WARRANT ISSUANCE
AGREEMENT
This WARRANT ISSUANCE AGREEMENT
(this “ Agreement ”) is made and entered into as
of September 19, 2008 by and between RAIT FINANCIAL TRUST, a
Maryland real estate investment trust (the “ Company
”), and Cedric LLC, a Delaware limited liability company or
its registered assigns or successors (the “ Recipient
”).
The Company desires to issue and the
Recipient desires to receive a warrant substantially in the form
attached hereto as Exhibit A (the “ Warrant
”) to purchase shares of the Company’s common shares of
beneficial interest as described therein (the “ Warrant
Shares ”), on the terms and conditions set forth herein,
in partial consideration for the Recipient (i) entering into
that certain Agency Agreement, dated as of the Effective Date (as
amended, restated, supplemented or otherwise modified from time to
time, the “ Agency Agreement ”), between the
Recipient, Cedric LLC as calculation agent, and Wilmington Trust
Company (“ WTC ”) and (ii) providing the
financing for that certain Master Repurchase Agreement, dated
as of the Effective Date (as amended, restated, supplemented or
otherwise modified from time to time, the “ Repurchase
Agreement ”), by and between Taberna Loan Holdings I,
L.L.C, as Seller and WTC, as agent for the Recipient, as Buyer.
Terms used herein without definition
which are defined in the Repurchase Agreement have the meanings
ascribed to them therein, unless otherwise indicated or the context
clearly requires otherwise.
In consideration of the foregoing
and of the representations, warranties, covenants and agreements
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Purchase of Warrant
. Subject to the terms and conditions of this Agreement, the
Recipient agrees to receive the Warrant from the Company and the
Company agrees to issue to the Recipient the Warrant in partial
consideration for the Recipient entering into the Agency Agreement
and providing the financing pursuant to the Repurchase Agreement.
The Warrant shall be issued to the Recipient upon execution of the
Agency Agreement and the Repurchase Agreement.
2. Representations and
Warranties of the Company . In connection with the issuance of
the Warrant, the Company represents and warrants to the Recipient
as of the date hereof as follows:
2.1 Organization . The
Company is a real estate investment trust duly formed, validly
existing and in good standing under the laws of the State of
Maryland and has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement. Each
Subsidiary of the Company (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization, (b) has the corporate power and authority,
and the legal right, to own and operate its Property, to lease the
Property it operates as lessee and to conduct the business in which
it is currently engaged, and (c) is in compliance with all
Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, have a Material Adverse
Effect.
2.2 Capitalization . The
authorized and issued capital of the Company consists, or will
consist, immediately prior to the consummation of the transactions
contemplated by this Agreement and the Repurchase Agreement,
of:
(a)
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i.
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200,000,000 Common Shares of the Company
authorized; 64,901,929 Common Shares of the Company
outstanding,
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ii.
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25,000,000 preferred shares of the Company
authorized;
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iii.
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2,760,000 shares of 7.75% Series A
cumulative redeemable preferred shares of beneficial interest
outstanding;
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iv.
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2,258,300 shares of 8.375% Series B
cumulative redeemable preferred
shares
of beneficial interest outstanding;
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v.
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1,600,000 shares of 8.875% Series C
cumulative redeemable preferred
shares
of beneficial interest outstanding;
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vi.
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695,077 Common Shares reserved for issuance
under outstanding options, phantom shares or phantom units granted
under the Company’s incentive award plan, or any predecessor
or additional equity compensation plans adopted by the Company
(2,998,218 Common Shares remain available for issuance under the
Company’s incentive award plan);
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vii.
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12,192,145 Common Shares which have been
registered for resale upon conversion of the Company’s 6.875%
Convertible Senior Notes due 2027.
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(b) Except for the common shares
of beneficial interest (“ Common Shares ”),
outstanding options, phantom shares, phantom units, convertible
debt instruments and preferred shares of beneficial interest, each
as described above, capital issued or issuable under the
Company’s incentive award plan (or any successor or
additional equity compensation plan adopted by the Company),
capital issued or issuable under the Company’s dividend
reinvestment and share purchase plan (or any successor or
additional dividend reinvestment and share purchase plan adopted by
the Company) or capital issuable pursuant to (a)(vii) above, and
the Warrant to be issued hereunder, there is no additional
outstanding capital stock and there are no outstanding options,
warrants, rights (including conversion or preemptive rights and
rights of first refusal or similar rights) or agreements, orally or
in writing, for the purchase or acquisition from the Company of any
shares of its capital stock or all or substantially all of the
assets of the Company, whether by purchase, merger, reorganization,
recapitalization or otherwise.
2.3 Authorization . All
corporate action on the part of the Company, its officers,
directors and shareholders necessary for the authorization,
execution and delivery of this Agreement and the Warrant (as such
may be amended or modified from time to time, together, the “
Transaction Agreements ”), the performance of all
obligations of the Company hereunder and thereunder and the
authorization, issuance (or reservation for issuance) and delivery
of the Common Shares issuable upon exercise of the Warrant, has
been taken or will be taken prior to the date hereof, and this
Agreement, when executed and delivered by the Company, shall
constitute a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms except
as limited by applicable bankruptcy or insolvency laws.
2.4 Governmental Consents .
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the
Company is required in connection with the consummation of the
transactions contemplated by any of the Transaction Agreements,
except for filings pursuant to applicable state securities laws and
the Securities Act of 1933, as amended (the “ Act
”), which filings will be effected within the time prescribed
by law.
2.5 Compliance with Other
Instruments . The execution, delivery and performance of the
Warrant and the consummation of the transactions contemplated
hereby or thereby do not and will not result in any such violation
or conflict, or constitute, with or without the passage of time and
giving of notice, either a default or breach under any such
provision, instrument, judgment, order, writ, decree, mortgage,
agreement or contract.
2.6 Offering . Assuming the
accuracy of the representations and warranties of the Recipient
contained in Section 3 hereof, the offer, issue and sale of
the Warrant is exempt from the registration and prospectus delivery
requirements of the Act, and has been registered or qualified (or
are exempt from r
