SECOND AMENDMENT TO MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT

SECOND AMENDMENT TO
MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT TO MORTGAGE WAREHOUSE LOAN AND SECURITY AGREEMENT, dated as of November 9, 2012 (this “Amendment”), is by and among Centerline Mortgage Capital Inc., a Delaware corporation having its principal place of business at 100 Church Street, 15^th Floor, New York, New York 10007 (“CMC”), Centerline Mortgage Partners Inc., a Delaware corporation having its principal place of business at 100 Church Street, 15^th Floor, New York, New York 10007 (“CMP” and together with CMC collectively referred to as the “Borrowers”), and Manufacturers and Traders Trust Company, with offices at 25 South Charles Street, 17^th Floor, Baltimore, Maryland 21201 (the “Lender”).

R E C I T A L S

A.          The Lender and the Borrowers are parties to that certain Mortgage Warehouse Loan and Security Agreement dated as of November 14, 2011, as amended by the First Amendment to Mortgage Warehouse Loan and Security Agreement dated as of October 19, 2012, and as it may be further amended, modified, supplemented and/or restated from time to time (the “Loan Agreement”), pursuant to which the Lender makes Advances to the Borrowers secured by the Collateral. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Loan Agreement.

B.          The Borrowers have requested an extension of the Facility Termination Date by one (1) year, and the Lender has agreed to such request subject to the terms and conditions set forth in this Amendment.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Lender and the Borrowers, the Lender and the Borrowers agree as follows:

1.          Amendments.

(a)          Change in Defined Terms. The following definitions in the Loan Agreement are hereby amended and restated in their entirety to read as follows:

“Applicable Nonusage Rate: means the sum of the Minimum Nonusage Rate plus the Nonusage Rate Adjustment, provided that in no event shall the Applicable Nonusage Rate be less than the Minimum Nonusage Rate or greater than the Maximum Nonusage Rate. The Applicable Nonusage Rate shall be determined quarterly as follows: for any calendar quarter, the Applicable Nonusage Rate shall be calculated using the Deposit Level Average of the prior calendar quarter. For illustration purposes only, the chart below shows what the Applicable Nonusage Rate would be for a calendar quarter when the corresponding Deposit Level Average of the prior calendar quarter is at the amount shown below.”

“Credit Note: means that certain Amended and Restated Daily Adjusting LIBOR Revolving Line Note dated as of November 9, 2012 executed and delivered by the Borrowers payable to the order of the Lender in the principal face amount of $50,000,000, as amended, modified and/or restated from time to time.”

“Facility Termination Date: means the earliest of (a) November 14, 2013, or (b) the date the Lender terminates the Commitment pursuant to Section 9.2.1, provided that if the Facility Termination Date, as so determined, is not a Business Day, the Facility Termination Date shall be the next succeeding Business Day.”

(b)          Section 7.13 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“SECTION 7.13. Minimum Deposits.

To maintain average deposit balances of the Borrowers and their Affiliates held at the Lender of not less than Fifteen Million Dollars ($15,000,000) in the aggregate (the “Deposit Level Target”), provided that the sole remedy of the Lender for the Borrowers’ failure to satisfy the Minimum Deposit Target shall be an increase in the Applicable Interest Rate Spread (as defined in the Credit Note) and the Applicable Nonusage Rate as provided herein.”

(c)          Interest on Advances. The outstanding principal balance of Advances made by the Lender to the Borrowers prior to the date hereof shall bear interest at the rate set forth in that certain Daily Adjusting LIBOR Revolving Line Note dated November 14, 2011 and executed and delivered by the Borrowers payable to the order of the Lender in the principal face amount of $50,000,000. The outstanding principal balance of Advances made by the Lender to the Borrowers on or after the date hereof shall bear interest at the rate set forth in that certain Amended and Restated Daily Adjusting LIBOR Revolving Line Note dated November 9, 2012 and executed and delivered by the Borrowers payable to the order of the Lender in the principal face amount of $50,000,000.

