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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Dated of earliest event reported) March 13, 1998
Resource America, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-4408 72-0654145
(State of incorporation (Commission (I.R.S. Employer
or organization) File Number) Identification No.)
1521 Locust Street, 4th Floor Philadelphia, PA 19102
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (215)546-5005
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Item 5 Other Events
On March 13, 1998, the Company and Resource Asset Investment
Management, a real estate investment trust sponsored by the Company ("RAIT"),
jointly purchased a defaulted loan in the original principal amount of $80.0
million plus accrued fees, restructuring charges, interest and costs (the
"Loan"), from Dai-Ichi Kangyo Bank, Limited, New York Branch (the "Seller"). The
purchase price of the Loan was $85.5 million, $75.5 million of which was
contributed by the Company and $10.0 million of which was contributed by RAIT.
The rights and interests of the Company and RAIT with respect to the Loan are
set forth in a Participation Agreement, the terms of which are described below.
The Company holds legal title to the Loan. There can be no assurance that the
Company will realize the full outstanding amount of the Loan.
The Loan is secured by a first priority mortgage lien on an office
building known as the "Evening Star Building" located at 1101 Pennsylvania
Avenue, N.W., Washington, D.C. (the "Property"). The Property has been valued by
an independent valuation firm at not less than $90.0 million. Such valuation is
only an estimate of value and should not be relied upon as a precise measure of
market value. As part of the purchase of its interest in the Loan, the Company
received an assignment of all of the Seller's rights against the borrower under
the Loan (the "Bankruptcy Rights") pursuant to the bankruptcy plan of
reorganization (the "Plan") governing the Property. The Bankruptcy Rights
include the right to appoint a liquidating agent to manage, control and take
possession of the Property; the right to receive all net cash flow from the
Property; the right to approve leases and all other material contracts related
to the Property; and the right, but not the obligation, to cause title to the
Property to be transferred on or before June 30, 1998.
In addition to paying its portion of the purchase price of the Loan,
the Company incurred closing costs of approximately $3.0 million, comprised of
certain expenses that the Plan required the holder of the Loan to pay.
Approximately $1.5 million of these closing costs was paid into an escrow
account. In the event title to the Property is transferred, the $1.5 million
will be delivered to the borrower pursuant to the Plan.
Financing for the Company's purchase of its interest in the Loan was
provided by a loan, in the principal amount of $55.0 million, from Merrill Lynch
Capital Mortgage Inc. (the "Senior Financing"). The Senior Financing bears
interest at LIBOR plus 2.5% until September 9, 1998, and at LIBOR plus 4.0% from
September 10, 1998 until July 1, 1999, when the Senior Financing matures.
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The Company is currently seeking 10-year, fixed rate financing to replace the
Senior Financing, and anticipates (although there can be no assurance) closing
on such financing before September 10, 1998. The Company incurred fees and
expenses of approximately $950,000 in connection with the Senior Financing.
RAIT's participation interest in the Loan entitles it to receive (i)
distributions from the monthly net cash flow of the Property, after monthly debt
service payments on the Senior Financing, in an amount sufficient to pay
interest on its $10.0 investment at 10% per annum and (ii) the first $10.0
million of principal payments from the Loan after the prior repayment of the
Senior Financing. In addition, RAIT received advance interest of approximately
$510,000.
Item 7(c) Exhibits.
2.1 Agreement for Purchase and Sale between the Company and Dai-Ichi Kangyo
Bank, Limited, New York Branch
2.2 Amendment to Agreement for Purchase and Sale among the Company, Dai-Ichi
Kangyo Bank, Limited and Resource Properties XLIX, Inc.
2.3 Secured Loan Agreement between Resource Properties XLIX, Inc. and Merrill
Lynch Mortgage Capital Inc.
2.4 $55,000,000 Promissory Note to Merrill Lynch Mortgage Capital Inc.
2.5 Pledge and Security Agreement between Resource Properties XLIX, Inc. and
Merrill Lynch Mortgage Capital Inc.
2.6 Stock Pledge Agreement between Resource Properties, Inc. and Merrill Lynch
Mortgage Capital Inc.
2.7 Guaranty of Recourse obligations between the Company and Merrill Lynch
Mortgage Capital Inc.
2.8 Hazardous Waste Guaranty and Indemnification Agreement between the Company
and Merrill Lynch Mortgage Capital Inc.
2.9 Participation Agreement between Resource Properties XLIX, Inc. and RAIT
Partnership, L.P.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RESOURCE AMERICA, INC.
By: /s/ Steven J. Kessler
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Steven J. Kessler
Chief Financial Officer
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AGREEMENT FOR PURCHASE AND SALE
between
RESOURCE AMERICA, INC.,
as Purchaser
and
THE DAI-ICHI KANGYO BANK, LIMITED, NEW YORK BRANCH,
as Seller
DATE: March 4, 1998
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AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT FOR PURCHASE AND SALE (as more particularly defined in
Section 1.1, this "Agreement") is dated as of the 4th day of March, 1998, by and
between THE DAI-ICHI KANGYO BANK, LIMITED, NEW YORK BRANCH (as more particularly
defined in Section 1.1, "Seller") and RESOURCE AMERICA, INC. (as more
particularly defined in Section 1.1, "Purchaser").
ARTICLE I - DEFINITIONS
Section 1.1 Definitions. Seller and Purchaser hereby agree that the
following terms shall have the meanings hereinafter set forth, such definitions
to be applicable equally to the singular and plural forms, and to the masculine
and feminine forms, of such terms:
"Agreement" shall mean this Agreement for Purchase and Sale,
as amended or supplemented from time to time in writing by the parties hereto in
accordance with the terms hereof.
"Bankruptcy Code" shall mean the United States Bankruptcy
Code, 11 U.S.C. ss.ss. 101, et seq., as amended or supplemented from time to
time.
"Bankruptcy Proceeding" shall mean the bankruptcy proceeding
of Debtor, styled In re The Avenue All Stars Limited Partnership, Case No.
97-1386, commenced July 25, 1997, before the United States Bankruptcy Court for
the District of Columbia.
"Broker" shall mean Cassidy Pinkard/Sonnenblick Goldman and
its successors and assigns.
"Cash" shall mean cash in United States coin or currency, or
cash equivalents, including wire transfers of funds, constituting legal tender
for the payment of public and private debts.
"Cash Collateral Order" shall mean that certain Consent Order
Authorizing Use of Rents entered on or about September 17, 1997 in the
Bankruptcy Proceeding, as amended by that certain Order Granting Joint Motion to
Extend Consent Order Authorizing Use of Rents entered on or about February 24,
1998 in the Bankruptcy Proceeding.
"Claims, Rights and Benefits" shall mean, collectively, (a)
the claims, as defined in Section 101(5) of the Bankruptcy Code, of Seller
against Debtor, including those claims described by the Proof of Claim
("Lender's Claims"), and (b) any and all rights and benefits accruing to Seller
on account of the Lender's Claims, including any and all rights
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and benefits accruing under the Plan, the Cash Collateral Order, the
Confirmation Order and otherwise in the Bankruptcy Proceeding, to the full
extent such claims, rights and benefits are assignable; provided, however, that
Seller hereby reserves and retains (i) jointly with Purchaser, the Reserved
Claims, and (ii) exclusively unto Seller, the Retained Rights and Payments.
"Closing" shall mean the consummation of the purchase,
assignment, assumption and other transactions contemplated by this Agreement in
accordance with Article IV.
"Closing Costs" shall have the meaning of the same defined
term set forth in Section 3.3.
"Closing Date" shall mean March 13, 1998 at 10:00 a.m.,
Eastern Standard Time, TIME BEING OF THE ESSENCE, or such other date and time as
may be agreed upon by written instrument executed by Seller and Purchaser.
"Confirmation Order" shall mean the Order Confirming Lender's
Plan of Reorganization for Debtor entered February 24, 1998 in the Bankruptcy
Proceeding.
"Debtor" shall mean collectively and severally, The Avenue All
Stars Limited Partnership, a limited partnership existing and operating under
the laws of the District of Columbia and the debtor in the Bankruptcy
Proceeding, and its nominees and agents, the Titleholders, and their respective
legal representatives, successors and assigns.
"Debtor Parties" shall mean collectively and severally, the
Debtor, the Titleholders, Andrea Woodner, Diane Woodner, the Partners (as that
term is defined in the Plan), any Person claiming by, through or under any of
the foregoing, any insiders of the foregoing, and all other Persons guarantying
or acting as sureties, providing security or otherwise liable for the payment or
performance of any or all of the obligations evidenced or secured by the Loan
Documents, and their respective legal representatives, successors and assigns.
"Disbursing Agent" shall mean Commercial Title Group, Ltd., as
disbursing agent under the Disbursing Agreement and/or Liquidating Trust
Agreement and Plan, and its legal representatives, successors and assigns.
"Disbursing Agreement" shall have the meaning of the same
defined term set forth in the Plan.
"Due Diligence" shall have the meaning of the same defined
term set forth in Section 2.4.
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"Earnest Money" shall mean the sum of Twelve Million Eight
Hundred Twenty Five Thousand Dollars ($12,825,000) [Fifteen Percent (15%) of
Purchase Price], together with any and all interest that may accrue thereon
under the Escrow Agreement, all of which is to be applied, refunded and/or
retained pursuant to Sections 3.5, 7.1 and/or 7.2.
"Effective Date" shall mean the date on which each and all of
the conditions precedent to the effectiveness of this Agreement are satisfied in
accordance with Section 8.16.
"Escrow Agent" shall mean Hutton Ingram Yuzek Gainen Carroll &
Bertolotti, in its capacity as escrow agent under the Escrow Agreement, and its
successors and assigns.
"Escrow Agreement" shall mean the Escrow Agreement dated of
even date herewith by and among Purchaser, Seller and Escrow Agent.
"Financing" shall mean, individually and collectively, any
financing and/or other funding arrangements of any kind or nature whatsoever,
whether direct or indirect, private or public, interim or long term, structured
as debt or equity, secured or unsecured, pursuant to repurchase agreements or
reverse repurchase agreements, and whether for purposes of acquisition,
ownership, holding, warehousing, securitization or otherwise, together with the
rights and obligations of the holders thereof and payments and distributions
thereon and proceeds therefrom.
"Governmental Authority" shall mean the United States, any
State, Commonwealth, District, Territory, municipality, foreign state, or other
foreign or domestic government, or department, agency, board, commission, or
instrumentality of any of the foregoing, including any "Governmental Unit" as
that term is defined in the Plan.
"Information" shall mean, individually and collectively, all
documents, reports, studies, materials and other information of any kind or
nature whatsoever, whether relating to the Loan Documents, Claims, Rights and
Benefits, Obligations, Plan, Bankruptcy Proceeding, any and all orders,
consents, judgments and decrees entered in the Bankruptcy Proceeding (including
the Cash Collateral Order and Confirmation Order), Debtor Parties, Property or
otherwise and provided by any of the Seller Parties, whether prior to or after
the date hereof, in whatsoever form.
"Insolvency Proceedings" shall mean any reorganization,
liquidation, dissolution, receivership or other actions or proceedings under the
Bankruptcy Code or any other federal, state or local laws affecting the rights
of debtors and/or creditors generally, whether voluntary or involuntary and
including proceedings to set aside or avoid any transfer of an interest in
property or obligations, whether denominated as a fraudulent
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conveyance, preferential transfer or otherwise, or to recover the value thereof
or to charge, encumber or impose a lien thereon.
"Insolvent" shall have the meaning of the same defined term
set forth in Section 101(32) of the Bankruptcy Code.
"JAD" shall mean JAD Associates, a New York general
partnership, and its successors and assigns, including, without limitation, JAD
Associates, L.L.C.
"Land Records" shall mean the Recorder of Deeds Office of the
District of Columbia.
"Liabilities" shall mean, individually and collectively, any
and all claims, controversies, disputes, demands, losses, damages, liabilities,
costs and expenses (including reasonable attorneys' and legal assistants' fees
and expenses, whether incurred in connection with nonjudicial action, prior to
trial, at trial, or on appeal or review or in settlement) incurred by or
asserted against Purchaser or Seller, as the case may be, whether grounded in
contract, statute (including the Securities Laws), tort or otherwise, at law or
in equity.
"Liquidating Trust Agreement" shall have the meaning of the
same defined term set forth in the Plan.
"Loan" shall mean the loan evidenced by the Loan Documents.
"Loan Documents" shall mean, collectively, each and all of the
documents listed on the attached Exhibit A.
"Net Cash Collateral" shall have the meaning of the same
defined term set forth in the Plan.
"Note" shall mean, collectively, the promissory notes
identified on Exhibit A constituting part of the Loan Documents.
"Obligations" shall mean, individually and collectively, any
and all Liabilities, obligations, duties, covenants or agreements of Seller or
Purchaser (as assignee of Seller pursuant to this Agreement) under or with
respect to or in any way arising out of or relating to the Loan Documents,
Claims, Rights and Benefits, Plan, Bankruptcy Proceeding, any and all orders,
consents, judgments and decrees entered in the Bankruptcy Proceeding (including
the Cash Collateral Order and Confirmation Order), the Debtor Parties, and/or
the Property.
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"Person" shall mean an individual, estate, trust, trustee,
receiver, partnership, limited liability partnership, corporation, limited
liability company, depository institution (including federal or state savings
banks, saving and loan associations and credit unions), Governmental Authority,
or other legal entity, including any "Person" as that term is defined in the
Plan.
"Petition Date" shall mean July 25, 1997.
"Plan" shall mean that certain Lender's Plan Of Reorganization
For Debtor dated February 11, 1998, a copy of which is attached to the
Confirmation Order, including modifications, if any, permitted under this
Agreement.
"Pre-Petition Rents" shall have the meaning of the same
defined term set forth in the Plan.
"Proof of Claim" shall mean the Proof of Claim (Including
Secured and Unsecured Claims, Liquidated and Unliquidated Amounts, and
Contingent and Non-Contingent Claims) filed on or about December 8, 1997 by
Seller in the Bankruptcy Proceeding.
"Property" shall have the meaning of the same defined term set
forth in the Plan.
"Purchase Price" shall have the meaning set forth in Section
3.1(b).
"Purchaser" shall mean Resource America, Inc., a Delaware
corporation, and its legal representatives, successors and assigns.
"Purchaser Parties" shall mean, jointly and severally,
Purchaser, each and all of its affiliates, subsidiaries, shareholders, officers,
directors, employees and agents, and each and all of their respective legal
representatives, successors and assigns.
"Purchaser's Condition Precedent" shall have the meaning of
the same defined term set forth in Section 2.3.
"Purchaser's Default" shall mean the occurrence of any of the
following: (a) except as set forth in (b) below, any breach by Purchaser of any
of its covenants, obligations, liabilities or duties hereunder, or in any
documents or certificates executed and delivered by any of the Purchaser Parties
in connection herewith; (b) any failure by Purchaser to pay all or any portion
of the Purchase Price or the other closing funds required to be paid by
Purchaser, or to execute and deliver all or any portion of the Transfer
Documents to be delivered by any of the Purchaser Parties, as and when due, and
in the manner required, by this Agreement, without notice or the opportunity for
cure;
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and (c) any of Purchaser's representations and warranties prove to be false in
any material respect as of the date deemed to be made.
"Rents" shall have the meaning of the same defined term set
forth in the Plan.
"Reserved Claims" shall mean, collectively, the rights to and
benefits of or under all settlements, stipulations, protections, releases,
waivers, covenants not to sue, discharges, and relinquishment of defenses,
offsets, set-offs, claims and counterclaims of the Debtor Parties, and other
provisions set forth in the Plan and any and all orders, consents, judgments and
decrees entered in the Bankruptcy Proceeding (including the Cash Collateral
Order and Confirmation Order) as they relate to or affect the period prior to
Closing and/or Seller in any respect, neither Purchaser nor Seller being
entitled to waive, discharge or modify any of the foregoing rights, benefits and
other provisions in a manner which would affect the rights, benefits and
interests of the other party following Closing, but specifically excluding the
Retained Rights and Payments which are reserved and retained exclusively and
solely unto Seller.
"Retained Rights and Payments" shall have the meaning of the
defined term set forth in Section 3.2.
"Securities Laws" shall mean, individually and collectively,
the Securities Act of 1933, the Securities Exchange Act of 1934, and any and all
other laws, regulations, rules, orders and decrees of any Governmental
Authorities governing the issuance, sale, marketing, exchange or disposition of
Securities, as any of the foregoing are amended from time to time.
"Security(ies)" shall have the meaning of the same defined
term in any Securities Laws, including the meaning for such term set forth in
section 77(b)(1) of the Securities Act of 1933 (15 U.S.C. ss. 77(b)(1)), section
3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. ss. 78(c)(10)), and
Section 101(49)(A) of the Bankruptcy Code, and shall further include, without
limitation, individually and collectively: note; stock; treasury stock; share in
a corporation (whether or not transferable or denominated "stock" or similar
security); bond; debenture; evidence of indebtedness; collateral trust
certificate; pre-organization certificate or subscription; transferable share;
voting trust certificate; certificate of deposit; certificate of deposit for
security; investment contract; certificate of interest or participation in a
profit sharing agreement or trust or in a royalty, lease, contract or other
interest; interests in a partnership; any legal or beneficial interest in a
trust or pooling or custodial agreement; any claim, interest or instrument
commonly known as a "security" or otherwise defined as a "security" under any
Securities Laws; certificate of interest or participation in, temporary or
interim certificate for, guarantee of, receipt for, warrant or right to
subscribe to or purchase or sell any of the foregoing; whether in the nature of
debt or equity, and whether or not the subject of a registration statement filed
with
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the Securities and Exchange Commission or exempt under Securities Laws from the
requirement to file such a statement, together with the rights and obligations
of the holders thereof and the payments and distributions thereon and the
proceeds therefrom.
"Seller" shall mean THE DAI-ICHI KANGYO BANK, LIMITED, NEW
YORK BRANCH, a Japanese banking corporation licensed to operate a branch under
the laws of the State of New York, and its legal representatives, successors and
assigns (excluding Purchaser).
"Seller Parties" shall mean, collectively, Seller, each and
all of its affiliates, subsidiaries, officers, directors, employees and agents,
and each and all of the respective legal representatives, successors and assigns
of any of the foregoing (excluding Purchaser).
"Seller's Conditions Precedent" shall have the meaning set
forth in Section 2.2.
"Seller's Default" shall mean the occurrence of any of the
following: (a) any breach by Seller of any of its covenants, obligations,
liabilities or duties hereunder, or in any documents or certificates executed
and delivered by any of the Seller Parties, in connection herewith; or (b) any
of Seller's representations and warranties prove to be false in any material
respect as of the date deemed to be made.
"Titleholders" shall mean, individually and collectively, JAD
and the Woodner Estate, in their capacities as agents and nominees of the
Debtor.
"Transfer" shall mean, individually and collectively, any
conveyance, sale, assignment, transfer, lease (other than in the ordinary course
of business to tenants), hypothecation, encumbrance, pledge, mortgage (including
security deed, deed of trust and security interest), charge or alienation of any
kind or nature whatsoever, or any offer or agreement to do any of the foregoing,
whether direct or indirect, private or public, voluntary or involuntary, by
operation of law or otherwise, with or without the consent of the Seller
Parties.
"Transfer Documents" shall have the meaning set forth in
Section 4.2.
"Woodner Estate" shall mean the estate of Ian Woodner, now
deceased, and his/its legal representatives, executors and executrixes.
Section 1.2 Rules of Construction. Article and Section captions used in
this Agreement are for convenience only and shall not affect the construction of
the Agreement. All references to "Articles" and "Sections" without reference to
a document other than this Agreement are intended to designate articles and
sections of this Agreement, and the
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words "herein," "hereof," "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article or Section, unless
specifically designated otherwise. The use of the terms: "including" shall mean
in all cases "including but not limited to," unless specifically designated
otherwise; and "legal representatives" shall mean any trustee, receiver,
custodian and/or any other Person appointed or authorized to act in a
representative capacity by a court or any other governmental or
quasi-governmental entity, whether appointed pursuant to the Bankruptcy Code or
otherwise. No rules of construction against the drafter of this Agreement shall
apply in any interpretation or enforcement of this Agreement, any documents or
certificates executed pursuant hereto, or any provisions of any of the
foregoing.
