collateral ”):
(a) the unlimited,
unconditional joint and several surety and guaranty agreements
(collectively, the “ Guaranty Agreements ”) of
RAIT Asset Holdings II, LLC (“ RAH2 ”) and RAIT
Asset Holdings II Member, LLC (“ RAHM ”)
(collectively, the “ Guarantors ” and each a
“ Guarantor ”), which Guaranty Agreements shall
guaranty payment, and not merely collection, of all Indebtedness
and the prompt performance of all of the Company’s other
obligations under this Note and all other documents executed in
connection with or as security for this Note;
(b) a pledge from RAHM of a
100% limited liability company interest in RAH2, as evidenced by a
Subsidiary Collateral Pledge Agreement from RAHM in favor of Holder
(the “ Securities Pledge Agreement ”);
(c) a securities account
agreement (the “ Account Agreement ”) among
RAH2, Holder and the Wilmington Trust Company of even date herewith
providing for certain rights and obligations of the parties with
respect to Account #094146-000 established by RAH2 with the
Wilmington Trust Company;
(d) pledges of such additional
collateral from the Company or the Guarantors as may hereafter be
mutually agreed upon; and
(e) such certificates and/or
financing statements or account control agreements (the “
Collateral Documents ”) as may be necessary to perfect
Holder’s security interest in the Collateral.
9. Transaction Documents
. This Note is secured by and entitled to all rights and remedies
provided in all of the agreements, conditions, provisions and
stipulations contained in the documents described in the foregoing
Section 8 , a Securities Purchase Agreement dated
July 31, 2009 between the Company and Moses Marx and all other
documents executed or delivered in connection herewith (this Note
and such documents, as any of them may be amended from time to
time, being collectively the “ Transaction Documents
”).
10. Events of Default .
For purposes hereof, each of the following shall constitute an
Event of Default (“ Event of Default ”)
hereunder and under each of the Transaction Documents:
(a) the failure of the Company
to pay any amount of principal or interest on this Note, any fees
or other sums payable hereunder or any other Indebtedness on the
date on which such payment is due, whether on demand, at the stated
maturity or due date thereof or by reason of any requirement for
the prepayment thereof, by acceleration or otherwise, and such
failure continues unremedied for a period of two (2) business
days after Holder’s delivery of written notice to the Company
of such monetary default (such two business day period, the “
Payment Cure Period ”);
(b) the failure of the Company
or any Guarantor to duly perform or observe any obligation,
covenant or agreement on its or their part contained herein or in
any other Transaction Document and such failure continues
unremedied for a period of ten business (10) days after
written notice from Holder to the Company of the existence of such
failure. Notwithstanding the foregoing, if such failure
specifically constitutes an Event of Default under some other
subsection of this Section 10 or under any of the other
Transaction Documents, and is incapable of remedy or cure, the
Company shall not be entitled to any notice or grace hereunder;
(c) the adjudication of the
Company or any Guarantor as a bankrupt or insolvent, or the entry
of an order for relief against the Company or any Guarantor or the
entry of an order appointing a receiver or trustee for the Company
or any Guarantor or any of their property or approving a petition
seeking reorganization or other similar relief under the bankruptcy
or other similar laws of the United States or any state or any
other competent jurisdiction;
(d) a proceeding under any
bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt or receivership law is filed by or (unless
dismissed within 90 days) against the Company or any
Guarantor, or the Company or any Guarantor makes an assignment for
the benefit of creditors or the Company or any Guarantor takes any
action to authorize any of the foregoing;
(e) all or any material part of
the Collateral or the assets of the Company or any Guarantor are
attached, seized, subjected to a writ or distress warrant, or
levied upon, or come within the possession or control of any
receiver, trustee, custodian or assignee for the benefit of
creditors;
(f) any representation or
warranty of the Company or any Guarantor in any of the Transaction
Documents is discovered to be untrue in any material respect as of
the date such representation or warranty is made;
(g) the Company or any
Guarantor voluntarily or involuntarily dissolves or is dissolved,
terminates or is terminated;
(h) the Company or any
Guarantor is enjoined, restrained, or in any way prevented by the
order of any court or any administrative or regulatory agency, the
effect of which order restricts the Company or any Guarantor from
conducting all or any material part of its business; or
(i) the occurrence of an event
of default under any of the other Transaction Documents.
11. Remedies . Upon the
occurrence of an Event of Default, Holder, at its option and
without notice to the Company, may declare immediately due and
payable the entire Indebtedness, together with interest accrued
thereon at the rate specified herein to the date of payment.
Payment thereof may be enforced and recovered in whole or in part
at any time by one or more of the remedies in this Note or in the
Transaction Documents, or as may be available to Holder at law or
in equity. If Holder employs counsel to enforce this Note by suit
or otherwise, the Company will reimburse Holder for all costs of
suit and other expenses in connection therewith, whether or not
suit is actually instituted, together with Holder’s
reasonable attorney’s fees incurred for collection, together,
to the extent permitted by applicable law, with interest on any
judgment obtained by Holder at the rate specified herein, including
interest from and after the date of execution, judicial or
foreclosure sale until actual payment is made to Holder of the full
amount due to Holder.
12. Set-Off . Without
limiting the rig