2.          Miscellaneous.

(a)          Condition Precedent. This Amendment shall become effective upon completion or satisfaction of the following in the Lender’s determination:

(i)          The execution and delivery of this Amendment by the Borrowers and the Lender.

(ii)          The execution and delivery of the Amended and Restated Daily Adjusting LIBOR Note substantially in the form attached hereto as Exhibit A.

(iii)          The execution and delivery of that certain letter agreement dated as of October 19, 2012 with respect to certain fees by the Borrowers and agreed to and accepted by the Lender (the “Fee Letter”).

(iv)          The Borrowers shall have paid to the Lender the fees in immediately available funds in the amount stated in the Fee Letter. The Borrowers acknowledge that such fees shall be paid in addition to the Nonusage Fee due and payable in accordance with Section 3.1 of the Loan Agreement during the term of the Loan, including, without limitation, during the Temporary Funding Period.

(v)          The Borrowers shall have delivered to the Lender the following, all in form and substance reasonably satisfactory to the Lender: (A) a certificate of good standing of each Borrower, dated no earlier than thirty (30) days prior to the date of this Amendment; (B) a certificate of the Secretary of each Borrower dated as of the date of this Amendment and certifying as to the Certificate of Incorporation and By-Laws of each Borrower, the incumbency and signatures of officers of each of the Borrowers executing this Amendment, the Amended and Restated Daily Adjusting LIBOR Note or otherwise acting on behalf of each Borrower hereunder and the resolutions authorizing the transactions contemplated by this Amendment; and (C) a legal opinion of Nixon Peabody LLP, as counsel to the Borrowers dated as of the date hereof, addressed to and in form and substance reasonably satisfactory to the Lender and its counsel.

(vi)          The Borrowers shall have paid the Lender’s reasonable attorneys’ fees and expenses related to the preparation, negotiation and closing of this Amendment.

(b)          Release of Claims. Each Borrower hereby releases, waives and forever relinquishes all claims, demands, obligations, liabilities and causes of action of whatever kind or nature, whether known or unknown, which they have, may have, or might assert now or in the future against the Lender and/or the Lender’s affiliates, participants, affiliates, officers, directors, employees, agents, attorneys, accountants, consultants, successors and assigns, directly or indirectly, arising out of, based upon, or in any manner connected with (i) any transaction, event, circumstance, action, failure to act or occurrence of any sort or type, whether known or unknown, which occurred, existed, was taken, permitted or begun prior to the execution of this Amendment with respect to the Obligations, the Loan Documents and/or the administration thereof or the obligations created thereby; (ii) any discussions, commitments, negotiations, conversations or communications with respect to the refinancing, restructuring or collection of any obligations; or (iii) any thing or matter related to any of the foregoing. The inclusion of this paragraph in this Amendment, and the execution of this Amendment by the Lender, does not constitute an acknowledgment or admission by the Lender of liability for any matter, or a precedent upon which liability may be asserted. The foregoing paragraph does not constitute a release of the Lender from its ongoing and future obligations under the Loan Agreement as amended hereby or under the other Loan Documents.

(c)          Amendment as Loan Document. Each party hereto agrees and acknowledges that this Amendment constitutes a “Loan Document” under and as defined in the Loan Agreement.

(d)          Existing Loan Documents. Unless specifically modified hereby, all terms and provisions of the Loan Agreement and the other Loan Documents shall remain in full force and effect in accordance with their terms and are hereby ratified and confirmed.

(e)          Confirmation of Representations, Warranties and Covenants. Each Borrower hereby confirms that (i) all representations, warranties and covenants made in the Loan Agreement, and the other Loan Documents to which it is a party, remain true and correct as of the date hereof, (ii) there has been no material adverse change in each Borrower’s financial condition from the date of the most recent financial statements submitted to the Lender pursuant to the Loan Agreement, and (iii) there have occurred no Defaults or Events of Default under the Loan Agreement and the other Loan Documents which are continuing as of the date hereof.

(f)          Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York.

(g)          Counterparts. This Amendment may be executed in any number of counterparts, all of which constitute one and the same instrument.