ARTICLE II - TERMS OF PURCHASE AND SALE
Section 2.1 Agreement to Purchase and Sell. Subject to and in
accordance with the terms and conditions set forth in this Agreement, Seller
agrees to sell, transfer and assign, without recourse, representation or
warranty (other than as expressly set forth in Section 6.2), and Purchaser
agrees to purchase, assume and perform, all of Seller's right, title and
interest in, to and under the Loan Documents and Claims, Rights and Benefits and
the Obligations from and after Closing. Notwithstanding the foregoing, Seller
shall reserve, and retain jointly with Purchaser, the Reserved Claims, and
Seller shall reserve and retain exclusively unto itself the Retained Rights and
Payments, subject to the provisions of Section 3.2.
Section 2.2 Seller's Conditions Precedent to Sale. Seller's obligation
to sell the Loan Documents and Claims, Rights and Benefits in accordance with
Section 2.1 is hereby conditioned upon full and complete satisfaction, or
written waiver signed by Seller, in its sole discretion, of each and all of the
following conditions precedent (individually, "Seller's Condition Precedent" and
collectively, "Seller's Conditions Precedent") as of the date(s) specified below
for each such Seller's Condition Precedent, TIME BEING OF THE ESSENCE:
(i) at all times prior to and as of the
Closing Date, no Purchaser's Default shall have occurred hereunder;
(ii) at all times prior to and as of the Closing
Date, no assignment or other Transfer, or attempted or purported assignment or
other Transfer, by Purchaser (or any permitted assignee under Section 8.1(b), if
applicable) of this Agreement, or any of Purchaser's rights, benefits or
obligations hereunder, shall have occurred, without the prior written consent of
Seller and strict compliance with the provisions of Section 8.1(b), provided
however, nothing herein shall be construed to prohibit Purchaser from
encumbering any of the assets purchased pursuant hereto upon Closing;
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(iii) at all times prior to and as of the Closing
Date, Purchaser shall have unconditionally and irrevocably, fully, strictly and
timely performed and satisfied each and all of its covenants and obligations
hereunder in accordance with the terms hereof, and each and all of its
representations, warranties and certifications made herein shall be true and
complete in all respects;
(iv) on or before the Closing Date, Purchaser
shall have delivered to Seller each and all of the Transfer Documents to be
executed and delivered by Purchaser and the full Purchase Price (taking into
account any credit for Earnest Money) together with any and all other sums that
are to be paid by Purchaser pursuant to Sections 3.1 and 3.3;
(v) on or before the Closing Date, Purchaser
shall have deposited with Disbursing Agent, to be held and disbursed in
accordance with the Disbursing Agreement and/or Liquidating Trust Agreement, the
sum of $1,450,000 payable to the Holders of Interests in Class III (as all such
terms are defined in the Plan); and,
(vi) at all times, no Insolvency Proceedings
shall have been commenced by or against the Purchaser.
In the event each and all of the Seller's Conditions Precedent are not fully and
completely satisfied, or waived by Seller, in its sole discretion (the
consummation of the transactions contemplated hereby being deemed a waiver by
Seller of such Seller's Condition Precedent as a condition precedent but not of
any rights or remedies Seller may have on account of Purchaser's failure to
satisfy such Seller's Condition Precedent), on or before the Closing Date, TIME
BEING OF THE ESSENCE, Seller's obligation to sell, assign, transfer or otherwise
convey all or any portion of its right, title and interest in, to and under the
Loan Documents and/or Claims, Rights and Benefits shall be deemed, without
notice, grace or further act of any party, to be automatically null and void and
of no force or effect, and Seller shall have no liability hereunder or otherwise
for failing to sell, assign, transfer or otherwise convey any of the foregoing.
The Seller's Conditions Precedent set forth in this Section 2.2, and each of
them, shall inure solely to the benefit of Seller, and no other Person,
including Purchaser, shall have any right to waive or defer any of the
conditions specified herein.
Section 2.3 Purchaser's Condition Precedent to Sale. Purchaser's
obligation to acquire the Loan Documents and Claims, Rights and Benefits in
accordance with Section 2.1 is hereby conditioned upon full and complete
satisfaction, or written waiver signed by Purchaser, in its reasonable
discretion, of the following condition precedent ("Purchaser's Condition
Precedent") as of the date specified below for such Purchaser's Condition
Precedent:
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(i) at all times prior to and as of the Closing
Date, no Seller's Default shall have occurred hereunder;
(ii) at all times prior to and as of the Closing
Date, Seller shall have unconditionally and irrevocably, fully, strictly and
timely performed and satisfied each and all of its covenants and obligations
hereunder in accordance with the terms hereof, and each and all of its
representations, warranties and certifications made herein shall be true and
complete in all respects;
(iii) on or before the Closing Date, Seller shall
have delivered Purchaser each and all of the Transfer Documents to be executed
and delivered by Seller;
(iv) at all times, no Insolvency Proceedings
shall have been commenced by or against the Seller; and,
(v) from February 27, 1998 to Closing, Seller has
not caused or knowingly permitted, and will not cause or knowingly permit, any
of the Net Cash Collateral to be disbursed in any manner except to or by the
Disbursing Agent in accordance with the Plan.
In the event the Purchaser's Conditions Precedent are not fully and completely
satisfied, or waived by Purchaser, in its sole discretion (the consummation of
the transactions contemplated hereby being deemed a waiver by Purchaser of such
Purchaser's Condition Precedent as a condition precedent but not of any rights
or remedies Purchaser may have on account of Seller's failure to satisfy such
Purchaser's Condition Precedent), on or before the Closing Date, Purchaser's
obligation to acquire the Loan Documents and/or Claims, Rights and Benefits
shall be deemed, without notice, grace or further act of any party, to be
automatically null and void and of no force or effect, and Purchaser shall have
no liability hereunder or otherwise for failing to acquire the foregoing. The
Purchaser's Condition Precedent set forth in this Section 2.3 shall inure solely
to the benefit of Purchaser, and no other Person, including Seller, shall have
any right to waive or defer the condition specified herein.
Section 2.4 Due Diligence Is Satisfied. Purchaser has copies of and has
reviewed and is familiar with each and all of the Loan Documents, the Plan, and
any and all orders, consents, judgments and decrees entered in the Bankruptcy
Proceeding (including the Cash Collateral Order and Confirmation Order) and has
reviewed and is familiar with all documents filed and the record in the
Bankruptcy Proceeding which Purchaser deems necessary or appropriate to review
in connection with this Agreement and the transactions contemplated hereby.
Purchaser has had ample opportunity to conduct such investigations and inquiries
of the Loan Documents, Claims, Rights and Benefits, Obligations, Plan,
Bankruptcy Proceeding, any and all orders, consents, judgments and decrees
entered in the Bankruptcy Proceeding (including the Cash
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Collateral Order and the Confirmation Order), Property and Debtor Parties as it
deems necessary or appropriate and has approved the foregoing and all other
matters considered by Purchaser to be relevant or material to its decision to
consummate this Agreement and the transactions contemplated hereby. Purchaser
hereby further acknowledges that it has conducted such due diligence activities
and examined and investigated to its full satisfaction all facts, circumstances
and matters relating to the Loan Documents, Claims, Rights and Benefits,
Obligations, Plan, Bankruptcy Proceeding, any and all orders, consents,
judgments and decrees entered in the Bankruptcy Proceeding (including the Cash
Collateral Order and the Confirmation Order), Debtor Parties, and Property, or
otherwise relevant or material to its purchase and assumption of Seller's right,
title, interest and obligations in, to and under the foregoing, including the
income and operating performance of Debtor Parties, and the Property, the
condition of the Property (including the physical condition and use of the
Property, availability and adequacy of utilities, access to the Property,
zoning, compliance with applicable laws, tenants, leases, contracting parties,
contracts, environmental conditions on and/or affecting the Property, and
engineering and structural matters), title, survey matters and any other matters
it deems necessary or appropriate for purposes of entering into and consummating
this Agreement and the transactions contemplated hereby (all such due diligence
activities, examinations and investigations are collectively referred to herein
as the "Due Diligence").
Section 2.5 Purchaser's Independent Investigation. Purchaser hereby
acknowledges that the Seller Parties make no representations or warranties,
express or implied, regarding the adequacy, accuracy, completeness or content of
any Information or the suitability of such Information for any purpose and
further hereby acknowledges and agrees that the Seller Parties shall have no
liability to Purchaser Parties, or any other Person claiming by, through or
under any of them, arising out of the Information, or to any Person to whom any
of them has disclosed any of the Information, or otherwise with respect thereto,
and neither the Purchaser Parties, any person or entity claiming by, through or
under any of them, nor any Person to whom any of the Information was disclosed
by any of the foregoing, shall have or make any claims against any of the Seller
Parties based upon any of the Information, including the adequacy, accuracy,
completeness or content of any Information or the suitability of such
Information for any purpose. Purchaser hereby acknowledges that, as of the
Closing, it shall be deemed to have relied solely on its own independent
examination of the Loan Documents, Claims, Rights and Benefits and Obligations,
and all security therefor, including the Property, Bankruptcy Proceeding, any
and all orders, consents, judgments and decrees entered in the Bankruptcy
Proceeding (including the Cash Collateral Order and the Confirmation Order), and
Debtor Parties, and Due Diligence in consummating the purchase thereof in
accordance with the terms of this Agreement, that Purchaser is assuming the risk
of future changes in the Bankruptcy Proceeding, any and all orders, consents,
judgments and decrees entered in the Bankruptcy Proceeding (including the Cash
Collateral Order and the Confirmation Order), the Bankruptcy Code and any
applicable laws, and that Purchaser has not relied on, is not entitled to rely
on, and shall not rely on, and the Seller Parties are
<PAGE>
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not liable for or bound by, any warranties or representations, none being so
implied (except as expressly set forth in Section 6.2), statements (verbal or
written), documents, reports, studies, Information or other materials made or
provided by any of the Seller Parties or any other Person representing or
purporting to represent or act on behalf of any of the Seller Parties. Further,
Purchaser acknowledges that, except as provided in Section 6.2, no
representations or warranties, express or implied, has been or shall be deemed
to be made or provided by any of the Seller Parties, relating to any of the
Information, Due Diligence or the Loan Documents, Claims, Rights and Benefits,
Obligations, Plan, Bankruptcy Proceeding, any and all orders, consents,
judgments and decrees entered in the Bankruptcy Proceeding (including the Cash
Collateral Order and Confirmation Order), Debtor Parties, Property or otherwise,
and Purchaser hereby acknowledges that no representations or warranties, either
express or implied, have been or shall be deemed to be made by any of the Seller
Parties (other than as expressly set forth in Section 6.2) with respect to any
of the foregoing. To the extent any Person, including any surveyors, appraisers,
title agents, tenants, Broker, Debtor Parties, attorneys or engineering or
environmental consultants or any other Person, made any representations or
warranties (other than as expressly set forth in Section 6.2) or any other
statements (verbal or written) to Purchaser, or provided any documents, reports,
studies, information or other materials, Purchaser acknowledges it shall have no
claim or right of action against any of the Seller Parties arising therefrom,
nor any right to rescind or revoke this Agreement or any of the transactions
contemplated hereunder on account thereof.
Section 2.6 Sale Without Recourse Or Warranties. Purchaser shall be
deemed to be satisfied with and/or to have waived the results of the Due
Diligence and to have accepted the Loan Documents, Claims, Rights and Benefits
and Obligations, Plan, Bankruptcy Proceeding, any and all orders, consents,
judgments and decrees entered in the Bankruptcy Proceeding (including the Cash
Collateral Order and Confirmation Order), Property and Debtor Parties, in "AS
IS" condition on a "WHERE IS" basis and "WITH ALL FAULTS," including latent
defects, without recourse to Seller and without representation or warranty
(except as expressly set forth in Section 6.2), express or implied, whether
statutory or otherwise, and without any warranties of transfer, merchantability
or fitness for a particular, or Purchaser's intended, use or purposes. WITHOUT
LIMITATION, SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF TRANSFER, QUALITY,
FITNESS, MERCHANTABILITY OR OTHERWISE, RELATING TO ANY OF THE LOAN DOCUMENTS,
CLAIMS, RIGHTS AND BENEFITS AND OBLIGATIONS TO BE CONVEYED AND ASSUMED
HEREUNDER, AND ANY WARRANTIES ARISING UNDER SECTION 417 OF ARTICLE 3 (OR SIMILAR
SECTIONS) OF THE UNIFORM COMMERCIAL CODE IN EFFECT IN THE JURISDICTIONS IN WHICH
THE PROPERTY IS LOCATED OR TO WHICH THE LOAN DOCUMENTS AND/OR THIS AGREEMENT ARE
SUBJECT, AND WITHOUT ANY RECOURSE AGAINST SELLER. WITHOUT LIMITING THE
FOREGOING, PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES TO PURCHASER
<PAGE>
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IN CONNECTION WITH, AND ASSUMES NO RESPONSIBILITY FOR: (A) THE SOLVENCY,
FINANCIAL CONDITION OR INFORMATION, REPRESENTATIONS, WARRANTIES OR STATEMENTS OF
THE DEBTOR AS MAKER OF THE NOTE OR OF ANY GUARANTOR OR SURETY OF OR FOR ALL OR
ANY PART OF THE INDEBTEDNESS EVIDENCED THEREBY; (B) THE EXECUTION, SUFFICIENCY,
GENUINENESS, COLLECTABILITY, VALIDITY OR ENFORCEABILITY OF THE NOTE OR OTHER
LOAN DOCUMENTS, THE CLAIMS, RIGHTS AND BENEFITS, THE PLAN, AND ANY ORDERS,
CONSENTS, JUDGEMENT AND DECREES ENTERED IN THE BANKRUPTCY PROCEEDING (INCLUDING
THE CONFIRMATION ORDER AND CASH COLLATERAL ORDER); (C) THE ACCURACY OR
COMPLETENESS OF MATTERS DISCLOSED, REPRESENTED OR WARRANTED BY ANY PARTY IN THE
NOTE OR OTHER LOAN DOCUMENTS, THE CLAIMS, RIGHTS AND BENEFITS, THE PLAN, THE
BANKRUPTCY PROCEEDING, AND ANY ORDERS, CONSENTS, JUDGEMENT AND DECREES ENTERED
IN THE BANKRUPTCY PROCEEDING (INCLUDING THE CONFIRMATION ORDER AND CASH
COLLATERAL ORDER); (D) THE PERFORMANCE OF THE OBLIGATIONS OF ANY PARTY UNDER THE
NOTE OR OTHER LOAN DOCUMENTS, THE CLAIMS, RIGHTS AND BENEFITS, THE PLAN, THE
BANKRUPTCY PROCEEDING, AND ANY ORDERS, CONSENTS, JUDGEMENT AND DECREES ENTERED
IN THE BANKRUPTCY PROCEEDING (INCLUDING THE CONFIRMATION ORDER AND CASH
COLLATERAL ORDER); OR (E) THE EXISTENCE OR NON-EXISTENCE OF ANY DEFAULT UNDER
THE NOTE OR OTHER LOAN DOCUMENTS, THE CLAIMS, RIGHTS AND BENEFITS, THE PLAN, THE
BANKRUPTCY PROCEEDING, AND ANY ORDERS, CONSENTS, JUDGEMENT AND DECREES ENTERED
IN THE BANKRUPTCY PROCEEDING (INCLUDING THE CONFIRMATION ORDER AND CASH
COLLATERAL ORDER). Except as otherwise expressly set forth in Section 6.2, none
of the representations set forth in this Agreement shall be deemed to survive
Closing, and upon Closing, Purchaser shall be deemed to have accepted the Loan
Documents, Claims, Rights and Benefits and Obligations, Plan, Bankruptcy
Proceeding, any and all orders, consents, judgments and decrees entered in the
Bankruptcy Proceeding (including the Cash Collateral Order and Confirmation
Order), Property, and Debtor Parties, unconditionally and with any and all (none
being so implied) rights to rescind, set aside or avoid the transactions
contemplated hereby or to seek a reduction or recovery of the Purchase Price, on
the grounds of redhibition or otherwise, waived and relinquished. Except as
otherwise provided in Section 6.2, from and after the Closing, Purchaser shall
have no, and hereby waives, any rights, claims and causes of action, whatsoever,
against any of the Seller Parties for any manner, cause or thing arising from or
relating to the Due Diligence, Information, Loan Documents, Claims, Rights and
Benefits, Obligations, Plan, Bankruptcy Proceeding, any and all orders,
consents, judgments and decrees entered in the Bankruptcy Proceeding (including
the Cash Collateral Order and Confirmation Order), Property, and Debtor Parties,
including the performance and condition of the Property and the Debtor Parties.
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Section 2.7 Distribution to Debtor Parties. Purchaser covenants to
deposit, on or before the Closing Date, with Disbursing Agent the sum of
$1,450,000, which amount is payable to the Holders of Interests in Class III (as
all such terms are defined in the Plan), and shall not cause or permit such
payment to be disbursed from the escrow under the Disbursing Agreement and/or
Liquidating Trust Agreement prior to the earlier of June 30, 1998 or the
Conveyance Date (as defined in the Plan).
ARTICLE III - PURCHASE PRICE; PAYMENT
Section 3.1 Earnest Money; Purchase Price.
(a) Earnest Money. The Earnest Money shall be delivered, in
Cash, to Escrow Agent by Purchaser (and no other Person) simultaneously with
Purchaser's execution and delivery to Seller of this Agreement. Escrow Agent
shall hold the Earnest Money subject to the terms of this Agreement and the
Escrow Agreement. The Earnest Money shall be applied in payment of the Purchase
Price on the Closing Date in accordance with the terms of this Agreement,
subject to Section 3.5.
(b) Purchase Price. In consideration of and as a condition
precedent to Seller's conveyance of its interest in the Loan Documents, Claims,
Rights and Benefits and Obligations, Purchaser shall, and hereby covenants and
agrees to, unconditionally and irrevocably pay to Seller, on the Closing Date,
in Cash, TIME BEING OF THE ESSENCE, the purchase price (collectively, "Purchase
Price") of:
(i) Eighty Five Million Five Hundred Thousand United
States Dollars ($85,500,000); plus
(ii) if and to the extent paid by Seller at or prior to
Closing, an amount equal to the real estate taxes and interest thereon, if any,
allocable to the period of October 1, 1997 to Closing.
Purchaser and Seller hereby acknowledge and agree that no adjustments shall be
made to the Purchase Price, including adjustments as a result of the receipt of
lesser or more payments than are required or anticipated under any of the Loan
Documents or with respect to any of the Claims, Rights and Benefits, the Plan,
the Bankruptcy Proceeding, and/or any and all orders, consents, judgments and
decrees in the Bankruptcy Proceeding (including the Cash Collateral Order and
Confirmation Order).
Section 3.2 Retained Rights and Payments. Seller shall be entitled to
receive and retain exclusively for its sole benefit (collectively, the "Retained
Rights and Payments"):
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(a) all payments actually paid to Seller under or pursuant to
the Loan Documents, Claims, Rights and Benefits, the Plan, the Bankruptcy
Proceeding, and/or any and all orders, consents, judgments and decrees in the
Bankruptcy Proceeding (including the Cash Collateral Order and Confirmation
Order) or otherwise prior to Closing, including, without limitation, all Rents,
Net Cash Collateral, Pre-Petition Rents, Distributions (as defined in the Plan)
under the Plan, principal, interest (including interest at the default rate),
late charges, advances, escrows and deposits (including taxes and insurance
premiums), fees, costs, expenses, and other amounts, of whatever nature,
regardless of whether the application of such payments is consented to by the
Debtor Parties and/or otherwise permitted under the Plan, any and all orders,
consents, judgments and decrees in the Bankruptcy Proceeding (including the Cash
Collateral Order and Confirmation Order), the Bankruptcy Code or otherwise; and
(b) the Recourse Claims and Avoidance Actions (as such terms
are defined in the Plan) and all rights, title and interests therein and
benefits thereof, at law and/or in equity, and all proceeds of the foregoing.
Notwithstanding the foregoing, Purchaser shall be entitled, solely as an
affirmative defense, to assert the Retained Rights and Payments in any action
brought against Purchaser relating to matters arising prior to Closing, but
Purchaser shall not be entitled to, and agrees that it shall not, waive,
discharge, modify, recover, receive or retain any Retained Rights and Payments
or pursue, or cooperate with, consent to or assist any other Person in pursuing,
any of the Retained Rights and Payments against Seller, directly or indirectly,
and Purchaser shall indemnify and hold Seller harmless from and against any and
all Obligations and Liabilities arising out of Purchaser's assertion of the
Retained Rights and Payments in any action brought against Purchaser. Seller and
Purchaser hereby acknowledge that Seller has received payments which have been
applied by Seller (no representation by Seller that the Debtor Parties concur
with such application or that such application is otherwise permitted under the
Bankruptcy Code being made or implied hereby) to pay principal, interest, fees,
charges and other amounts owed under the Loan Documents and/or on account of the
Claim, Rights and Benefits, in such order and priority as Seller desires, no
obligation to account for the same being imposed or implied hereby.
Section 3.3 Closing Costs. Seller shall pay all costs and expenses
incurred by it in connection with the preparation, negotiation, documentation
and Closing of the this Agreement and the transactions contemplated thereby,
including any and all legal fees and expenses and sales commissions to Broker.
Purchaser shall pay all costs and expenses incurred by it in connection with the
preparation, negotiation, documentation and Closing of this Agreement and the
transactions contemplated thereby, including any and all Due Diligence,
Financing obtained by Purchaser, legal fees and expenses, and all transfer,
recordation and/or filing taxes, fees and costs (for assignment of the Loan
Documents and otherwise).
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Section 3.4 Payment of Purchase Price. The Purchase Price shall be paid
to Seller by Purchaser (and no other Person) in immediately available funds, in
Cash, on or before the Closing Date.
Section 3.5 Disposition of Earnest Money. If Closing occurs on or
before the Closing Date in accordance with the terms of this Agreement, the
Earnest Money shall be applied in payment of the Purchase Price on the Closing
Date as a credit against the Purchase Price. If Closing does not occur on the
Closing Date for any reason other than a Seller's Default, Seller shall be
entitled to retain as liquidated damages, as further provided in Section 7.1,
the full amount of the Earnest Money. Escrow Agent shall return to Purchaser the
Earnest Money actually paid by Purchaser to Escrow Agent pursuant to this
Agreement if Closing does not occur on or before the Closing Date as a result of
a Seller's Default.
ARTICLE IV - CLOSING; TRANSFER DOCUMENTS
Section 4.1 Closing. All Transfer Documents shall be executed and
delivered by the parties, as described in Section 4.2, on the Closing Date.
Closing shall not be deemed to have occurred, and the Transfer Documents shall
not be deemed effective, unless and until: (a) each and all of the Seller's
Conditions Precedent and Purchaser's Condition Precedent hereunder have been
fully and completely satisfied or waived, strictly in accordance with the terms
hereof; (b) the Transfer Documents have been delivered to both Purchaser and
Seller, as applicable; and (c) the Purchase Price has been fully paid to Seller.
Closing shall occur on or prior to the Closing Date at such place as Seller may
designate.
Section 4.2 Transfer Documents. On or before the Closing Date, the
following documents necessary for Closing (collectively, the "Transfer
Documents") shall be executed and/or delivered as hereinafter provided, by the
applicable parties designated in Sections 4.2(a) through (d).
(a) Assignment. An Assignment and Assumption of Loan
Documents, in the form attached as Exhibit B, shall be properly executed and
delivered, in recordable form, by Seller and Purchaser. Additionally, on or
before the Closing Date, the original Note, endorsed by Seller without recourse,
representation or warranty of any kind or nature whatsoever, express or implied,
payable to the order of Purchaser, and originals, to the extent in Seller's
possession, or copies of each of the other documents listed on Exhibit A
attached hereto (unless previously provided) shall be delivered by Seller.
Purchaser shall record, or cause to be recorded, on the Closing Date, in the
Land Records, at Purchaser's sole cost and expense, the Assignment and
Assumption of Loan Documents to evidence the assignment to and assumption by
Purchaser of all of Seller's
<PAGE>
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right, title and interest in, to and under the Loan Documents, Claims, Rights
and Benefits and Obligations in accordance with the terms hereof;
(b) Notice of Assignment of Claims, Rights and Benefits. A
Notice of Assignment of Claims, Rights and Benefits, in the form attached as
Exhibit C, shall be properly executed and delivered by Seller and Purchaser.
Purchaser shall file, or cause to be filed, withing five (5) days after the
Closing, in the Bankruptcy Proceeding, at Purchaser's sole cost and expense, the
Notice of Assignment of Claims, Rights and Benefits to evidence the assignment
to and assumption by Purchaser of all of Seller's right, title and interest in,
to and under the applicable Loan Documents, Claims, Rights and Benefits and
Obligations in accordance with the terms hereof. Purchaser shall also deliver,
or cause to be delivered, in accordance with any and all notice requirements
contained in the Loan Documents and otherwise in accordance with the Bankruptcy
Code, such notices to the Debtor, Debtor's counsel of record in the Bankruptcy
Proceeding, all creditors, all contracting parties, all tenants and any parties
in interest in the Bankruptcy Proceeding, at Purchaser's sole cost and expense,
immediately following Closing;
(c) UCC Assignments. UCC-3 assignments with respect to each of
the financing statements executed by the Debtor and included in the Loan
Documents shall be properly executed and delivered by Seller. Purchaser shall
file, or cause to be filed, on the Closing Date, in each location in which such
financing statements are filed and/or recorded, at Purchaser's sole cost and
expense, such UCC assignments; and
(d) Substitution of Parties. Such pleadings and other
documentation as may be necessary or appropriate to substitute Purchaser as the
party in interest, in place of Seller, and Purchaser's legal counsel, in place
of Seller's legal counsel, in any action, litigation or other proceeding
relating to the Loan Documents as may be pending as of Closing, including the
Bankruptcy Proceeding shall be prepared and filed by Purchaser, at Purchaser's
sole cost and expense, within five (5) days of the Closing Date, subject to
review and approval by Seller.
Section 4.3 Post-Closing Matters.
(a) Retained Rights and Payments. All Retained Rights and
Payments shall remain the property of Seller and nothing herein shall be deemed
to limit or impair, in any respect, Seller's right and entitlement to
independently retain and/or collect any Retained Rights and Payments by such
means as it deems necessary or appropriate, including commencement, defense of
and/or prosecution of any legal proceedings relating to the same. In no event
shall Seller be obligated to pursue or collect any Retained Rights and Payments,
no obligation to account for same being implied hereby. Any Retained Rights and
Payments collected or otherwise received by Seller may be applied and/or used by
Seller in such order of priority and for such purposes as Seller deems
appropriate, in its sole discretion. Purchaser shall provide such cooperation
and
<PAGE>
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assistance (which shall not include the payment of money or the obligation to
incur any out-of-pocket expenses) as may be reasonably requested by Seller in
the retention and/or collection of the Retained Rights and Payments.
(b) Substitution as Party in Interest. Within five (5) days
after Closing, Purchaser shall, at its sole cost and expense, file the pleadings
and/or other documentation described in Section 4.2(d) and otherwise take such
actions as may be necessary to substitute Purchaser as the party in interest, in
place of Seller, and Purchaser's legal counsel, in place of Seller's legal
counsel, in any action, litigation or other proceeding relating to the Loan
Documents as may be pending as of Closing, including the Bankruptcy Proceeding.
Purchaser shall within ten (10) days after Closing provide Seller with filed
copies of all such pleadings and other documentation and promptly following
receipt, any orders substituting Purchaser and Purchaser's legal counsel in the
place of Seller and Seller's legal counsel.
(c) Reserved Claims/No Modifications of Plan and Orders.
Notwithstanding any other provisions of this Agreement, Seller hereby reserves
and retains, jointly with Purchaser, the Reserved Claims, and all rights, title
and interests therein and benefits thereof, at law and/or in equity, and nothing
herein shall be deemed to limit or impair in any respect Seller's rights and
entitlement to independently enforce any of the Reserved Claims by such means as
it deems necessary or appropriate, which may include the commencement, defense
and/or prosecution of legal proceedings. Neither Seller nor Purchaser is
entitled to, and each of Seller and Purchaser agrees that it shall not, waive,
discharge or modify any of the rights, title, interests, benefits and other
provisions of the Reserved Claims, or attempt to do or consent to any of the
foregoing. Further to that end, neither Seller nor Purchaser shall be entitled
to, and each of Seller and Purchaser agrees that it shall not, waive, discharge,
or modify the Plan, the Disbursing Agreement, the Liquidating Agreement, or any
orders, consents, judgments and decrees entered in the Bankruptcy Proceeding
(including the Cash Collateral Order and Confirmation Order), or attempt to do
or consent to any of the foregoing. Purchaser shall cause the Disbursing Agent
to deliver to Seller original Mutual Releases fully executed by the Debtor
Parties, in favor of Seller, on the Effective Date and Conveyance Date (as each
of such terms are defined in the Plan).
ARTICLE V - ASSUMED OBLIGATIONS; CONFIDENTIALITY; INDEMNITIES
Section 5.1 Assumed Obligations; General Indemnity. Purchaser hereby
assumes and agrees to fully and timely pay and perform all Obligations from and
after Closing, whether or not arising prior to Closing, including all
obligations under the Plan and all orders, consents, judgments and decrees
entered in the Bankruptcy Proceeding (including the Cash Collateral Order and
Confirmation Order) (but excluding legal, accounting and other professional fees
and other expenses incurred by Seller in
<PAGE>
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connection with the administration of the Loan). Purchaser shall indemnify,
defend and hold harmless Seller from and against all Obligations, including all
liabilities, obligations, duties, covenants or agreements under, relating to or
arising out of the Loan Documents, Claims, Rights and Benefits, Obligations,
Plan, Bankruptcy Proceeding, all orders, consents, judgments and decrees entered
in the Bankruptcy Proceeding (including the Cash Collateral Order and
Confirmation Order), Debtor Parties, Property and otherwise arising out of,
under or relating to any of the foregoing (but excluding legal, accounting and
other professional fees and other expenses incurred by Seller in connection with
the administration of the Loan).
Section 5.2 Confidentiality. Purchaser, for itself and the Purchaser
Parties, and Seller, for itself and the Seller Parties, agree to keep the
provisions of this Agreement confidential and shall not make any public
announcements or communicate with any media with respect to the subject matter
hereof without the prior written consent of the other party prior to Closing;
provided, however, the Purchaser Parties and the Seller Parties shall be
entitled to make such disclosures as may be necessary or appropriate to: (a)
seek or apply for any required federal or state regulatory, governmental or
quasi-governmental approval for the contemplated transaction; (b) comply with
any laws (including Securities Laws, no implication that the same apply to this
transaction being implied hereby) and requirements of Governmental Authorities
to which any of them are subject; (c) comply with any subpoenas, discovery or
court orders, provided, however, in such case the subject party shall give the
other party seven (7) days advance written notice and such other party may, at
its sole option and cost, seek an order in the related litigation or proceedings
for purposes of protecting its interests; and (d) pursue any Financing or
Transfer upon Closing. Disclosure of this Agreement to a title company,
Disbursing Agent, Liquidating Agent (as defined in the Plan), Debtor Parties and
as otherwise expressly provided for in this Agreement shall not constitute a
breach of this Section 5.2. This provision shall terminate upon Closing.
Section 5.3 Securities Acknowledgments. Purchaser, for itself and each
of the Purchaser Parties, hereby acknowledges the following:
(a) notwithstanding any Information, cooperation or assistance
of any kind by any of the Seller Parties from time to time, none of the Seller
Parties is intended to be or shall be construed as a party to or a participant
in any transaction entered into by Purchaser in connection with any Transfer or
Financing entered into by the Purchaser Parties of or relating to any of the
Loan Documents, Claims, Rights and Benefits, Obligations, Plan, Property, or
Debtor Parties or any Securities in or relating to any of the foregoing, which
Financing and/or Transfer transactions are acknowledged to be, insofar as the
Seller Parties are concerned, for the sole benefit of Purchaser and/or the other
Purchaser Parties;
<PAGE>
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(b) none of the Seller Parties shall have any disclosure,
other responsibilities or Liabilities in connection with any Transfer or
Financing entered into by the Purchaser Parties of or relating to any of the
Loan Documents, Claims, Rights and Benefits, Obligations, Plan, Property, or
Debtor Parties or any Securities in or relating to any of the foregoing,
including the completeness or accuracy of any Information and any decisions to
include or exclude any Information, or any inclusion or failure to include any
other information, in any offering materials prepared, used or disseminated in
connection with any of the foregoing; and
(c) no mention of any of the Seller Parties or reference to
any Information shall be made in any offering materials prepared, used or
disseminated in connection with any Transfer or Financing entered into by the
Purchaser Parties of or relating to any of the Loan Documents, Claims, Rights
and Benefits, Obligations, Plan, Property, or Debtor Parties or any Securities
in or relating to any of the foregoing, unless such offering materials also
disclose, in close proximity to any Information or mention of any of the Seller
Parties, that no purchasers of any Securities or other parties to any such
Transfer or Financing should rely on the Seller Parties in respect of any of the
Information or otherwise in entering into any such transactions or making any
investment decisions relating thereto, and that none of the Seller Parties makes
any representation as to the completeness or accuracy of such Information or
mention made of the Seller Parties.
Section 5.4 Securities Indemnity. Purchaser hereby agrees to indemnify
and hold harmless the Seller Parties from and against all Liabilities arising
out of or relating in any way to any acts or omissions of Purchaser or any of
the Purchaser Parties in respect of (a) any Financing of any of the Loan
Documents, Claims, Rights and Benefits, Obligations or Property procured by or
on behalf of Purchaser; (b) any Transfer of any of the Loan Documents, Claims,
Rights and Benefits, Obligations or Property by Purchaser; (c) any Financing or
Transfer of any Securities in or relating to the Loan Documents, Claims, Rights
and Benefits or Obligations, by Purchaser, including non-compliance with any
Securities Laws applicable thereto; (d) any solicitation for, marketing of,
offer, agreement or attempt to do any of the foregoing matters identified in
Sections 5.4(a) through (c) permitted, suffered to occur or engaged in by
Purchaser, whether private or public, verbal or written, direct or indirect, and
whether or not completed; and any breach of any of the acknowledgments,
representations and agreements set forth in Sections 5.3 or 5.5 of this
Agreement, each of which shall be deemed continuing. This Section shall survive
any termination of or Closing under this Agreement and such indemnification
obligation shall be in addition to Seller's right to retain the Earnest Money
and shall not be limited by any provision elsewhere in this Agreement limiting
the amount of damages which Seller is entitled to recover from Purchaser under
this Agreement, including the limitations in Section 7.1(a).
Section 5.5 Commercial Transaction. Further, as a material inducement
to Seller to assign the Loan Documents and Claims, Benefits and Rights and
Obligations as
<PAGE>
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contemplated hereunder, Purchaser hereby represents and warrants to Seller that:
(a) the purchase and sale of the Loan Documents and Claims, Benefits and Rights
and Obligations is a purely commercial transaction and is not intended to be,
and shall not constitute, the sale or exchange of securities or any other type
of investment; (b) Purchaser acknowledges that the Loan Documents and Claims,
Benefits and Rights and Obligations are not the subject of common trading for
speculation, investment or otherwise, there is no ready market for resale of the
foregoing, and Purchaser understands and is able to bear the economic and other
risks associated with the purchase and ownership of the Loan Documents and
Claims, Benefits and Rights and Obligations, including the necessity of holding
the same for an indefinite period of time; (c) Purchaser is sophisticated,
knowledgeable and experienced in financial and business matters, including the
purchase and sale of commercial loans, documents, claims, and obligations of the
type contemplated hereunder and capable of evaluating independently the merits
and risks of the purchase and ownership of the Loan Documents and Claims,
Benefits and Rights and Obligations, and any profit to be derived by Purchaser
from this commercial transaction (none being implied hereby) shall be derived
solely from Purchaser's knowledge, experience, and business and financial
activities; and (d) the purchase and sale of the Loan Documents hereunder is not
required to be registered under any securities laws and, if and to the extent
applicable, Purchaser qualifies as an "accredited investor" within the meaning
of Rule 501 of the Securities Act of 1933. Purchaser hereby agrees to indemnify
and hold harmless the Seller Parties from and against all Liabilities arising
out of or relating in any way to a breach of any of the foregoing
representations and warranties. This Section shall survive any termination of or
Closing under this Agreement and such indemnification obligation shall be in
addition to Seller's right to retain the Earnest Money and shall not be limited
by any provision elsewhere in this Agreement limiting the amount of damages
which Seller is entitled to recover from Purchaser under this Agreement,
including the limitations in Section 7.1(a).
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties by Purchaser. Purchaser
hereby makes the following representations and warranties for the benefit of
Seller as of the Closing Date only (unless otherwise specified), each of which
shall survive the Closing of the transactions contemplated hereby:
(a) Corporate Status. Purchaser is a corporation, duly
organized and validly existing under the laws of the State of Delaware and is in
good standing under the laws of the State of Delaware.
(b) Power and Authority. Purchaser has full power and
authority to enter into and perform this Agreement, the documents and
certificates to be executed and delivered pursuant hereto, and each and all of
the transactions contemplated hereby and
<PAGE>
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thereby in accordance with the terms hereof and thereof. Further, Purchaser has,
by all necessary action, validly authorized the execution, delivery and
performance of this Agreement, the documents and certificates to be executed and
delivered in connection herewith, and the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof. The individuals
executing this Agreement, and each of the other documents and certificates to be
executed and delivered in connection herewith, on behalf of Purchaser have full
power and authority to do so.
(c) Agreement Binding. This Agreement, and each of the
documents and certificates executed or to be executed and delivered by Purchaser
in connection herewith, is, or will be when executed, the legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with the terms hereof and thereof. The execution, delivery and performance by
Purchaser of this Agreement and the other documents to be executed and delivered
pursuant to this Agreement will not contravene any provision of Purchaser's
organizational documents.
(d) Solvency; No Fraudulent Conveyance. Purchaser is not
Insolvent and will not become Insolvent as a result of entering into and
consummating this Agreement and the purchase and assumption of Seller's right,
title, interest and obligations in, to and under the Loan Documents, Claims,
Rights and Benefits and Obligations in accordance with the terms hereof, nor are
the transfers to be made hereunder or obligations incurred in connection
herewith made or incurred by Purchaser with any intent to hinder, delay or
defraud any creditors to which Purchaser is or becomes indebted. Purchaser is
not engaged in business or any transactions, including the transactions
contemplated hereunder, or about to engage in any business or transactions, for
which any remaining property of Purchaser is unreasonably small capital, nor
does Purchaser intend to incur or believe that it will incur, debts that would
be beyond its ability to pay as such debts mature. Purchaser acknowledges that
it is receiving new, fair, reasonably equivalent value in exchange for the
transfers and obligations contemplated by this Agreement, and affirmatively
represents that its entry into this Agreement and consummation of the
transactions contemplated hereby does not constitute a fraudulent conveyance or
preferential transfer under the Bankruptcy Code or any other federal, state or
local laws affecting the rights of creditors generally.
(e) Actions Against Purchaser. As of the date hereof,
Purchaser has no actual knowledge of any action, proceeding or investigation
pending or threatened in writing against Purchaser or any of the other Purchaser
Parties before any court or governmental department, commission, board, agency
or instrumentality which would affect or impair in any respect Purchaser's
ability to consummate the transactions contemplated hereby.
(f) Loan Conveyed Without Recourse or Warranties. Purchaser
represents and warrants that the purchase and sale of the Loan Documents,
Claims,
<PAGE>
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Rights and Benefits, and Obligations is without warranties (except as
specifically provided in Section 6.2) of any kind by, or recourse to, Seller and
each of the acknowledgments, representations and warranties made by Purchaser
set forth in Section 2.6 are true and complete in all respects and incorporated
herein by this reference.
Section 6.2 Representations and Warranties by Seller. Seller hereby
makes the following representations and warranties for the benefit of Purchaser
as of the Closing Date only (unless otherwise specified), each of which shall
survive the Closing of the transactions contemplated hereby:
(a) Corporate Status. Seller is a Japanese banking corporation
licensed to operate a branch under the laws of the State of New York and is in
good standing under the laws of the State of New York.
(b) Power and Authority. Seller has full corporate power and
authority to enter into and perform this Agreement, the documents and
certificates to be executed and delivered pursuant hereto, and each and all of
the transactions contemplated hereby and thereby in accordance with the terms
hereof and thereof. Further, Seller has, by all necessary corporate action,
validly authorized the execution, delivery and performance of this Agreement,
the documents and certificates to be executed and delivered in connection
herewith, and the transactions contemplated hereby and thereby in accordance
with the terms hereof and thereof. The individuals executing this Agreement, and
each of the other documents and certificates to be executed and delivered in
connection herewith, on behalf of Seller have full power and authority to do so.