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IN WITNESS WHEREOF, the undersigned have executed and delivered this Amendment as an instrument under seal as of the date first set forth above.

EXHIBIT A

AMENDED AND RESTATED DAILY
ADJUSTING LIBOR REVOLVING LINE NOTE

(this “Note”)

New York

This Amended and Restated Daily Adjusting LIBOR Revolving Line Note is an amendment to and restatement, renewal and replacement of that certain Daily Adjusting LIBOR Revolving Line Note dated as of November 14, 2011 from Borrower (as defined below) to Bank (as defined below) in the principal face amount of Fifty Million Dollars ($50,000,000).

BORROWER (Name): CENTERLINE MORTGAGE CAPITAL INC. and CENTERLINE MORTGAGE PARTNERS INC.

(Organizational Structure): Corporations

(State Law organized under): Delaware

(Address of residence/chief executive office): 100 Church Street, 15^th Floor, New York, New York 10007

1.          DEFINITIONS. Each capitalized term shall have the meaning specified herein and the following terms shall have the indicated meanings:

2.          PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES.

3.          CREDIT AVAILABILITY.

M&T Bank

M&T Commercial Real Estate

25 South Charles Street, 17th Floor

Mail Code: MD2-CS64

Baltimore, MD 21201

Attn: John Mangan

Tel. (410) 545-2373

***@***

4.          CONVERSION UPON DEFAULT. Unless the Bank shall otherwise consent in writing, if (i) Borrower fails to pay when due, in whole or in part, the indebtedness under this Note (whether by demand or otherwise), or (ii) there exists a condition or event which, with the passage of time, the giving of notice or both, shall constitute an Event of Default under the Loan Agreement or any other Loan Document, the Bank, in its sole discretion, may convert any LIBOR Rate Loan to a Base Rate Loan. Nothing herein shall be construed to be a waiver by the Bank to have any Loan accrue interest at the Default Rate of interest (which shall be calculated from the higher of the LIBOR Rate or the Base Rate, as described above).

5.          RIGHT OF SETOFF. The Bank shall have the right to set off against the amounts owing under this Note any property held in a deposit or other account with the Bank or any of its affiliates or otherwise owing by the Bank or any of its affiliates in any capacity to Borrower or any guarantor or endorser of this Note. Such setoff shall be deemed to have been exercised immediately at the time the Bank or such affiliate elects to do so.

6.          BANK RECORDS CONCLUSIVE. The Bank shall set forth on a schedule attached to this Note or maintained on computer, the date and original principal amount of each Loan and the date and amount of each payment to be applied to the Outstanding Principal Amount of this Note. The Outstanding Principal Amount set forth on any such schedule shall be presumptive evidence of the Outstanding Principal Amount of this Note and of all Loans. No failure by the Bank to make, and no error by the Bank in making, any annotation on any such schedule shall affect the Borrower’s obligation to pay the principal and interest of each Loan or any other obligation of Borrower to the Bank pursuant to this Note.

7.          PURPOSE. Borrower certifies (a) that no Loan will be used to purchase margin stock except with the Bank’s express prior written consent for each such purchase and (b) that all Loans shall be used for a business purpose, and not for any personal, family or household purpose.

8.          AUTHORIZATION. Borrower, if a corporation, partnership, limited liability company, trust or other entity, represents that it is duly organized and in good standing or duly constituted in the state of its organization and is duly authorized to do business in all jurisdictions material to the conduct of its business; that the execution, delivery and performance of this Note have been duly authorized by all necessary regulatory and corporate or partnership action or by its governing instrument; that this Note has been duly executed by an authorized officer, partner or trustee and constitutes a binding obligation enforceable against Borrower and not in violation of any law, court order or agreement by which Borrower is bound; and that Borrower’s performance is not threatened by any pending or threatened litigation.