(c) Agreement Binding. This Agreement, and each of the
documents and certificates executed or to be executed and delivered by Seller in
connection herewith, is, or will be when executed, the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with the terms
hereof and thereof. The execution, delivery and performance by Seller of this
Agreement and the other documents to be executed and delivered pursuant to this
Agreement will not contravene any provision of Seller's organizational
documents.
(d) Holder of Loan Documents. Seller is the sole owner and
holder of the Loan Documents and the Claims, Rights and Benefits, if any, and
has not previously sold, assigned, conveyed, mortgaged, pledged, or encumbered
its interest in the Loan Documents or the Claims, Rights and Benefits; provided,
however, it is fully disclosed and acknowledged that the Seller is required to
execute and deliver or has executed and delivered the Mutual Releases (as
defined in the Plan).
(e) Solvency; No Fraudulent Conveyance. Seller is not
Insolvent and will not become Insolvent as a result of entering into and
consummating this Agreement and the sale, assignment and conveyance of Seller's
right, title, interest and
<PAGE>
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obligations in, to and under the Loan Documents, Claims, Rights and Benefits and
Obligations in accordance with the terms hereof, nor are the transfers to be
made hereunder or obligations incurred in connection herewith made or incurred
by Seller with any intent to hinder, delay or defraud any creditors to which
Seller is or may become indebted. Seller is not engaged in business or any
transactions, including the transactions contemplated hereunder, or about to
engage in any business or transactions, for which any remaining property of
Seller is unreasonably small capital, nor does Seller intend to incur or believe
that it will incur, debts that would be beyond its ability to pay as such debts
mature.
(f) Actions Against Seller. As of the date hereof, Seller has
no actual knowledge of any action, proceeding or investigation pending or
threatened in writing against Seller or any of the other Seller Parties before
any court or governmental department, commission, board, agency or
instrumentality which would affect or impair in any respect Seller's ability to
consummate the transactions contemplated hereby, other than the Bankruptcy
Proceeding.
ARTICLE VII - DEFAULT/REMEDIES
Section 7.1 By Purchaser. If prior to Closing, there occurs a
Purchaser's Default, then Seller shall be entitled: (a) to terminate its
obligations to sell and Purchaser's obligation to purchase the Loan Documents
and Claims, Rights and Benefits and not to proceed with Closing, whereupon
Seller shall be entitled to retain the Earnest Money as its sole and exclusive
remedy (subject to its further right to recover additional damages and
attorneys' fees and expenses as hereinafter provided), as liquidated damages for
Purchaser's breach of its purchase obligations under this Agreement; or (b) to
proceed to Closing and in the event Closing occurs, to the rights and remedies
set forth in Section 7.3. Further, in the event Seller elects not to proceed to
Closing and retain the Earnest Money as provided herein, and because the actual
damages suffered by Seller as a result of such breach by Purchaser would be
impracticable or extremely difficult or impossible to determine, Purchaser
agrees that the amount of the Earnest Money is a reasonable estimate of damages
to which Seller is entitled in such event and that the amount of such liquidated
damages does not constitute a penalty. Upon the election of Seller to retain the
Earnest Money pursuant to (a) above, this Agreement, including the purchase and
sale obligations of Purchaser and Seller hereunder, shall be deemed
automatically terminated (except for such provisions as survive termination),
and the parties shall have no further rights, obligations or liabilities
hereunder, except in the event the Purchaser wrongfully hinders, delays,
contests or interferes with Seller's retention of same (or attempts to do any of
the foregoing). If Purchaser wrongfully hinders, delays, contests or interferes
with Seller's retention of the Earnest Money (or attempts to do any of the
foregoing), then Seller shall be entitled to recover any additional actual
damages (excluding "lost profits," special and consequential damages) arising
from Purchaser's breach (including reasonable
<PAGE>
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attorney's fees and expenses (whether incurred in connection with nonjudicial
action, prior to trial, at trial or on appeal or review, including any
proceedings under the Bankruptcy Code)), in addition to retaining the Earnest
Money.
Section 7.2 By Seller. If prior to Closing, there occurs a Seller's
Default, Purchaser shall be entitled: (a) to terminate its obligations to
purchase and Seller's obligations to sell the Loan Documents and Claims, Rights
and Benefits and not to proceed with Closing, whereupon Purchaser shall be
entitled to a prompt return of the Earnest Money (to the extent actually paid by
Purchaser) and, as its sole and exclusive remedy, to recover from Seller actual
damages (excluding "lost profits," special and consequential damages) suffered
or incurred by Purchaser as a result of such breach; provided, however, the
amount of such actual damages shall be limited to an amount equal to the amount
of the Earnest Money actually posted by Purchaser (all amounts in excess thereof
being expressly waived by Purchaser hereby), any and all other claims for
losses, damages, costs and expenses being deemed waived hereby (except for the
recovery of attorneys' fees and expenses as hereinafter provided); or (b) to
proceed to Closing and in the event Closing occurs, the rights and remedies set
forth in Section 7.3. The prevailing party in any such action for damages, or in
the event Purchaser must pursue an action to recover the Earnest Money, shall be
entitled to recover from the other reasonable attorney's fees and expenses
(whether incurred in connection with nonjudicial action, prior to trial, at
trial or on appeal or review, including any proceedings under the Bankruptcy
Code).
Section 7.3 Post-Closing Defaults. If, from and after Closing, any
party hereto breaches any of its representations, warranties, covenants,
obligations, liabilities, indemnities or duties hereunder, or in any documents
or certificates executed and delivered by it, or if any of its representations
and warranties prove to be false in any material respect as of the date deemed
to be made, the other party shall be entitled to recover from such defaulting
party any and all damages (excluding "lost profits," special and consequential
damages), costs and expenses, including reasonable attorneys' fees (whether
incurred in connection with nonjudicial action, prior to trial, at trial or on
appeal or review, including any proceedings under the Bankruptcy Code) and
expenses suffered or incurred by such other party as a result of such breach and
to exercise any and all other rights and remedies as may be provided for at law
or in equity. Anything herein to the contrary notwithstanding, in no event shall
Seller be liable for any damages on account of a breach in excess of the amount
of the Purchase Price actually paid by Purchaser to Seller; such excess damages
being, in all respects, expressly waived by Purchaser hereby.
Section 7.4 General Provisions. All rights and remedies in favor of the
parties hereunder are exclusive and in lieu of any other rights and remedies
that may be available at law or in equity, but are, to the extent provided
herein, cumulative and may be exercised successively or concurrently as
determined by such parties in their sole discretion, except as specifically
provided herein to the contrary. The exercise of any one right or remedy shall
not be a waiver of the right to exercise at the same time or thereafter any
other right
<PAGE>
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or remedy, and no delay in exercising or failing to exercise any rights or
remedies hereunder in any one or more instances shall constitute, or be deemed
to constitute, a waiver of the right to exercise any such rights or remedies at
any time thereafter or a release, satisfaction or discharge of the terms hereof,
all such rights and remedies remaining continuously in force. This Article VII
shall not limit or impair in any way, and shall be in addition to, the rights or
remedies any party hereto may have by virtue of any specific indemnities
expressly provided for herein or in any of the other documents or certificates
executed and delivered by any of the parties to the other, all of which shall
survive any termination of or Closing under this Agreement; such indemnities
shall be in addition to Seller's right to retain the Earnest Money and shall not
be limited by any provision elsewhere in this Agreement limiting the amount of
damages which Seller is entitled to recover from Purchaser under this Agreement,
including the limitations in Section 7.1(a).
ARTICLE VIII - MISCELLANEOUS
Section 8.1 Assignment.
(a) By Seller. Seller shall have the right, at its sole option
and without the consent of Purchaser, to assign its rights, benefits and
obligations under this Agreement to any entity in which Seller or its
stockholders own, directly or indirectly, a majority of the outstanding stock or
other equity interests, whereupon such assignee and Seller shall remain jointly
and severally liable for performance of all obligations to be performed by
Seller hereunder, including, the refund of the Earnest Money in accordance with
the terms hereof. Seller shall promptly notify Purchaser of any such assignment.
Except as expressly set forth in this Section 8.1(a), Seller shall not assign
its rights, benefits or obligations under this Agreement without the prior
written consent of Purchaser, which consent may be withheld, conditioned or
delayed in Purchaser's sole and absolute discretion.
(b) By Purchaser. Purchaser hereby acknowledges that this
Agreement is a contract to extend certain financial accommodations and is
personal to Purchaser and Purchaser shall have no right to assign or otherwise
Transfer this Agreement or any of its rights, benefits or obligations hereunder
(including any representations and warranties included herein) without the prior
written consent of Seller, which consent may be withheld, conditioned or delayed
in Seller's sole and absolute discretion, except as hereinafter provided. Seller
will consent to a one time only assignment by Purchaser of this Agreement and
its rights, benefits and obligations hereunder, prior to Closing, to a Person in
which Purchaser owns, directly or indirectly, a majority of the outstanding
stock or other equity interests, provided that, as a condition precedent to the
effectiveness of any such assignment, Purchaser shall notify Seller in writing
of any such assignment at least ten (10) days prior to such assignment and
<PAGE>
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Purchaser and the assignee shall execute and deliver to Seller an express
agreement, in form and content satisfactory to Seller, by such assignee and
Purchaser to remain jointly and severally liable for the payment and performance
of all of Purchaser's obligations and liabilities hereunder. Any assignment or
other Transfer, or attempted or purported assignment or other Transfer, by
Purchaser of this Agreement, or any of its right and obligations hereunder,
shall be NULL AND VOID, unless made with the prior written consent of Seller and
strictly in accordance with the terms hereof. Any such permitted assignee shall
be deemed the "Purchaser" for all purposes hereunder from and after the
assignment by Purchaser of its interest hereunder to such assignee; provided,
however, the original named Purchaser herein shall remain jointly and severally
liable after such assignment with such permitted assignee for the performance of
all covenants, obligations, duties, liabilities, representations and warranties
of Purchaser under this Agreement and all agreements, documents and certificates
executed and delivered by Purchaser or such permitted assignee in connection
herewith. Further, any assignment or other Transfer or attempted or purported
assignment or other Transfer by Purchaser of this Agreement, or any of its
rights, benefits and obligations hereunder, shall constitute a material breach
by Purchaser of this Agreement and shall entitle Seller to exercise immediately
any and all of its rights and remedies hereunder, at law or in equity. Purchaser
hereby agrees to indemnify, defend and hold the Seller Parties harmless from and
against any Liabilities, including special and consequential damages, arising
out of or relating to any assignment or other Transfer and/or attempted or
purported assignment or other Transfer by Purchaser and/or any permitted
assignee of this Agreement, or any of Purchaser's or such assignee's rights,
benefits and obligations hereunder, in breach of the provisions hereof and such
indemnification obligation shall be in addition to Seller's right to retain the
Earnest Money and shall not be limited by any provision elsewhere in this
Agreement limiting the amount of damages which Seller is entitled to recover
from Purchaser under this Agreement, including the limitations in Section
7.1(a).
Section 8.2 Notices. Any notices, demands, requests and other
communications required hereunder shall be in writing and shall be deemed to
have been given and/or received: (a) upon delivery if personally delivered; (b)
one (1) business day after deposit with a nationally recognized overnight
delivery service marked for delivery on the next business day; or (c) upon
completion of transmission (which is confirmed by telephone or a statement
generated by the transmitting machine) if sent by facsimile to compatible
equipment in the possession of the recipient, addressed to the party for whom it
is intended at its address hereinafter set forth:
<PAGE>
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(a) If to Seller: The Dai-Ichi Kangyo Bank, Limited,
New York Branch
One World Trade Center, 48th Floor
New York, New York 10048
Attn: Lester Yassky, General Counsel
(212) 466-0129 (Facsimile)
With a copy to: Ernest Bertolotti, Esquire
Hutton Ingram Yuzek Gainen Carroll & Bertolotti
250 Park Avenue
New York, New York 10177
(212) 907-9681 (Facsimile)
With a copy to: Constance Collins Davis, Esquire
Andrews & Kurth L.L.P.
A Registered Limited Liability Partnership
1701 Pennsylvania Avenue, N.W., Suite 300
Washington, D.C. 20006
(202) 662-2739 (Facsimile)
(b) If to Purchaser: Resource America, Inc.
Ledgewood Law Firm Building
1521 Locust Street, 4th Floor
Philadelphia, Pennsylvania 19102
Attn: Mr. Scott F. Schaeffer
(215) 546-5388 (Facsimile)
With a copy to: Jeffrey F. Brotman, Esquire
Ledgewood Law Firm, P.C.
Ledgewood Law Firm Building
1521 Locust Street, 8th Floor
Philadelphia, Pennsylvania 19102
(215) 735-2513 (Facsimile)
Any party may designate a change of address by written notice to the others,
given at least ten (10) days before such change of address is to become
effective.
Section 8.3 No Third Party Beneficiary. The provisions of this
Agreement are solely for the benefit of Purchaser and Seller, and their
successors and permitted assigns. No provision of this Agreement or of any of
the documents and certificates executed in connection herewith shall be
construed as creating in any Person other than Purchaser and Seller, and their
successors and permitted assigns, any rights of any nature whatsoever.
<PAGE>
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Section 8.4 Successors and Assigns. Subject to the provisions of
Sections 8.1 and 8.3, all of the terms, covenants and conditions contained
herein and in the other documents and certificates executed in connection
herewith shall apply to and be binding upon, and inure to the benefit of, the
successors and permitted assigns of Purchaser and Seller, respectively.
Section 8.5 Severability. If any provision in this Agreement is found
by a court of competent jurisdiction to be in violation of any applicable law,
and if such court should declare such provision of this Agreement to be
unlawful, void, illegal or unenforceable in any respect, the remainder of this
Agreement shall be severable, and the rights, obligations and interests of the
parties hereto under the remainder of this Agreement shall continue in full
force and effect. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part or provision of this Agreement
shall deprive any party of the economic benefit intended to be conferred by this
Agreement, the parties shall negotiate, in good faith, to develop a structure,
the economic effect of which is nearly as possible the same as the economic
effect of this Agreement without regard to such invalidity.
Section 8.6 Modification. This Agreement and the terms hereof may not
be changed, waived, modified, canceled, discharged or terminated orally, but
only by an instrument or instruments in writing signed by Purchaser and Seller.
Section 8.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCLUDING CONFLICTS OF LAW PRINCIPLES.
Section 8.8 Consent to Jurisdiction. Each of Purchaser and Seller
hereby consents to the exercise of personal jurisdiction over it by any federal
or state court in the State of New York and consents to the exclusive laying of
venue in any federal or state court in the State of New York.
Section 8.9 Headings. The Article headings and the Section and
Subsection titles hereof are inserted for convenience of reference only, are not
intended to modify the terms hereof, and shall not be construed in any way to
limit or define the content, scope or intent of the provisions hereof.
Section 8.10 Entire Agreement. This Agreement sets forth the entire
agreement between Purchaser and Seller relating to the transactions contemplated
hereby and all prior or contemporaneous agreements, understandings,
representations or statements, oral or written, are superseded hereby.
<PAGE>
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Section 8.11 Broker. Purchaser hereby represents to Seller that it has
had no dealings with any broker, finder or other party concerning Purchaser's
acquisition of the Loan Documents, Claims, Rights and Benefits or Obligations.
Seller hereby represents to Purchaser that it has had no dealings with any
broker, finder or other party concerning Purchaser's acquisition of the Loan
Documents, Claims, Rights and Benefits or Obligations other than Broker, and
Seller shall be solely responsible for paying all fees owed to Broker arising
from this Agreement and the transactions contemplated hereby. Each of Seller and
Purchaser hereby agrees to indemnify and hold the other harmless from and
against all loss, cost, damage or expense (including reasonable attorneys' fees)
incurred by the other as a result of (a) any breach by such party of the
foregoing representation to the other, and (b) any claim arising out the acts of
the indemnifying party (or others on its behalf) for a commission, finder's fee
or similar compensation made by any broker, finder or any party who claims to
have dealt with such party. This Section shall survive any termination of or
Closing under this Agreement and such indemnification obligation shall be in
addition to Seller's right to retain the Earnest Money and shall not be limited
by any provision elsewhere in this Agreement limiting the amount of damages
which Seller is entitled to recover from Purchaser under this Agreement,
including the limitations in Section 7.1(a).
Section 8.12 No Personal/Joint Liability. This Agreement and all
documents, agreements, understandings and arrangements relating hereto and to
the transactions contemplated hereby have been negotiated, executed and
delivered on behalf of Seller and Purchaser by their respective officers in
their representative capacities and not individually, and bind only the
corporate and/or partnership assets of Seller and Purchaser and no officer,
director, employee, agent or shareholder of either Seller or Purchaser shall be
bound or held to any personal liability or responsibility in connection with the
agreements, obligations and undertakings of Seller or Purchaser, as the case may
be, hereunder. Any Person dealing with Seller or Purchaser in connection
herewith shall look solely to the assets of Seller or Purchaser, as applicable,
for the payment of any claim or for the performance of any of its agreements,
obligations or undertakings hereunder. Each party acknowledges and agrees that
each agreement and other document executed by the other party in accordance with
or in respect of this Agreement and the transactions contemplated hereby shall
be deemed and treated to include in all respects and for all purposes the
provisions of this Section 8.12.
Section 8.13 Survival. All representations, warranties, covenants,
obligations, indemnities and provisions of this Agreement shall survive the
Closing of the transactions contemplated hereby and/or termination of this
Agreement.
Section 8.14 Waiver of Trial by Jury. SELLER AND PURCHASER HEREBY
WAIVE, UNCONDITIONALLY AND IRREVOCABLY, ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION AND THE DEFENSE OF ANY ACTION BROUGHT ON, UNDER OR BY
<PAGE>
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VIRTUE OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY OF THE DOCUMENTS OR
CERTIFICATES EXECUTED IN CONNECTION HEREWITH, OR ANY CLAIMS, RIGHTS AND
BENEFITS, DEFENSES, RIGHTS OF SET-OFF OR OTHER ACTIONS PERTAINING HERETO OR
THERETO.
Section 8.15 Time Is of Essence. TIME IS OF THE ESSENCE under this
Agreement and each and all of the other documents and certificates executed in
connection herewith.
Section 8.16 Effective Date. Notwithstanding the fact that this
Agreement may have been executed on a date prior or subsequent thereto, this
Agreement shall be deemed effective on the date on which each and all of the
following conditions precedent to effectiveness are satisfied (but not prior
thereto): (a) Purchaser shall have executed and delivered this Agreement to
Seller and the Escrow Agreement to Seller and Escrow Agent; (b) concurrently
with the execution and delivery by Purchaser of this Agreement to Seller, the
Earnest Money shall have been paid in full in accordance with the provisions of
Section 3.1(a) and the Escrow Agreement; and (c) Seller shall have executed and
delivered this Agreement to Purchaser and the Escrow Agreement to Purchaser and
Escrow Agent, together with a notice to Purchaser specifying therein the
Effective Date. Any calculation of time periods within which Purchaser or Seller
must act or respond which refer in any way to the date of this Agreement shall
mean and refer to the Effective Date and not the date set forth on the first
page hereof.
Section 8.17 No Recording. Purchaser and Seller hereby agree that
neither this Agreement nor any memorandum hereof shall be recorded. Each party
hereby agrees to indemnify and hold harmless the other for all liabilities,
losses, damages, liens, suits, claims, costs and expenses (including reasonable
attorneys' fees) incurred by the other by reason of a breach of the foregoing
covenant.
Section 8.18 Informed Consent. Purchaser and each Seller hereby
acknowledges for the benefit of the other that: (a) it has thoroughly read and
reviewed the terms and provisions of this Agreement and each of the other
documents and certificates to be executed in connection herewith and is familiar
with same; (b) the terms and provisions hereof and thereof are clearly
understood and have been fully consented to; it has had the full benefit and
advice of counsel of its own selection, in regard to understanding the terms and
provisions hereof and thereof, the meaning and effect of this Agreement and each
of the other documents and certificates to be executed in connection herewith,
and otherwise as desired; and (c) all such documents have been entered into
freely, voluntarily, in good faith, with full knowledge of the consequences
thereof and without duress or significant disparity in bargaining position in
relation to the other.
Section 8.19 No Modification of Debt. Nothing in this Agreement,
including without limitation, the payments to be made to Seller pursuant hereto,
shall constitute or
<PAGE>
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be deemed to constitute a modification, waiver, discharge, satisfaction,
reduction or release in any respect of the Loan Documents and/or Claims, Rights
and Benefits, indebtedness evidenced or secured thereby, liens created pursuant
thereto, or rights and remedies of Seller thereunder or afforded by law or in
equity.
Section 8.20 Further Assurances. Seller and Purchaser hereby agree,
upon reasonable request of the other party, to do, execute, acknowledge and
deliver, or to cause to be done, executed, acknowledged and delivered, all such
further acts and documents as may be reasonably required to effectuate the
transactions contemplated hereby. All costs and expenses incurred by either
party in connection with this Section shall be paid by the party making the
request pursuant hereto.
Section 8.21 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
together shall constitute but one original.
Section 8.22 Waiver of Certain Rights and Remedies. PURCHASER HEREBY
REPRESENTS AND WARRANTS TO SELLER THAT: (A) IT SEEKS TO ACQUIRE AND WILL BE
ACQUIRING THE LOAN DOCUMENTS, CLAIMS, RIGHTS AND BENEFITS AND OBLIGATIONS FOR
COMMERCIAL PURPOSES ONLY, AND NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES;
(B) PURCHASER IS EXPERIENCED AND HAS PREVIOUSLY ENGAGED IN THE ACQUISITION OF
LOAN DOCUMENTS, CLAIMS, RIGHTS AND BENEFITS AND OBLIGATIONS AND OTHER
TRANSACTIONS OF THE TYPE CONTEMPLATED HEREUNDER; AND (C) NEITHER THIS AGREEMENT
NOR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER, INCLUDING THE PURCHASE AND
SALE OF THE LOAN DOCUMENTS, CLAIMS, RIGHTS AND BENEFITS AND OBLIGATIONS, IS A
CONSUMER TRANSACTION AND/OR GOVERNED, OR INTENDED TO BE GOVERNED, BY ANY
CONSUMER PROTECTION, UNFAIR OR DECEPTIVE, TRADE OR CONSUMER FRAUD ACTS IN ANY OF
THE JURISDICTIONS IN WHICH THE PROPERTY IS LOCATED OR TO WHICH THE LOAN, CLAIMS,
RIGHTS AND BENEFITS, OBLIGATIONS AND/OR THIS AGREEMENT ARE SUBJECT, AND
PURCHASER HEREBY WAIVES UNCONDITIONALLY AND IRREVOCABLY ALL RIGHTS, BENEFITS,
PROTECTIONS, REMEDIES AND OTHER PROVISIONS THEREOF AND THEREUNDER, INCLUDING THE
UNIFORM DECEPTIVE TRADE PRACTICES ACT AS ENACTED IN THE STATE OF DELAWARE IN
TITLE 6, SECTIONS 2531, ET SEQ. AND/OR IN THE STATE OF NEW YORK.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first written above.
<PAGE>
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PURCHASER:
RESOURCE AMERICA, INC., a Delaware
corporation
By: _________________________________________
Name:____________________________________
Title:___________________________________
SELLER:
THE DAI-ICHI KANGYO BANK, LIMITED,
NEW YORK BRANCH, a Japanese banking
corporation licensed to operate a branch
under the laws of the State of New York
By: _________________________________________
Name:____________________________________
Title:___________________________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS......................................................-1-
Section 1.1 Definitions..........................................-1-
"Agreement" ....................................................-1-
"Bankruptcy Code"................................................-1-
"Bankruptcy Proceeding"..........................................-1-
"Broker" ........................................................-1-
"Cash" ..........................................................-1-
"Cash Collateral Order"..........................................-1-
"Claims, Rights and Benefits"....................................-1-
"Closing" .......................................................-2-
"Closing Costs"..................................................-2-
"Closing Date"...................................................-2-
"Confirmation Order".............................................-2-
"Debtor" ........................................................-2-
"Debtor Parties".................................................-2-
"Disbursing Agent"...............................................-2-
"Disbursing Agreement"...........................................-2-
"Earnest Money"..................................................-3-
"Effective Date".................................................-3-
"Escrow Agent"...................................................-3-
"Escrow Agreement"...............................................-3-
"Financing" ....................................................-3-
"Governmental Authority".........................................-3-
"Information"....................................................-3-
"Insolvency Proceedings".........................................-4-
"Insolvent" ....................................................-4-
"JAD" ...........................................................-4-
"Land Records"...................................................-4-
"Liabilities"....................................................-4-
"Liquidating Trust Agreement"....................................-4-
"Loan" ..........................................................-4-
"Loan Documents".................................................-4-
"Net Cash Collateral"............................................-4-
"Note" ..........................................................-4-
"Obligations"....................................................-4-
"Person" ........................................................-5-
"Petition Date"..................................................-5-
"Plan" ..........................................................-5-
"Pre-Petition Rents".............................................-5-
"Proof of Claim".................................................-5-
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"Property" ......................................................-5-
"Purchase Price".................................................-5-
"Purchaser" .....................................................-5-
"Purchaser Parties"..............................................-5-
"Purchaser's Condition Precedent"................................-5-
"Purchaser's Default"............................................-6-
"Rents" .........................................................-6-
"Reserved Claims"................................................-6-
"Retained Rights and Payments"...................................-6-
"Securities Laws"................................................-6-
"Security(ies)"..................................................-6-
"Seller" ........................................................-7-
"Seller Parties".................................................-7-
"Seller's Conditions Precedent"..................................-7-
"Seller's Default"...............................................-7-
"Titleholders"...................................................-7-
"Transfer" ......................................................-7-
"Transfer Documents".............................................-8-
"Woodner Estate".................................................-8-
Section 1.2 Rules of Construction...............................-8-
ARTICLE II - TERMS OF PURCHASE AND SALE......................................-8-
Section 2.1 Agreement to Purchase and Sell......................-8-
Section 2.2 Seller's Conditions Precedent to Sale...............-8-
Section 2.3 Purchaser's Condition Precedent to Sale............-10-
Section 2.4 Due Diligence Is Satisfied.........................-11-
Section 2.5 Purchaser's Independent Investigation..............-11-
Section 2.6 Sale Without Recourse Or Warranties................-13-
Section 2.7 Distribution to Debtor Parties.....................-14-
ARTICLE III - PURCHASE PRICE; PAYMENT.......................................-14-
Section 3.1 Earnest Money; Purchase Price......................-14-
(a) Earnest Money...............................-14-
(b) Purchase Price..............................-15-
Section 3.2 Retained Rights and Payments.......................-15-
Section 3.3 Closing Costs......................................-16-
Section 3.4 Payment of Purchase Price..........................-16-
Section 3.5 Disposition of Earnest Money.......................-16-
ARTICLE IV - CLOSING; TRANSFER DOCUMENTS....................................-17-
Section 4.1 Closing............................................-17-
Section 4.2 Transfer Documents.................................-17-
(a) Assignment..................................-17-
(c) UCC Assignments.............................-18-
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(d) Substitution of Parties......................-18-
Section 4.3 Post-Closing Matters...............................-18-
(a) Retained Rights and Payments.................-18-
(b) Substitution as Party in Interest............-18-
(c) Reserved Claims/No Modifications of Plan
and Orders...................................-19-
ARTICLE V - ASSUMED OBLIGATIONS; CONFIDENTIALITY; INDEMNITIES...............-19-
Section 5.1 Assumed Obligations; General Indemnity.............-19-
Section 5.2 Confidentiality....................................-20-
Section 5.3 Securities Acknowledgments.........................-20-
Section 5.4 Securities Indemnity...............................-21-
Section 5.5 Commercial Transaction.............................-21-
ARTICLE VI - REPRESENTATIONS AND WARRANTIES.................................-22-
Section 6.1 Representations and Warranties by Purchaser........-22-
(a) Corporate Status.............................-22-
(b) Power and Authority..........................-22-
(c) Agreement Binding............................-23-
(d) Solvency; No Fraudulent Conveyance...........-23-
(e) Actions Against Purchaser....................-23-
(f) Loan Conveyed Without Recourse or Warranties.-23-
Section 6.2 Representations and Warranties by Seller...........-24-
(a) Corporate Status.............................-24-
(b) Power and Authority..........................-24-
(c) Agreement Binding............................-24-
(d) Holder of Loan Documents.....................-24-
(e) Solvency; No Fraudulent Conveyance...........-24-
(f) Actions Against Seller.......................-25-
ARTICLE VII - DEFAULT/REMEDIES..............................................-25-
Section 7.1 By Purchaser.......................................-25-
Section 7.2 By Seller..........................................-26-
Section 7.3 Post-Closing Defaults..............................-26-
Section 7.4 General Provisions.................................-26-
ARTICLE VIII - MISCELLANEOUS................................................-27-
Section 8.1 Assignment.........................................-27-
(a) By Seller....................................-27-
(b) By Purchaser.................................-27-
Section 8.2 Notices............................................-28-
Section 8.3 No Third Party Beneficiary.........................-30-
Section 8.4 Successors and Assigns.............................-30-
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Section 8.5 Severability.......................................-30-
Section 8.6 Modification.......................................-30-
Section 8.7 Governing Law......................................-30-
Section 8.8 Consent to Jurisdiction............................-30-
Section 8.9 Headings...........................................-30-
Section 8.10 Entire Agreement...................................-31-
Section 8.11 Broker.............................................-31-
Section 8.12 No Personal/Joint Liability........................-31-
Section 8.13 Survival...........................................-32-
Section 8.14 Waiver of Trial by Jury............................-32-
Section 8.15 Time Is of Essence.................................-32-
Section 8.16 Effective Date.....................................-32-
Section 8.17 No Recording.......................................-32-
Section 8.18 Informed Consent...................................-32-
Section 8.19 No Modification of Debt............................-33-
Section 8.20 Further Assurances.................................-33-
Section 8.21 Counterparts.......................................-33-
Section 8.22 Waiver of Certain Rights and Remedies..............-33-
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EXHIBITS:
Exhibit A - Loan Documents
Exhibit B - Assignment and Assumption of Loan Documents
Exhibit C - Notice of Assignment of Claims, Rights and Benefits
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<PAGE>
AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE
THIS AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE ("Amendment") is made
as of the 9th day of March, 1998 by and among THE DAI-ICHI KANGYO BANK, LIMITED,
NEW YORK BRANCH ("Seller"), RESOURCE AMERICA, INC. ("Original Purchaser") and
RESOURCE PROPERTIES XLIX, INC. (together with its legal representatives,
successors and assigns, jointly and severally, "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Original Purchaser are parties to that certain
Agreement for Purchase and Sale dated as of March 5, 1998 (as amended by this
Amendment, the "Agreement"); and
WHEREAS, Original Purchaser desires to assign to Purchaser its right,
title and interest in, to and under the Agreement, including the right to
acquire the Loan Documents and Claims, Rights and Benefits (as defined therein),
and Purchaser desires to assume the obligations of Original Purchaser under and
relating to the Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Seller, Original Purchaser and
Purchaser, the parties hereby agree as follows:
1. Definitions in Amendment. All capitalized terms used herein and not
otherwise defined shall have the meanings for such terms set forth in the
Agreement. The definition of "Agreement" shall hereafter be amended to mean the
Agreement as amended by this Amendment.
2. Assignment and Assumption. Original Purchaser and Purchaser hereby
represent and warrant to Seller that Original Purchaser owns, directly or
indirectly, a majority of the outstanding stock of Purchaser. Original Purchaser
hereby confirms its assignment to Purchaser of the Agreement and all of its
rights, benefits and obligations thereunder and represents and warrants to
Seller that it has not previously assigned, transferred or encumbered,
voluntarily or involuntarily, the Agreement or any of its rights, benefits and
obligations thereunder. Seller consents to such assignment In accordance with
the provisions of Section 8.1 of the Agreement and the terms and provisions set
forth in this Amendment. Purchaser represents and warrants to Seller that it has
accepted such assignment and hereby assumes and agrees to pay and perform all of
the Original Purchaser's covenants, obligations, duties, liabilities,
representations, and warranties under the Agreement and all agreements,
documents and certificates executed and delivered by Purchaser or Original
Purchaser in connection with the Agreement (whether
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arising prior or subsequent to such assignment), including, without limitation,
the Escrow Agreement and the letter agreement between Seller and Original
Purchaser of even date therewith. From and after the date hereof, the Purchaser
shall be deemed to be the "Purchaser" for all purposes under the Agreement;
provided however, Purchaser and Original Purchaser shall be and remain jointly
and severally liable for the payment and performance of all covenants,
obligations, duties, liabilities, representations and warranties of Purchaser
and Original Purchaser under the Agreement and all agreements, documents and
certificates executed and delivered by Purchaser or Original Purchaser in
connection therewith (whether arising prior or subsequent to such assignment),
including, without limitation, the Escrow Agreement and the letter agreement
between Seller and Original Purchaser of even date therewith. All parties hereby
acknowledge that the foregoing assignment by Original Purchaser to Purchaser
shall be deemed to constitute the one-time permitted assignment contemplated
under Section 8.1 of the Agreement and no further assignment by Original
Purchaser or Purchaser of the Agreement or any of their respective rights,
benefits, or obligations thereunder or in, to or under any of the agreements,
documents and certificates executed or to be executed and delivered pursuant
thereto shall be permitted without the prior written consent of Seller.
3. Representations and Warranties. Purchaser hereby joins in and makes
each and all of the representations and warranties set forth in Section 6.1 and
otherwise in the Agreement for the benefit of Seller, each of which
representations and warranties shall survive Closing of the transactions
contemplated hereby.
4. Notices. Purchaser's address for notice purposes in Section 8.2 of
the Agreement and Paragraph (g) of the Escrow Agreement shall be the same as set
forth therein for the Original Purchaser.
5. Ratification of Agreement. Except as specifically modified herein,
the Agreement remains in full force and effect in accordance with its terms and
Seller, Original Purchaser and Purchaser hereby ratify and reaffirm each and all
of the terms and provisions of the Agreement as so modified.
6. Counterparts; Effectiveness. This Amendment may be executed in one
or more counterparts, each of which shall constitute an original and all of
which together shall constitute but one original. Delivery of this Amendment by
facsimile made in accordance with the notice provisions of Section 8.2 of the
Agreement shall be deemed binding and effective for all purposes.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Seller, Original Purchaser and Purchaser have
executed and delivered this Amendment as of the date first above written.
PURCHASER:
RESOURCE PROPERTIES XLIX, INC., a
Delaware corporation
By:_______________________________________
Name:__________________________________
Title:_________________________________
ORIGINAL PURCHASER:
RESOURCE AMERICA, INC., a Delaware
corporation
By:_______________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
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SELLER:
THE DAI-ICHI KANGYO BANK,
LIMITED, NEW YORK BRANCH, a
Japanese banking corporation licensed to
operate a branch under the laws of the
State of New York
By:_______________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
________________________________________________________________________________
SECURED LOAN AGREEMENT
Dated as of March 12, 1998
between
RESOURCE PROPERTIES XLIX, INC., as Borrower
and
MERRILL LYNCH MORTGAGE CAPITAL INC., as Lender
________________________________________________________________________________
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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT........................................................ 1
ARTICLE IDEFINITIONS......................................................... 1
ARTICLE II LOAN.............................................................. 9
SECTION 2.01. Loan...................................................... 9
SECTION 2.02. The Note.................................................. 9
SECTION 2.03. Interest on Loan..........................................10
SECTION 2.04. Capital Adequacy; Increased Costs; Illegality.............10
SECTION 2.05. Security..................................................10
SECTION 2.06. Payments from Net Cash Flow...............................10
SECTION 2.07. Optional Prepayments; Break Funding.......................12
SECTION 2.08. Place and Time of Payment.................................12
ARTICLE III CONDITIONS TO LOAN...............................................12
SECTION 3.01. Conditions Precedent to Loan..............................12
ARTICLE IV WARRANTIES AND REPRESENTATIONS....................................16
SECTION 4.01. Warranties and Representations of Borrower................16
ARTICLE V COVENANTS..........................................................19
SECTION 5.01. Maintenance of Existence..................................19
SECTION 5.02. Maintenance of Records....................................19
SECTION 5.03. Maintenance of Insurance..................................20
SECTION 5.04. Compliance with Laws; Payment of Taxes....................20
SECTION 5.05. Right of Inspection.......................................20
SECTION 5.06. Compliance with Transaction Documents.....................20
SECTION 5.07. Payment of Costs..........................................20
SECTION 5.08. Payment of Lender's Expenses..............................20
SECTION 5.09. Special Purpose Entity; Other Limitations.................21
SECTION 5.10. Reporting and Miscellaneous Document Requirements.........21
SECTION 5.11. Management of Mortgaged Property..........................23
SECTION 5.12. Acquisition of Mortgaged Property.........................24
SECTION 5.13. Fictitious Name, etc......................................25
SECTION 5.14. Transfers of Shareholder Interests........................25
SECTION 5.15. Notice of Sale............................................25
SECTION 5.16. Major Decisions...........................................25
SECTION 5.17. Further Assurances........................................25
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ARTICLE VI EVENTS OF DEFAULT.................................................26
SECTION 6.01. Events of Default.........................................26
SECTION 6.02. Consequence of Event of Default...........................27
ARTICLE VII MISCELLANEOUS....................................................28
SECTION 7.01. Modification of Agreement.................................28
SECTION 7.02. No Waiver by Lender.......................................28
SECTION 7.03. Non-Recourse..............................................29
SECTION 7.04. Indemnification...........................................29
SECTION 7.05. Severability..............................................30
SECTION 7.06. Parties...................................................30
SECTION 7.07. Waivers by Borrower.......................................30
SECTION 7.08. Debtor-Creditor Relationship; No Partnership..............30
SECTION 7.09. Governing Law; Submission to Non-exclusive Jurisdiction;
Waiver of Objection to Inconvenient Forum.................31
SECTION 7.10. Waiver of Jury Trial......................................31
SECTION 7.11. Restoration or Set Aside..................................31
SECTION 7.12. Notices...................................................31
SECTION 7.13. Headings and References...................................32
SECTION 7.14. Counterparts..............................................32
SECTION 7.15. Survival of Representations and Warranties................33
SECTION 7.16. Entirety..................................................33
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Exhibits
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Exhibit A Form of Promissory Note
Exhibit B Underlying Loan Documents
Exhibit C Monthly Reports and Information
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<PAGE>
SECURED LOAN AGREEMENT ("Agreement") dated as of March 12, 1998,
between RESOURCE PROPERTIES XLIX, INC., a Delaware corporation ("Borrower"),
and MERRILL LYNCH MORTGAGE CAPITAL INC., a Delaware corporation ("Lender").
PRELIMINARY STATEMENT
Borrower wishes to borrow and Lender has agreed to fund the sum
of $55,000,000 on the terms and subject to the conditions contained in this
Agreement and the other Loan Documents (as defined below) to provide, among
other things, financing for Borrower's acquisition of the Mortgage Loan (as
defined below).
In consideration of the terms and conditions set forth herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"Administration Expenses" means, as of any date of
determination, the sum of (i) fees and expenses payable by Borrower to or at the
direction of Manager or Custodian pursuant to the Management Agreement and the
Custodial Agreement, respectively, and to the extent, in the case of expenses
payable to or at the direction of Manager, such expenses have been previously
approved by Lender under the Operating Budget or otherwise in writing and (ii)
ongoing, third-party, out-of-pocket legal and accounting fees and expenses
actually paid by Borrower, and the reasonable operating expenses of Borrower
incurred and paid by Borrower, in each case to the extent that such fee or
expense is authorized by the Operating Budget or otherwise approved in writing
by Lender.
"Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such first Person.
"Agents Recognition Agreement" means the Recognition,
Subordination and Non-Petition Agreement, dated March __, 1998, by and among
Lender, Manager and Disbursing Agent.
"Agreement" means this Secured Loan Agreement, as amended or
supplemented from time to time.
"Bankruptcy Code" means the Bankruptcy Code of 1978, Title 11 of
the United States Code, as amended from time to time.
"Borrower" has the meaning specified in the first paragraph of
this Agreement.
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"Borrower Collection Account" has the meaning specified in
Section 2.06(b).
"Borrower Account" has the meaning specified in Section 2.06(b).
"Borrower Working Capital Account" has the meaning specified in
Section 2.06(b).
"Business Day" means any day excluding Saturday, Sunday and any
day on which banking institutions located in New York, New York are authorized
or required by law to remain closed.