9.          INABILITY TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.

10.          MISCELLANEOUS. This Note, together with any related loan and security agreements and guaranties, contains the entire agreement between the Bank and Borrower with respect to this Note, and supersedes every course of dealing, other conduct, oral agreement and representation previously made by the Bank. All rights and remedies of the Bank under applicable law and this Note or amendment of any provision of this Note are cumulative and not exclusive. No single, partial or delayed exercise by the Bank of any right or remedy shall preclude the subsequent exercise by the Bank at any time of any right or remedy of the Bank without notice. No waiver or amendment of any provision of this Note shall be effective unless made specifically in writing by the Bank. No course of dealing or other conduct, no oral agreement or representation made by the Bank, and no usage of trade, shall operate as a waiver of any right or remedy of the Bank. No waiver of any right or remedy of the Bank shall be effective unless made specifically in writing by the Bank. Borrower agrees that in any legal proceeding, a copy of this Note kept in the Bank’s course of business may be admitted into evidence as an original. This Note is a binding obligation enforceable against Borrower and its successors and assigns and shall inure to the benefit of the Bank and its successors and assigns. If a court deems any provision of this Note invalid, the remainder of the Note shall remain in effect. Section headings are for convenience only. Singular number includes plural and neuter gender includes masculine and feminine as appropriate.

11.          NOTICES. Any demand or notice hereunder or under any applicable law pertaining hereto shall be in writing and duly given if delivered to Borrower (at its address on the Bank’s records) or to the Bank (at the address on page one and separately to the Bank officer responsible for Borrower’s relationship with the Bank). Such notice or demand shall be deemed sufficiently given for all purposes when delivered (i) by personal delivery and shall be deemed effective when delivered, or (ii) by mail or courier and shall be deemed effective three (3) New York Business Days after deposit in an official depository maintained by the United States Post Office for the collection of mail or one (1) New York Business Day after delivery to a nationally recognized overnight courier service (e.g., Federal Express). Notice by e-mail is not valid notice under this or any other agreement between Borrower and the Bank.

12.          JOINT AND SEVERAL. There is more than one Borrower; therefore, each of them shall be jointly and severally liable for all amounts which become due under this Note and the term “Borrower“ shall include each as well as all of them.

13.          GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted by the Bank and will be deemed to be made in the State of New York. Except as provided under federal law, this Note will be interpreted in accordance with the laws of the State of New York excluding its conflict of laws rules. Borrower hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the State of New York in a county or judicial district where the bank maintains a branch, and consents that the Bank may effect any service of process in the manner and at Borrower’s address set forth above for providing notice or demand; provided that nothing contained in this Note will prevent the Bank from bringing any action, enforcing any award or judgment or exercising any rights against Borrower individually, against any security or against any property of Borrower within any other county, state or other foreign or domestic jurisdiction. Borrower acknowledges and agrees that the venue provided above is the most convenient forum for both the Bank and Borrower. Borrower waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Note.

14.          WAIVER OF JURY TRIAL. Borrower and the Bank hereby knowingly, voluntarily, and intentionally waive any right to trial by jury Borrower and the Bank may have in any action or proceeding, in law or in equity, in connection with this note or the transactions related hereto. Borrower represents and warrants that no representative or agent of the Bank has represented, expressly or otherwise, that the Bank will not, in the event of litigation, seek to enforce this jury trial waiver. Borrower Acknowledges that the Bank has been induced to enter into this note by, among other things, the provisions of this Section.

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Acknowledgment. Borrower acknowledges that it has read and understands all the provisions of this Note, including the Governing Law, Jurisdiction and Waiver of Jury Trial, and has been advised by counsel as necessary or appropriate.

ACKNOWLEDGMENT

STATE OF New York )

:SS.

COUNTY OF New York)

On the 8^th day of November, in the year 2012, before me, the undersigned, a Notary Public in and for said State, personally appeared Michael P. Larsen , the Chief Financial Officer of Centerline Mortgage Capital Inc., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument. 

___________________

Notary Public

ACKNOWLEDGMENT

STATE OF New York)

:SS.

COUNTY OF New York)

On the 8^th day of November, in the year 2012, before me, the undersigned, a Notary Public in and for said State, personally appeared Michael P. Larsen , the Chief Financial Officer of Centerline Mortgage Partners Inc., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

___________________

Notary Public

FOR BANK USE ONLY