"Bylaws" means the bylaws of Borrower, dated as of March __,
1998, as may be amended, supplemented or replaced from time to time.
"Collateral Assignment of Deed of Trust@ means the Collateral
Assignment of Deed of Trust and Other Documents, dated March 12, 1998, from
Borrower in favor of Lender.
"Certificate of Incorporation" means the certificate of
incorporation of Borrower, as filed with the Secretary of State of the State of
Delaware on March __, 1998, as such certificate may be amended from time to time
in accordance with this Agreement.
"Closing Date" means March 12, 1998, or such other date to which
Lender and Borrower mutually agree.
"Collateral" has the meaning specified in the Security
Agreement.
"Collections" means all collections received with respect to the
Mortgage Loan or Mortgaged Property, including principal and interest payments,
lease or other revenues from the use or occupancy of the Mortgaged Property and,
disposition and/or liquidation proceeds.
"Commercial Paper Rate" means, for each applicable Interest
Period (or portion thereof), if any, the per annum rate published in the Wall
Street Journal on the first day of such Interest Period (or portion thereof) for
high-grade thirty-day commercial paper sold through dealers by major
corporations.
"Current Interest" has the meaning specified in Section 2.06(a).
"Custodial Agreement" means the custodial agreement, dated as of
the date hereof, between Custodian and Lender, as such agreement may be amended,
supplemented or replaced from time to time.
"Custodian" means State Street Bank and Trust Company, as
custodian under the Custodial Agreement, and any successor custodian.
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<PAGE>
"Debt" with respect to Borrower, means (i) any indebtedness,
contingent or otherwise, for borrowed money or the deferred purchase price of
property or services or evidenced by notes, bonds, or other instruments, (ii)
obligations as lessee under capital leases, (iii) obligations secured by any
Lien existing on any asset owned or held by Borrower whether or not Borrower has
assumed or become liable for the obligations secured thereby, (iv) any
obligation under any interest rate swap agreement (the principal amount of such
obligation being deemed to be notional principal amount on which such swap is
based), and (v) obligations under direct or indirect guarantees of (including
obligations, contingent or otherwise, to assure a creditor against loss in
respect of) indebtedness or obligations of the kinds referred to in clauses (i),
(ii), (iii), and (iv) above, provided that "Debt" shall not include obligations
in respect of any accounts payable that are incurred in the ordinary course of
Borrower's business and are not delinquent or are being contested by Borrower in
good faith in appropriate proceedings.
"Default" means any condition or event which, with the giving of
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
"Default Administration Fee" means the fee payable pursuant to
Section 6.02(d) by Borrower to Lender upon the occurrence of an Event of
Default, which fee shall equal two percent (2%) of the Principal Amount
outstanding on the date such fee becomes payable.
"Default Rate" means a rate per annum equal to five percent (5%)
above the then LIBOR Interest Rate.
"Disbursing Agent" means Commercial Title Group, Ltd.
"Disbursing Agreement" means the Disbursing Agreement, dated
March __, 1998, among Borrower, Disbursing Agent and the Debtor parties.
"Delinquent Interest" has the meaning specified in Section
2.06(a).
"Dollars" and the symbol "$" each means lawful currency of the
United States.
"Earned Income" means any and all earnings or income realized in
respect of amounts from time to time on deposit in the Borrower Collection
Account, the Manager Collection Account established pursuant to the Management
Agreement.
"Environmental Claim" means any notice, claim, administrative or
judicial action, suit, demand or other written communication by any Governmental
Authority alleging liability arising out of, based on or resulting from (i) the
presence, use or release into the environment of any Hazardous Materials on or
from the Mortgaged Property or (ii) any violation, or alleged violation, of any
Environmental Law as a result of the use, operation or ownership of the
Mortgaged Property.
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<PAGE>
"Environmental Law" means all federal, state or local laws,
statutes, ordinances or regulations pertaining to the environmental conditions
on, under or about, or the release of Hazardous Materials onto, the Mortgaged
Property.
"Event of Default" means any of the events specified in Section
6.01.
"Exit Fee" means the fee payable pursuant to Section 2.07(a),
equal to 0.75% of that portion of the Principal Amount repaid, whether at
maturity or otherwise, from a source other than Collections.
"GAAP" means generally accepted accounting principles in the
United States in effect from time to time, provided that any financial statement
prepared in accordance with GAAP shall be based on accounting principles
consistently applied during the period covered by such financial statement.
"Governmental Authority" means any domestic or foreign
government, including any federal, state, or local government and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Materials" means any substance that is or becomes
regulated by, or that may form the basis of liability under, any Environmental
Law, including, in whatever form, any oil, petroleum, chemicals, asbestos,
polychlorinated biphenyls, flammable, explosive or radioactive materials or any
"Hazardous Waste", "Hazardous Material", "Toxic Substance" or "Hazardous
Substance" as those or similar terms are used in any Environmental Law.
"include", "includes", "included" and "including" mean include,
includes, included and including, in each case without limitation by reason of
enumeration.
"Initial Certification" has the meaning specified in the
Custodial Agreement.
"Interest Period" means each period during which interest at the
LIBOR Interest Rate shall be applicable to the Principal Amount; provided,
however, that (1) the initial Interest Period hereunder shall be the period from
and including April 10, 1998 to but excluding the first Payment Date and (2)
each such period (other than the initial Interest Period) shall be approximately
one month, and shall be measured, in each case, from and including a Payment
Date to but excluding the next Payment Date.
"Involuntary Proceeding" means the commencement of a proceeding
or case by any party other than Lender in any court having jurisdiction, seeking
(i) relief in respect of Borrower in an involuntary case or other similar
proceeding under any federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect or (ii) the appointment of a trustee, receiver,
liquidator,
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<PAGE>
custodian or other similar official for Borrower or for any substantial part of
the property of Borrower, in each case without the consent of Borrower.
"Lender" has the meaning specified in the first paragraph of
this Agreement, and also means any other Person that becomes a Lender pursuant
to Section 7.07.
"Lender Account" has the meaning specified in Section 2.06(b).
"Lender Mortgage" has the meaning specified in Section 5.12.
"LIBOR Base Rate" means, for any LIBOR Determination Date, (1)
the rate (expressed as a percentage per annum and rounded up to the nearest
1/8th of 1%) that appears as one-month LIBOR on Telerate Page 3750 as of 11:00
a.m., New York City time, on such LIBOR Determination Date or (2) if such rate
does not appear on Telerate Page 3750 as of 11:00 a.m., New York City time, on
the applicable LIBOR Determination Date, the arithmetic mean of the offered
rates (expressed as a percentage as annum, rounded up to the nearest 1/8th of
1%) for deposits in Dollars for a period of one month that appears on the
Reuters Screen LIBO Page as of 11:00 a.m., New York City time, on such LIBOR
Determination Date, if at least two such offered rates so appear. If fewer than
two such offered rates appear on the Reuters Screen LIBO Page as of 11:00 a.m.,
New York City time, on the applicable LIBOR Determination Date, Lender will
request the principal London office of each of four major reference banks in the
London interbank market selected by Lender to provide such banks' respective
offered quotations (expressed as a percentage per annum) to prime banks in the
London interbank market for deposits in Dollars for a period of one month as of
11:00 a.m., London time, on such LIBOR Determination Date for amounts of not
less than $1,000,000. If at least two such offered quotations are so provided,
the LIBOR Base Rate will be the arithmetic mean of such quotations. If fewer
than two such quotations are so provided, Lender will request each of three
major banks in New York City selected by Lender to provide such banks'
respective rates (expressed as a percentage per annum) for loans in Dollars to
leading European banks for a period of one month as of approximately 11:00 a.m.,
New York City time, on the applicable LIBOR Determination Date for amounts of
not less than $1,000,000. If at least two such rates are so provided, the LIBOR
Base Rate will be the arithmetic means of such rates. If fewer than two such
rates are so provided, or if, for any other reason, the LIBOR Base Rate cannot
be determined for any Interest Period (or portion thereof) as provided above,
then the LIBOR Base Rate for such Interest Period (or portion thereof) shall be
deemed to be the Commercial Paper Rate, provided that if the LIBOR Base Rate can
once again be determined, as provided above, for the balance of an Interest
Period, then the LIBOR Interest Rate shall be determined based upon a LIBOR Base
Rate which assumes that the relevant "Interest Period" is the balance of the
Interest Period in question. The LIBOR Base Rate for the initial Interest Period
is 5.75% per annum.
"LIBOR Business Day" means a Business Day on which dealings in
Dollar deposits are carried out in the London interbank market and banks are
open for business in London.
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<PAGE>
"LIBOR Determination Date" means (1) with respect to the
initial Interest Period, April 8, 1998 and (2) with respect to any Interest
Period other than the initial Interest Period, the second LIBOR Business Day
prior to the Payment Date on which such Interest Period commences.
"LIBOR Interest Rate" means a rate per annum (expressed as a
percentage), as determined by Lender, equal to the sum of (1) the LIBOR Base
Rate for the applicable Interest Period, plus (2) the Relevant LIBOR Spread
(except that if Lender sells, transfers, grants or assigns all or any part of
Lender's interests hereunder, including by way of participation, to a Person
subject to the LIBOR requirements of Regulation D, "LIBOR Interest Rate" shall
mean a rate per annum (expressed as a percentage), as determined by Lender,
equal to the sum of (a) the quotient of (i) the Base Rate for the applicable
Interest Period divided by (ii) one minus the LIBOR Reserve Requirement, plus
(b) the Relevant LIBOR Spread).
"LIBOR Reserve Requirement" means, for any Interest Period in
which the LIBOR Reserve Requirement shall be applicable, the average maximum
rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period under
Regulation D by member banks of the Federal Reserve System in New York City with
deposits exceeding $1,000,000,000 against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
LIBOR Reserve Requirement shall also reflect any other reserves required to be
maintained by such member banks by reason of any regulatory change of any
Governmental Authority with respect to (1) any category of liabilities that
includes deposits by reference to which the LIBOR Base Rate is to be determined
as provided in the definition of "LIBOR Base Rate" in this Agreement or (2) any
category of extensions of credit or other assets which include loans the
interest rate in respect of which is determined on the basis of rates referred
to in such definition of "LIBOR Base Rate".
"Lien" means any mortgage, pledge, hypothecation, charge,
assignment, deposit arrangement, encumbrance, security interest, lien (statutory
or other), or preference, priority or other security or similar agreement or
preferential arrangement of any kind or nature whatsoever (including any
agreement to give or grant a lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).
"Loan" means the secured loan to be made by Lender to Borrower
hereunder on the Closing Date.
"Loan Amount" means the sum of $55,000,000.
"Loan Documents" means this Agreement, the Note, the Security
Agreement, the Partnership Interest Pledge Agreement, any Lender Mortgage and
any other agreement, instrument, document or financial statement contemplated by
or delivered pursuant to any of the foregoing.
"Loan Fees and Expenses" has the meaning specified in Section
2.06(a).
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"Management Agreement" means the Management Agreement, dated as
of March __, 1998, between Borrower and Manager, as such agreement may be
amended, supplemented or replaced from time to time.
"Manager" means Brandywine Construction & Management, Inc. as
manager under the Management Agreement, and any successor manager (or, prior to
the conveyance of the Mortgaged Property to Borrower or its designee pursuant to
the Plan of Reorganization, the Liquidating Trustee under the Liquidating Trust
Agreement).
"Manager Recognition Agreement" means the Recognition,
Subordination and Non-Petition Agreement, dated March __, 1998 between Lender
and Manager.
"Material Agreement" means any agreement, commitment or
understanding (a) that requires payment by Borrower of more than $100,000 in any
12-calendar month period and (b)(i) that is not cancelable by Borrower upon
thirty (30) days' or less notice without liability for further payment and/or
(ii) that is not assignable without consent of the other party thereto.
"Material Adverse Effect" means, in the reasonable judgment of
Lender, a material adverse effect: (i) on the business, properties, assets,
condition (financial or otherwise) or operations of Borrower since the Closing
Date; (ii) on Borrower's ability to perform its obligations under this
Agreement; or (iii) on the enforceability or priority of Lender's security
interest in the Collateral.
"Maturity Date" means July 1, 1999 (or, if such day is not a
Business Day, the immediately succeeding Business Day).
"Mortgage Loan" means the loan, in the aggregate original
principal amount of $80,000,000, evidenced and secured by the Underlying Loan
Documents.
"Mortgaged Property" means the real property that constitutes
security for the Mortgage Loan.
"Net Cash Flow" means, with respect to any Payment Date,
Collections minus Administration Expenses plus Earned Income, in each case
received or paid prior to such Payment Date.
"Note" means the promissory note of Borrower referred to in
Section 2.02 (a form of which is attached hereto as Exhibit A), as such note may
be amended, supplemented or replaced from time to time.
"Obligations" means (i) all indebtedness, obligations and
liabilities of Borrower to Lender arising under, or in connection with, the Loan
Documents, whether now existing or hereafter
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arising; (ii) any and all sums paid by Lender in order to preserve the
Collateral or its security interest therein; (iii) in the event of any
proceeding for the collection or enforcement of any indebtedness, obligations or
liabilities of Borrower referred to in clause (i), the expenses of taking or
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by Lender of its
rights with respect to the Collateral under the Loan Documents, together with
reasonable attorneys' fees and expenses and court costs; and (iv) all indemnity
obligations of Borrower to Lender pursuant to the Loan Documents.
"Operating Budget" means the operating budget for Administrative
Expenses of Borrower, and otherwise as such budget may be modified or updated
with the prior written approval of Lender, which Operating Budget shall be
consistent with the Plan of Reorganization and the Property Operating Budget.
"Origination Fee" means an amount equal to $825,000.
"Payment Date" means the 10th day of each calendar month, or if
such day is not a Business Day, the immediately succeeding Business Day,
commencing May 10, 1998.
"Permitted Liens" means (a) Liens created by the Loan Documents,
(b) Liens for taxes, assessments and governmental charges or levies either (i)
not yet due and payable or (ii) being contested by Borrower in good faith and by
appropriate proceedings and as to which reserves in an amount reasonably
designated by Lender are being maintained by Borrower and (c) Liens approved in
writing by Lender in favor of Resource Assets Investment Trust.
"Person" means any natural person, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any government or political
subdivision or any agency, department or instrumentality thereof.
"Plan" means an "employee benefit plan" as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended.
"Plan of Reorganization" means, Lender's Plan of Reorganization
for Debtor in re: The Avenue All Stars Limited Partnership, as confirmed by the
United States Bankruptcy Court for the District of Columbia on February 24, 1998
(Case No. 97-1386, Chapter 11).
"Property Operating Budget" means (i) the operating budget for
the Mortgaged Property approved by the United States Bankruptcy Court for the
District of Columbia as part of the Plan of Reorganization and (ii) any
operating budget for the Mortgaged Property proposed by Borrower and approved in
writing by Lender following Borrower's acquisition of the Mortgaged Property
pursuant to the Plan of Reorganization.
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"Principal Amount" means the principal amount of the Loan
outstanding from time to time.
"Purchase Agreement" means the Agreement for Purchase and Sale,
dated March 4, 1998, between Resource America, Inc., as purchaser, and The
Dai-Ichi Kangyo Bank, Limited, New York Branch, as seller.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be amended or supplemented from time
to time, or any similar law from time to time in effect.
"Relevant LIBOR Spread" means (i) except as provided in clause
(ii), a rate per annum equal to two and one-half percent (2.50%) until September
9, 1998, and four percent (4.0%) from September 10, 1998 through the date upon
which all Obligations have been paid in full, and (ii) for each Interest Period
(or portion thereof) during the continuance of an Event of Default, a rate per
annum equal to the Default Rate.
"Reuters Screen LIBO Page" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as may
replace that page on that service for the purpose of displaying London interbank
rates in Dollars).
"Security Agreement" means the Pledge and Security Agreement,
dated as of the date hereof, between Borrower, as pledgor, and Lender, as
secured party, as such agreement may be amended or supplemented from time to
time.
"Seller" means The Dai-Ichi Kangyo Bank, Limited, New York
Branch, in its capacity as seller of the Mortgage Loan under the Purchase
Agreement.
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated
as of the date hereof, between Resource Properties, Inc., as pledgor, and
Lender, as secured party, as such agreement may be amended, supplemented or
replaced from time to time.
"Transaction Documents" means, collectively, the Custodial
Agreement and the Management Agreement.
"UCC" means at any time the Uniform Commercial Code as in effect
in the State of New York; provided that if, by reason of mandatory provisions of
law, the validity or perfection of Lender's security interest in any item of
Collateral is governed by the UCC or any similar law as in effect in a
jurisdiction other than New York, "UCC" means the UCC or such similar as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such validity or perfection.
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"Underlying Borrower" means The Avenue All Stars Limited
Partnership and its successors and assigns as obligor under the Mortgage Loan.
"Underlying Loan Documents" means all agreements, documents or
instruments evidencing, securing, guaranteeing or otherwise relating to the
Mortgage Loan, including the "Loan Documents" listed on Exhibit B hereto.
In addition, references in this Agreement to the approval,
determination, satisfaction or opinion of Lender shall mean, except as otherwise
expressly provided, such approval, determination, satisfaction or opinion as
determined in Lender's sole discretion.
ARTICLE II
LOAN
SECTION II.1. Loan. On the terms and subject to the conditions
set forth herein, Lender agrees to make the Loan to Borrower on the Closing Date
in the principal amount equal to the Loan Amount.
SECTION II.2. The Note. The Loan shall be evidenced by a
promissory note of Borrower substantially in the form of Exhibit A, dated the
Closing Date, duly executed and delivered by Borrower, scheduled to mature on
the Maturity Date, and payable to Lender. Lender shall, and is hereby
irrevocably authorized by Borrower to, endorse Schedule A to the Note to
evidence the date and amount of each payment or prepayment of principal of the
Loan. Lender shall furnish a photocopy of such Schedule to Borrower from time to
time upon request of Borrower and shall correct any error in such Schedule after
submission of evidence reasonably satisfactory to Lender of such error. The
outstanding principal amount of the Loan shown on Schedule A to the Note shall
be presumptive evidence as of any date of determination of the Principal Amount
owing to Lender with respect to the Loan.
SECTION II.3. Interest on Loan. Interest on the Loan shall
accrue from the Closing Date on the unpaid Principal Amount until such amount
shall become due and payable (whether at the stated maturity of the Note, by
acceleration or otherwise) at the LIBOR Interest Rate as in effect from Interest
Period to Interest Period. Interest for any period shall be calculated on the
basis of the actual number of days elapsed and a 360-day year and shall be
payable as provided herein and in the Note. Notwithstanding anything herein to
the contrary, the interest on the Loan shall not exceed the maximum amount
permitted by applicable law and, to the extent that any payments in excess of
such permitted amount are received by Lender, such excess shall be considered
payments in respect of the Principal Amount.
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SECTION II.4. Capital Adequacy; Increased Costs; Illegality. If
Lender shall determine that the adoption of any law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Lender (or its lending office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on Lender's capital as a
consequence of its obligations hereunder or credit extended by it hereunder to a
level below that which Lender would have achieved but for such adoption, change
or compliance by an amount deemed by Lender to be material, then from time to
time as specified by Lender, Borrower shall pay promptly such additional amount
or amounts as will compensate Lender for such reduction as it accrues.
SECTION II.5. Security. The Loan shall be secured by
first-priority Liens on all tangible and intangible property of Borrower,
whether now owned by Borrower or hereafter acquired, as provided herein and in
the Security Agreement.
SECTION II.6. Payments from Net Cash Flow. (1) On each Payment
Date, all Net Cash Flow deposited into the Borrower Collection Account on or
after the preceding Payment Date shall be applied, subject to Section 4.03 of
the Security Agreement, to pay the following in full in the following order of
priority:
first, to the interest accrued on the Loan during the
Interest Period ending on the day preceding such Payment Date
("Current Interest");
second, to pay interest, if any, accrued and unpaid
on the Loan during any Interest Period preceding the Interest
Period ending on the day preceding such Payment Date
("Delinquent Interest");
third, to pay any fees, expenses and penalties then
payable to Lender under the Loan Documents, including, without
limitation, under Sections 5.08, 5.12, 7.03 and 7.11 hereof and
under Sections 3.03, 3.05, 4.06, 4.07(b), 5.13 and 5.14 of the
Security Agreement (collectively, "Loan Fees and Expenses").
fourth, (x) for the period to but excluding April 10,
1998, 100% of the remaining Net Cash Flow shall be paid to
Borrower, (y) for Payment Dates in May and June of 1998 and no
Event of Default has occurred and is continuing, 50% of the
remaining Net Cash Flow shall be applied to the Principal
Amount and 50% of the remaining Net Cash shall be paid to
Borrower, and (z) for all Payment Dates after the Payment Date
in June, 1998 or an Event of Default has occurred and
continuing, all
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of the remaining Net Cash Flow shall be applied to the Principal
Amount until paid in full and then paid to Borrower.
(2) Borrower represents that pursuant to the Management
Agreement, Manager has established a deposit account in the name of Borrower
(the "Borrower Collection Account"), into which account Manager is required to
deposit all Collections received by Manager. Borrower shall not, without the
approval of Lender, change the depository institution at which is established
the Borrower Collection Account, the Borrower's working capital account (the
"Borrower Working Capital Account") or any other bank account in the name or
under the control of Borrower (each such account, the Borrower Collection
Account and the Borrower Working Capital Account, each a "Borrower Account"). If
an Event of Default shall have occurred and be continuing, (i) Borrower shall,
promptly upon request by Lender, cause Manager immediately to remit all amounts
then on deposit in the Borrower Collection Account to an account designated by
and under the sole dominion and control of Lender or its designee (a "Lender
Account") and cause each other depository institution at which a Borrower
Account is established to remit all amounts then on deposit in such account to a
Lender Account and (ii) Lender shall immediately be entitled to transfer or
cause to be transferred to a Lender Account any and all amounts on deposit in
each Borrower Account. The Management Agreement shall contain an acknowledgment
by the Manager that Lender can itself direct Manager to remit amounts to a
Lender Account.
(3) Borrower shall cause Manager to remit to Lender on each
Payment Date all Net Cash Flow for such Payment Date, net of the amounts (the
"Borrower Amounts") payable to Borrower pursuant to priority fourth (if
applicable) of Section 2.06(a). Borrower shall not authorize Manager to make any
remittances from the Borrower Collection Account other than (i) payments to
Lender as required by the preceding sentence, and (ii) payments of Borrower
Amounts on the related Payment Dates to or as instructed by Borrower, (iii)
subject to the Operating Budget, payments of amounts representing Administrative
Expenses, which amounts shall be remitted by Manager to the Borrower Working
Capital Account and used by Manager to pay such Administrative Expenses. A copy
of each set of instructions delivered by Borrower to Manager for any such
payment purpose shall be delivered by Borrower to Lender simultaneously with
Borrower's delivery of such instructions to Manager.
SECTION II.7. Optional Prepayments; Break Funding. (1) Borrower
may prepay the Principal Amount in whole or in part on the last day of any
Interest Period, upon not less than ten (10) days' irrevocable prior notice to
Lender. Each optional prepayment pursuant to this Section shall be accompanied
by the payment of interest accrued to the date of such prepayment on the
Principal Amount, plus, if such prepayment is from a source other than
Collections, the Exit Fee. If the initial Lender or an Affiliate thereof is the
source of the funds from a permanent financing used to make such prepayment, the
Exit Fee shall not be payable. Any amounts prepaid may not be reborrowed.
(2) Borrower shall reimburse Lender on demand for any loss
incurred or to be incurred by Lender in the reemployment of the funds released
by any optional prepayment of Principal Amount if such prepayment occurs (i)
other than on the last day of an Interest Period or (ii) on less
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than ten (10) days' irrevocable prior notice to Lender. Such loss shall be the
difference, as reasonably determined by Lender, between the amount that would
have been realized by Lender for the remainder of such Interest Period based on
the LIBOR Base Rate applicable for such Interest Period and any lesser amount
that would be realized by Lender in reemploying the funds received in optional
prepayment by making a loan of the same type (but utilizing the then-applicable
LIBOR Base Rate) in the principal amount optionally prepaid during the period
from the date of such prepayment to the last day of the then-applicable Interest
Period.
SECTION II.8. Place and Time of Payment. Borrower shall make
(or cause to be made) each payment it is required to make (or cause to be made)
hereunder in Dollars, as provided in Sections 2.06, 2.07 or otherwise, not later
than 12:00 noon, New York City time, on the date due, by transfer of immediately
available funds to the following account: Merrill Lynch MCI-Firm, account number
00-813-108, at Bankers Trust, New York, New York, ABA number 021-00-1033,
reference Evening Star (attention: Carol Han) (or to such other account and in
such location as Lender may direct Borrower in writing at least two Business
Days prior to the applicable payment date). Payments received on such date after
such time shall be deemed to have been received on the next succeeding Business
Day.
ARTICLE III
CONDITIONS TO LOAN
SECTION III.1. Conditions Precedent to Loan. Lender's
obligations to make the Loan on the Closing Date shall be subject to the
fulfillment (or waiver in writing by Lender) of the following conditions
precedent:
(1) Borrower shall have delivered to Lender this Agreement,
which shall be duly executed by Borrower.
(2) The Note in form and substance reasonably satisfactory to
Lender, shall each have been duly executed and delivered by Borrower to
Lender.
(3) The Security Agreement and the Stock Pledge Agreement, in
each form and substance satisfactory to Lender, shall have been duly
executed and delivered by Borrower and Resource Properties Inc.,
respectively, to Lender.
(4) The Custodial Agreement, in form and substance satisfactory
to Lender, shall have been duly executed and delivered to Lender by
Custodian and Borrower shall have paid all fees and expenses of
Custodian in connection therewith.
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(5) Lender shall have received from Custodian the Initial
Certification in form and substance satisfactory to Lender.
(6) Agents Recognition Agreement and Manager Recognition
Agreement.
(7) Lender shall have received a true, correct and complete
copy of the Purchase Agreement.
(8) Lender shall have received a copy of the Management
Agreement, together with an acknowledgment executed by Manager, in form
and substance reasonably satisfactory to Lender, with respect to the
nature and priority of amounts payable to the Manager thereunder, with
respect to the institution of an Involuntary Proceeding as to Borrower
and with respect to the matters referred to in Section 2.07(b) and (c).
(9) Lender shall have received from Borrower evidence in form
and substance satisfactory to Lender that the conditions set forth in
the Plan of Reorganization have been satisfied, including, without
limitation, (i) delivery of the Lists by Borrower to the Disbursing
Agent to Section 3 of each of the Disbursing Agreement and the
Liquidating Trust Agreement and (ii) delivery by the Underlying
Borrower to the Disbursing Agent of the Conveyancing Documents pursuant
to Section 4 of each of the Disbursing Agreement and the Liquidating
Trust Agreement.
(10) Lender shall have received copies, certified to be true and
correct by the President of Borrower, (i) of all documents (including
the Certificate of Incorporation and a good standing certificate (dated
the most recent practicable date prior to the Closing Date) from the
Secretary of State of the State of Delaware) evidencing the formation,
organization, valid existence and good standing of Borrower, (ii) a
copy of the Bylaws and (iii) of all documents evidencing the due
authorization by Borrower of the execution, delivery, and performance
by Borrower of the Loan Documents.
(11) Endorsement of the existing Title Policy as of the
Closing Date and endorsement of the Collateral Assignment of Deed of
Trust in favor of Lender.
(12) Borrower shall have executed and delivered financing
statements on form UCC-1 satisfactory to Lender, and Borrower shall
have taken any such other action as Lender shall have reasonably
requested in order to perfect the security interests created pursuant
to the Loan Documents.
(13) Lender shall have received any letters of credit or other
cash and non-cash collateral held by Borrower as security for the
performance of any of the obligations of the Underlying Borrower.
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(14) No Default or Event of Default shall have occurred and be
continuing on the Closing Date.
(15) Each representation and warranty of Borrower in the Loan
Documents shall be true and correct in all material respects on and as
of the Closing Date.
(16) Since its formation, there shall not have occurred any
material adverse change in the business, financial condition or results
of operations of Borrower, or any event, condition or state of facts
that would reasonably be expected to affect materially and adversely
the business, financial condition or results of operations of Borrower.
(17) Lender shall have received a Certificate of Borrower, dated
the Closing Date, stating that, to the knowledge of the President of
Borrower signing such Certificate, after due inquiry, the statements
set forth in clauses (n), (o) and (p) above are true and correct on and
as of the Closing Date and Borrower has satisfied all conditions set
forth in this Section 3.01 other than those waived in writing by
Lender.
(18) No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed, before
any court, governmental agency or legislative body to enjoin, restrain
or prohibit, or to obtain damages in respect of, or which is related to
or arises out of this Agreement or the consummation of the transactions
contemplated hereby or which in Lender's judgment would make it
inadvisable to consummate the transactions contemplated by this
Agreement or any of the other Loan Documents.
(19) Lender shall have received opinions from Ledgewood Law
Firm, P.C., counsel to Borrower, in form and substance satisfactory to
Lender, addressing enforceability of the Loan Documents, creation and
perfection of security interests and such other matters as Lender may
request.
(20) Lender shall have received the Origination Fee and
interest payable on the Loan for the period from and including the
Closing Date to and including April 9, 1998, which, unless otherwise
directed by Borrower in writing at least two Business Days prior to the
Closing Date, shall be withheld by Lender from the proceeds of the
Loan.
(21) Borrower shall have paid all reasonable costs and expenses,
including Lender's due diligence expenses and the legal fees and
expenses of counsel to Lender, incurred by Lender in connection with
this Agreement through the Closing Date, which, unless otherwise
directed by Borrower in writing at least two Business Days prior to the
Closing Date, shall be withheld by Lender from the proceeds of the
Loan.
(22) Lender shall have received evidence satisfactory to it that
the balance of the Purchase Price for the Mortgage Loan shall have been
remitted to the Seller and that the proceeds of the Loan shall be used
by Borrower only to acquire the Mortgage Loan and to pay
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closing costs relating to the Loan and the Plan of Reorganization,
including the Origination Fee; and no Debt of Borrower shall be
outstanding other than the Obligations, and the duties and obligations
of Borrower under the Transaction Documents.
(23) Lender shall have received copies of the results of current
UCC searches conducted in appropriate jurisdictions with respect to
Borrower and the Collateral.
(24) Lender shall have received evidence that the insurance
policies required to be maintained pursuant to the Plan of
Reorganization with respect to the Mortgaged Property are in full force
and effect, together with either (x) appropriate evidence showing loss
payable clauses in favor of Lender.
(25) Lender shall have received copies of all surveys in respect
of the Mortgaged Property, if any, that are in the possession of
Borrower.
(26) Lender shall have received such evidence as shall be
reasonably required by Lender in order to determine the extent to which
the Mortgaged Property and the usage thereof comply with all applicable
zoning, building, health, traffic, environmental, safety and other
laws, regulations and rules applicable thereto, and with other fire,
safety and health standards.
(27) Lender shall have received copies of all engineering
reports or architect's certificates in respect of the Mortgaged
Property, if any, that are in the possession of Borrower.
(28) Lender shall have received copies of all environmental
assessment reports in respect of the Mortgaged Property that are in the
possession of Borrower.
(29) Lender shall have received copies of all certificates of
occupancy, building permits and other licenses, certificates, approvals
or consents required of any Governmental Authority that relate to the
Mortgaged Property and that are in the possession of Borrower.
(30) Lender shall have received copies of such title searches,
violation searches, lien searches and similar documents that are in the
possession of Borrower and that relate to the Underlying Borrower or
the Mortgaged Property.
(31) Lender shall have received from Borrower such other
documents, opinion letters, approvals and certificates as Lender may
reasonably request.
(32) Lender shall have received an acknowledgment from the
depository institution at which the Borrower Accounts are established
that Lender has a security interest in such Borrower Accounts and
following an Event of Default Lender has the authority to transfer all
amounts then on
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deposit in such accounts to another depository institution designated
by and for the sole benefit of Lender.
All documents delivered pursuant to this Section 3.01 shall be
in form and substance satisfactory to Lender in all material respects and all
legal matters in connection with the Loan shall be customary and proper and
shall be reasonably satisfactory in form and substance to Lender.
ARTICLE IV
WARRANTIES AND REPRESENTATIONS
SECTION IV.1. Warranties and Representations of Borrower.
Borrower warrants and represents that:
(1) Good Standing; Qualification to do Business. Borrower is a
corporation duly formed, validly existing and in good standing under
the laws of the State of Delaware, and is qualified or licensed to do
business in all other jurisdictions the laws of which require Borrower
to be so qualified or licensed, except for such jurisdictions wherein
the failure of Borrower to be so qualified will not, individually or in
the aggregate, have a Material Adverse Effect.
(2) Enforceability of Loan Documents. Each Loan Document, upon
execution and delivery by Borrower and Lender, shall constitute
(assuming due authorization, execution and delivery by Lender and that
Lender has full power, authority and legal right to enter into and
perform its respective obligations thereunder) a legal, valid and
binding obligation of Borrower enforceable against Borrower in
accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and subject (as
to enforceability) to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(3) Enforceability of Transaction Documents. The Transaction
Documents are in full force and effect and constitute legal, valid and
binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject (as to enforceability) to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(4) Power; Due Authorization. Borrower has the power under its
organizational documents, and is duly authorized, to execute and
deliver, and to perform its obligations under, each of the Loan
Documents.
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(5) No Conflict. Neither the execution and delivery of any
Loan Document nor the performance by Borrower of its obligations
thereunder will, by the lapse of time, the giving of notice or
otherwise, constitute a violation of any applicable law or a breach of
any provision contained in the Certificate of Incorporation, the Bylaws
or any agreement, instrument or document to which Borrower is now a
party or by which it is bound, and will not give rise to any default
under, or to any acceleration of or right to accelerate the maturity of
any obligation set forth in, any such agreement, instrument or
document.
(6) No Material Litigation. There are no actions, suits,
proceedings or claims pending or, to the knowledge of Borrower,
threatened against Borrower which may have, individually or in the
aggregate, a Material Adverse Effect.
(7) No Violation. Borrower is not in violation of any
applicable statute, regulation or ordinance of any Governmental
Authority applicable to it or its properties, which violation may have
a Material Adverse Effect.
(8) Use of Proceeds. The proceeds of the Loan will be used
solely for the purposes specified in Section 3.01(v). None of the Loan
proceeds will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U, Regulation X, Regulation G
or Regulation T of the Board of Governors of the Federal Reserve
System, or for the purpose of reducing or retiring any Debt which was
originally incurred to purchase or carry "margin stock" or for any
other purpose which might constitute this transaction a "purpose
credit" within the meaning of Regulation U, Regulation X or Regulation
G. As of the Closing Date, Borrower does not own any "margin stock".
(9) No Liens. Borrower has good and marketable title to the
Collateral, and to all of its properties and assets, free and clear of
all Liens other than Permitted Liens.
(10) Indebtedness. Borrower has no Debt (including guaranty,
reimbursement or other contingent obligations) except for the Loan and
its obligations under the Transaction Documents.
(11) Material Agreements. Borrower is not a party to any
Material Agreements other than the Loan Documents and the Transaction
Documents, except as otherwise agreed to in advance in writing by
Lender.
(12) Investment Company. Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940.
(13) Material Facts. There is no fact or circumstance known to
Borrower or General Partner that might materially and adversely affect
the ability of Borrower to perform its
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obligations under this Agreement and that Borrower has failed to
disclose to Lender in writing.
(14) ERISA. Borrower does not maintain or contribute to any
Plan or has any withdrawal liability in connection with a Plan.
(15) Taxes and Assessments. All federal, state, local and
foreign tax returns, reports and statements required to be filed by
Borrower have been filed with the appropriate Governmental Authority,
and all taxes and other impositions shown thereon to be due and payable
have been paid prior to the date on which any fine, penalty, interest
or late charge may be added thereto for nonpayment thereof, or any such
fine, penalty, interest or late charge has been paid. Borrower has paid
when due and payable all taxes required to be paid by it. Borrower does
not have any obligation under any tax sharing agreement.
(16) Environmental Compliance. Borrower has no knowledge of
any Environmental Claim or of the presence, release or discharge of any
Hazardous Materials located on the Mortgaged Property.
(17) Existence of Defaults. Borrower is not in default under
or with respect to any contract, agreement, lease or other instrument
to which Borrower is a party. No Default or Event of Default has
occurred.
(18) Condemnation. There is no pending or, to Borrower's
knowledge, threatened condemnation or similar proceeding affecting the
Mortgaged Property or any part thereof, and Borrower has not received
notice of any such proceeding.
(19) Casualty; Property Condition. To Borrower's knowledge,
the Mortgaged Property has not suffered any material damage by fire or
other casualty loss that has not heretofore been completely repaired
and restored to its original condition, and Borrower has not received
notice of any such material damage or loss.
(20) Mortgaged Property Compliance. To Borrower's knowledge,
the Mortgaged Property is in compliance with all applicable
subdivision, platting, building, land use, safety, traffic, fire and
zoning laws and requirements, and Borrower has not received notice that
the Mortgaged Property is not in such compliance.
(21) Delinquent Taxes, etc. To Borrower's knowledge, there are
no delinquent taxes, ground rents, water charges, sewer rents,
assessments (including assessments payable in future installments),
insurance premiums, leasehold payments, or other outstanding charges
affecting the Mortgaged Property, and Borrower has not received notice
of any such charges.
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(22) Leases. No lease affecting the Mortgaged Property (i)
contains an option to purchase, right of first refusal to purchase or
any other similar provision or (ii) is not subordinate to the Lien of
the Mortgage Loan.
(23) Single-Purpose Entity. Borrower, at all times since its
formation, has (i) been a duly formed and existing corporation, (ii)
complied with the provisions of its organizational documentation, (iii)
observed all material legal requirements regarding its existence as a
corporation, (iv) accurately maintained its financial statements,
accounting records and other corporate documents separate from those of
any other Person, (v) maintained its own bank accounts and separate
books of account, (vi) paid its own liabilities from its own separate
assets, and (vii) identified itself in all dealings with the public,
under its own name and as a separate and distinct entity, and not as a
division or a part of any other entity. Borrower has not at any time
since its formation commingled its assets with those of any other
Person.
(24) Status of Leases. To the knowledge of Borrower, (a) all
of the obligations of Underlying Borrower and each counterparty under
each lease affecting the Mortgaged Property have been duly performed,
(b) there are no existing conditions which are or with notice or the
passage of time would constitute a default on the part of Underlying
Borrower or the counterparty under the terms of such lease, and (c) the
counterparty under such lease is not entitled to any credits,
reductions, offsets, defenses concessions or abatements of rent.
(25) Plan of Reorganization Compliance. Borrower is in
compliance with all applicable terms and conditions of the Plan of
Reorganization and, to Borrower's knowledge, the Underlying Borrower is
in compliance with all applicable terms and conditions of the Plan of
Reorganization.
ARTICLE V
COVENANTS
For so long as the Note shall remain unpaid, or any other
amount is owing by Borrower to Lender hereunder or under any other Loan
Document, Borrower shall:
SECTION V.1. Maintenance of Existence. Preserve and maintain
its legal existence, rights, franchises and authority and, if applicable,
qualify and remain qualified in each jurisdiction in which such qualification is
required, except to the extent that failure to so qualify will not result in a
Material Adverse Effect.
SECTION V.2. Maintenance of Records. Keep complete, accurate
and separate records and books of account, in which complete entries will be
made in accordance with GAAP, reflecting all of its financial transactions.
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SECTION V.3. Maintenance of Insurance. (a) At all times (1)
maintain and keep in force insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated and (2) require the Underlying Borrower to maintain in full
force and effect all insurance required by the Underlying Loan Documents or, if
the Underlying Loan Documents permit Borrower to specify the insurance that the
Underlying Borrower must maintain, at least such insurance as is required by
prudent commercial mortgage lenders loaning against security comparable to the
Mortgaged Property or that Lender may specify in its reasonable discretion.
(b) All insurance maintained in respect of the Mortgaged
Property shall incorporate Borrower and Lender as their interests may appear and
shall name Lender as an additional insured and loss payee, and shall provide
that no cancellation or expiration thereof shall be effective without thirty
(30) days' prior written notice of cancellation of such policy to Lender.
SECTION V.4. Compliance with Laws; Payment of Taxes. Comply in
all respects with all laws, rules, regulations and orders of each Governmental
Authority applicable to it, such compliance to include paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property, provided that Borrower may contest any such tax,
assessment or governmental charge in good faith and by appropriate proceedings.
SECTION V.5. Right of Inspection. At any reasonable time and
from time to time upon reasonable notice, (1) permit Lender or any agent or
representative thereof to examine and make copies and abstracts from the records
and books of account of Borrower and to discuss the affairs, finances and
accounts of Borrower with its officers, directors and internal accountants and
with its independent accountants (if any), and (2) otherwise provide Lender or
such agent or representative with any information possessed by Borrower relating
to the Mortgage Loan or the Mortgaged Property and requested by Lender.
SECTION V.6. Compliance with Transaction Documents. Comply in
all respects with all of the terms and conditions of, and not waive compliance
by any other party with any provision of, the Transaction Documents.
SECTION V.7. Payment of Costs. Pay all costs and expenses
required to be paid by it under the Transaction Documents, including the fees of
Custodian and Manager.
SECTION V.8. Payment of Lender's Expenses. Pay to Lender (a)
all reasonable costs and expenses, including reasonable fees and expenses of
counsel and other advisors to Lender, incurred by or on behalf of Lender,
without duplication in connection with (1) the perfection of Lender's security
interest in the Collateral, and (2) the administration of the Loan prior to the
occurrence or continuation of an Event of Default and (b) all costs and
expenses, including fees and expenses of counsel and other advisors to Lender,
incurred by or on behalf of Lender, without duplication, in connection with (1)
the protection of Lender's security interest in the Collateral, (2)
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the negotiation, preparation, execution and delivery of any amendment, waiver or
consent relating to any of the Loan Documents, (3) any litigation, contest,
dispute or proceeding (whether instituted by Borrower, Lender or any other
Person) in any way relating to the Collateral or any of the Loan Documents,
(4) any attempt to verify, protect, collect, sell or otherwise dispose of any
Collateral following an Event of Default, and (5) the preservation of rights
under and enforcement of the Loan Documents and the documents and instruments
referred to therein. All such costs and expenses shall be payable upon demand
and shall be additional Obligations.
SECTION V.9. Special Purpose Entity; Other Limitations. Not:
(1) engage in any business other than the acquisition, ownership, management and
liquidation of the Mortgage Loan and/or the Mortgaged Property as contemplated
by the Bylaws, the Transaction Documents and the Loan Documents, (2) commingle
its assets with the assets of any other Person or fail to hold itself out to the
public as a legal entity separate and distinct from any other Person, (3) merge
into or consolidate with any Person or transfer all or substantially all of its
assets to any Person (provided that, subject to Section 5.15, Borrower may sell
all or substantially all of its assets if the cash proceeds of such sale are
sufficient to, and are actually applied to, pay in full all amounts due on or in
respect of the Loan and all other Obligations under the Loan Documents), (4)
incur, directly or indirectly, any Debt whatsoever other than under the Loan
Documents and the Transaction Documents, (5) voluntarily dissolve, terminate or
liquidate in whole or in part, (6) amend its Certificate of Incorporation or any
Transaction Document or fail to comply with or waive compliance with any
provision thereof, (7) amend, or waive compliance with, any material provision
of, the Bylaws or any Transaction Document, (8) admit any new partners (other
than Affiliates of partners existing upon consummation of the transactions
contemplated by the Loan Documents), (9) grant or permit to exist any Lien on
any of its assets other than Permitted Liens or other Liens in favor of Lender,
(10) enter into any Material Agreement, (11) acquire any asset without Lender's
prior written approval or acquire any "margin security" as defined by any
regulation of the Federal Reserve Board, or (12) establish any subsidiaries.
SECTION V.10. Reporting and Miscellaneous Document
Requirements. Furnish to Lender:
(1) Financial Statements. Not later than five (5) Business
Days following the completion thereof, any reports and/or financial
statements prepared for delivery to the shareholders, or any of them,
of Borrower, together with such supporting documents, exhibits,
invoices and calculations of distributions as are necessary in Lender's
reasonable judgment for the administration of the Loan. No later than
fifteen (15) days following the end of each month, Borrower shall
deliver or cause to be delivered to Lender (i) an income and expense
statement showing the results of operations and distributions for the
preceding month and the fiscal year to date, and (ii) a comparison of
actual income and expenses to the income and expenses projected in the
Property Operating Budget (which may consist of the equivalent report
delivered by Manager to Borrower pursuant to Section 3(i) of the
Management Agreement).
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(2) Certificate of No Default. Within forty-five (45) days
after the end of each of the first three quarters of each fiscal year
and within ninety (90) days after the end of each fiscal year
(commencing, in the latter case, with the fiscal year ending September
30, 1998), a certificate of the President of the Borrower stating that,
to the best of his or her knowledge, no Default or Event of Default has
occurred and is continuing, or if a Default or Event of Default has
occurred and is continuing, specifying the nature thereof and the
action that is proposed to be taken with respect thereto.
(3) Notice of Litigation. Promptly following the commencement
thereof, notice of any and all actions, suits and proceedings before
any court, arbitrator or administrative body affecting Borrower or all
or any part of the Collateral which, if determined adversely to
Borrower, could result in a Material Adverse Effect.
(4) Negotiations with Prospective Purchasers, etc. From time
to time, as such developments occur or as reasonably requested by
Lender, reports, in reasonable detail, of the nature and status of any
material negotiations between Borrower, any tenants of the Mortgaged
Property, any prospective purchasers of the Mortgaged Property and the
holder or holders of any other Liens or interests in the Mortgaged
Property, or any combination of any such Persons, with respect to the
Mortgage Loan, the Mortgaged Property or any lease, lien or interest of
or in the Mortgaged Property.
(5) Notice of Defaults and Events of Default. As soon as
possible and in any event within two (2) Business Days after Borrower
becomes aware of the occurrence of a Default, Event of Default or event
or circumstance that can reasonably be expected to result in a Material
Adverse Effect, a written notice setting forth the details of such
Default, Event of Default or event or circumstance and the action that
is proposed to be taken with respect thereto.
(6) Notice of Corporate Events. Promptly, and in any case
prior to the effective date of any of the following, a written notice
setting forth the details of any capital call, any proposed amendment
of the Bylaws, the proposed transfer of all or any portion of any
interest in Borrower or the occurrence of any event or other
circumstance that has resulted or would result in a transfer of any of
the interests in Borrower or withdrawal from Borrower of a shareholder
or any proposed liquidation or dissolution of Borrower.
(7) Budgets. A copy of each proposed modification or amendment
of the Operating Budget or the Property Operating Budget. In addition,
Borrower shall submit to Lender for Lender's approval its proposed
Property Operating Budget for the calendar year 1999 on or before
December 1, 1998.
(8) Mortgage Loan Correspondence. No more than five (5)
Business Days following its receipt or delivery thereof, a copy of each
written notice, statement, request, consent or
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other written transmittal delivered by or on behalf of Borrower to the
Underlying Borrower or received by Borrower from the Underlying
Borrower.
(9) New Places of Business. Not later than thirty (30) days
after any change of Borrower's principal place of business, written
notice thereof and financing statements, if required by applicable law,
to perfect or continue the perfection of Lender's Liens in the
Collateral.
(10) Environmental Notices. Not later than two (2) Business
Days after becoming aware thereof, written notice, in reasonable
detail, of: (a) any proceeding, investigation or inquiry commenced or
threatened, or any Environmental Claim asserted, by any Governmental
Authority with respect to any Hazardous Materials on, in, under or
emanating from the Mortgaged Property; and (b) any occurrence or
condition on the Mortgaged Property or on any real property adjoining
the Mortgaged Property that Borrower, consistent with prudent
commercial loan servicing standards, then believes is likely to lead to
an Environmental Claim against the Underlying Borrower, Borrower or
Lender and that might involve remediation cost or liability in excess
of $100,000.
(11) Casualty; Condemnation. Not later than two (2) Business
Days after becoming aware thereof, written notice of (a) any uninsured
or partially uninsured material loss of the Mortgaged Property or any
material portion thereof, (b) any termination or cancellation of any
insurance policy that the Underlying Borrower or Borrower is required
to maintain, or (c) the commencement of, or the threatened commencement
of, any proceeding for the expropriation of the Mortgaged Property or
any material portion thereof.
(12) General Information. Promptly, such other information
respecting the business, condition (financial or otherwise), results of
operations or properties of Borrower as Lender may from time to time
reasonably request.
SECTION V.11. Management of Mortgaged Property. (1) Borrower
shall cause Manager promptly to deliver to Lender, or Borrower shall deliver to
Lender promptly following Borrower's preparation or receipt thereof, a copy of
any and all Property Operating Budgets for Lender review and approval, and all
reports, notices, statements, copies of correspondence and other materials
delivered or required to be delivered to Borrower or any partner of Borrower by
Manager; provided that Borrower, at a minimum, shall cause Manager to deliver to
Lender, or Borrower shall deliver to Lender the reports and information
described on Exhibit C hereto. In addition, Borrower shall deliver or cause to
be delivered to Lender, promptly following Borrower's receipt thereof from
Manager, a copy of each report delivered pursuant to any of Sections 2(e) and
3(i) of the Management Agreement (or the comparable reports delivered pursuant
to any successor Management Agreement).
(2) Borrower shall not replace Manager under, amend in any
material respect or terminate, the Management Agreement without Lender's prior
written approval, or enter into
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a successor Management Agreement without Lender's prior written approval.
Borrower shall fully perform all of its obligations under the Management
Agreement and shall enforce the obligations of Manager under the Management
Agreement in all respects.
(3) Borrower agrees to manage, or cause the management of, the
Mortgage Loan and (if acquired) the Mortgaged Property in accordance with (i)
applicable law, (b) the terms of this Agreement, (c) servicing standards and
asset management standards for nonperforming commercial mortgage loans and their
related properties that are customarily employed by prudent managers servicing
comparable loans for their own account and prudent asset managers managing
comparable properties for their own account, and (d) the Business Plan and
Property Operating Budget.
SECTION V.12. Acquisition of Mortgaged Property. (1) On or
before May 30, 1998, Borrower shall take title to the Mortgaged Property in
accordance with the terms and conditions of the Plan of Reorganization prior to
taking title to the Mortgaged Property and extinguishing of the indebtedness of
the Underlying Borrower in respect of the Mortgage Loan, Borrower shall cause to
be provided to Lender a duly executed first mortgage, deed of trust, assignment
of leases and rents, security agreement and fixture filing (or similar
instrument or instruments) in favor of, and in form and substance satisfactory
to, Lender (a "Lender Mortgage"), that encumbers the Mortgaged Property, which
Lender Mortgage shall name Lender or its designee as the mortgagee thereon or
the beneficiary thereof and be in recordable form in accordance with applicable
law. In connection with granting a Lender Mortgage, Borrower shall also (1)
execute and deliver to Lender such other documents and instruments necessary to
perfect Lender's Lien as Lender may request, (2) cause to be delivered to Lender
a mortgagee title insurance policy issued by a title insurance company
acceptable to Lender and insuring Lender Mortgage as a first-priority Lien on
the Mortgaged Property and (3) take such other actions in connection with the
execution and delivery of the Lender's Mortgage as Lender shall reasonably
request. All costs and expenses in connection with the preparation, execution,
delivery and filing or recording of any Lender Mortgage and related
documentation, all title insurance premiums and any filing or recording tax or
other charges with respect thereto shall be paid by Borrower.
(2) Borrower shall not acquire the Mortgaged Property (whether
by foreclosure, deed in lieu of foreclosure or otherwise) without the prior
written consent of Lender. In connection with any such proposed acquisition,
Borrower shall, at its expense, furnish to Lender such environmental
assessments, appraisals or other documents with respect to the Mortgaged
Property as Lender shall reasonably request.
SECTION V.13. Fictitious Name, etc. Borrower shall not use any
fictitious name or "d/b/a" unless, not later than thirty (30) days after its has
commenced using such fictitious name or "d/b/a", Borrower shall file any
financing statement necessary to continue the perfection of Lender's security
interest in the Collateral.
SECTION V.14. Transfers of Shareholder Interests. Without the
prior written consent of Lender, Borrower shall not permit any shareholder of
Borrower to transfer or pledge,
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whether directly or indirectly, by operation of law or otherwise, any of the
shareholder interests in Borrower or permit any change in its ownership except
with respect to transfers among such shareholders.
SECTION V.15. Notice of Sale. Borrower shall not sell the
Collateral or any material portion thereof unless Borrower shall have provided
Lender with ten (10) days' prior written notice of such proposed sale and the
terms and conditions thereof.
SECTION V.16. Major Decisions. Without the prior written
consent of Lender, Borrower shall not (1) commence any proceeding against the
Underlying Borrower, any guarantor of the Mortgage Loan or otherwise with
respect to the Mortgage Loan, or the Mortgaged Property, or exercising any other
remedies under the Underlying Loan Documents or otherwise with respect to the
Mortgage Loan; (2) amend, extend, renew or otherwise modify the Mortgage Loan or
any Underlying Loan Document or grant (by action or inaction) any consent,
waiver, or indulgence thereunder, or enter into any other agreement or grant any
other consent (oral or written ) the effect of which would be to (A) permit any
lease of space at the Mortgaged Property or permit or effect any amendment,
modification, assignment, subletting, termination, non-disturbance, termination
or surrender of or with respect to any such lease (provided that Borrower may
permit the leasing or related actions in a manner expressly permitted by the
Underlying Loan Documents), (B) permit any application of funds, including
without limitation condemnation and insurance proceeds and funds to be paid by
the Underlying Borrower under the Underlying Loan Documents, or deposited into
or withdrawn from any accounts maintained pursuant to the Underlying Loan
Documents, (C) change the nature of any party's obligations under or with
respect to the Underlying Loan Documents or (D) permit the transfer or
encumbrance of the Mortgaged Property or any portion thereof; (3) enter into any
agreement with any other holders of Liens or claims with respect to the
Mortgaged Property which subordinates or impairs the Lien priority of the
Underlying Loan Documents; (4) enter into any agreement or settlement, or give
any consent, with respect to the condemnation of all or any material portion of
the Mortgaged Property; (5) following the Closing Date (i) amend the existing
Plan of Reorganization or (ii) offer, propose or vote to approve any
reorganization plan or interim cash collateral agreement, or any other agreement
relating to creditors' rights, or participate in any manner in any action or
proceeding under applicable insolvency law with respect to Underlying Borrower
or the Mortgaged Property; or (6) offer, propose or vote to approve or direct
the Disbursing Agent or the Liquidating Agent with respect to any action or
matter in connection with the Disbursing Agreement or the Liquidating Trust
Agreement, including, without limitation, any payments or disbursements other
than pursuant to the Property Operating Budget.
SECTION V.17. Further Assurances. Borrower shall promptly (1)
cure any defects in the execution and delivery by it of the Loan Documents, and
(2) execute and deliver, or cause to be executed and delivered, all such other
documents, agreements and instruments as Lender may reasonably request to
further evidence and more fully describe the Collateral, to correct any
omissions in the Loan Documents, to better and more effectively carry out the
intents and purposes of any Loan Document, to perfect, protect or preserve any
Liens created under any of the Loan Documents, or to
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make any recordings, file any notices, or obtain any consents as may be
necessary or desirable in connection therewith.
SECTION V.18. Property Operating Budget. Lender shall have
received from Borrower a draft Property Operating Budget for the period [May 1,]
1998 to December 31, 1998 prepared by Borrower no later than the earlier of (i)
seven (7) days from the date Borrower or its nominee takes title to the
Mortgaged Property and (ii) thirty (30) days from the Closing Date.
ARTICLE VI
EVENTS OF DEFAULT
SECTION VI.1. Events of Default. The occurrence of any one or
more of the following events shall constitute an Event of Default:
(1) Monetary Default. Borrower's default in (i) the payment of
any interest (which shall be payable in respect of each Interest
Accrual Period on the related Payment Date whether or not Net Cash Flow
is sufficient therefor) or other Obligation when due and payable or
(ii) in the payment of principal of the Loan after the same shall
become due and payable, whether at stated maturity, by declaration or
otherwise.
(2) Other Covenants; Representations and Warranties. (i)
Borrower's default in the performance of or compliance in any material
respect with any of its other obligations under any Loan Document, and
the continuation thereof for a period of thirty (30) days after
delivery to Borrower of notice thereof; or (ii) any representation or
warranty of Borrower contained herein shall be inaccurate in any
material respect when made, and such inaccuracy shall not be corrected
or cured within a period of thirty (30) days after delivery to Borrower
of notice thereof.
(3) Voluntary Petition. Borrower shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
similar relief with respect to itself or its debts or other liabilities
under any federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it under any
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall make a general assignment for the benefit
of its creditors.
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(4) Involuntary Proceeding. The entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of
Borrower in an Involuntary Proceeding or other similar proceeding under
any federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect or appointing a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and the continuance of any such decree or order in effect
and unstayed for a period of thirty (30) days.
(5) Transfer of Collateral. The sale, transfer, pledge,
hypothecation, or other transfer of an interest in, directly or
indirectly, any part of the Collateral, unless upon such sale or other
disposition all Obligations are fully paid.
(6) Judgments. Any judgment or order for the payment of money
in excess of $100,000 (excluding amounts covered by insurance) shall be
rendered against Borrower and either (i) enforcement proceedings shall
have been commenced by any creditor upon such judgment or order or (ii)
there shall be any period of ten (10) consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
(7) Loan Documents. At any time, for any reason, (i) any Loan
Document ceases to be in full force and effect or Borrower seeks to
repudiate its obligations thereunder and any Liens intended to be
created thereby are, or Borrower seeks to render such Liens, invalid
and unperfected, or (ii) (a) any one or more Liens in favor of Lender
contemplated by any of the Loan Documents shall, at any time, for any
reason, not constitute a valid and enforceable, perfected, continuing,
first-priority security interest, or shall be subordinated, in either
case, to the extent that the perfection of a security interest therein
is governed by the UCC as in effect in any applicable jurisdiction, or
(b) any one or more Liens in favor of Lender contemplated by any of the
Loan Documents shall, at any time, for any reason, in any material
respect not constitute valid and enforceable Liens of the priority
contemplated by such Loans Documents or shall be subordinated in any
material respect.
(8) Change in Constitution of Borrower. There shall occur any
violation of Section 5.14.
SECTION VI.2. Consequence of Event of Default. If an Event of
Default shall have occurred and be continuing, Lender may, by notice to
Borrower, at any time and from time to time, do any one or more of the
following:
(1) Acceleration. Declare the Principal Amount to be forthwith
due and payable, whereupon the Principal Amount, together with accrued
interest thereon and all other Obligations, shall become forthwith due
and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived, anything contained
herein or in the Note or any other Loan Document to the contrary
notwithstanding;
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(2) Legal and Equitable Remedies. Exercise whatever rights and
remedies are given to it by law or equity or by this Agreement, the
Note, the Security Agreement or any other Loan Document, whether for
specific performance of any agreement therein or in aid of the exercise
of any power granted in such document or otherwise;
(3) Additional Interest. Impose, during the continuance of an
Event of Default and in accordance with Section 2.03, an interest rate
on overdue amounts payable in respect of the Loan at the Default Rate;
and
(4) Default Administration Fee. Impose, as reimbursement and
compensation for the additional internal expenditures, administrative
expenses and other costs associated with actions to be taken in
connection with an Event of Default, and regardless of whether Lender
shall have commenced the exercise of any other remedy, the Default
Administration Fee, which shall be an additional Obligation payable
upon demand.
Notwithstanding the foregoing, if an Event of Default specified in paragraph (c)
or (d) of Section 6.01 occurs, the Principal Amount shall automatically become
immediately due and payable, together with accrued interest thereon, without any
action by Lender and without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived. No remedy is intended to be
exclusive, and each remedy shall be cumulative.
ARTICLE VII
MISCELLANEOUS
SECTION VII.1. Modification of Agreement. This agreement may
not be modified or amended except by an agreement in writing signed by Borrower
and Lender.
SECTION VII.2. No Waiver by Lender. Lender's failure, at any
time or times hereafter, to require strict performance by Borrower of any
provision of this Agreement shall not effect a waiver of or otherwise diminish
any right of Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by Lender of an Event of Default shall not
suspend, waive or affect any other Event of Default, whether the same is prior
to subsequent thereto and of the same or of a different type. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of Lender to any other or further action in any circumstances without
notice or demand. None of the undertakings, agreements, warranties, covenants
and representations of Borrower contained in this Agreement and no Event of
Default shall be deemed to have been suspended or waived by Lender, unless such
suspension or waiver is by an instrument in writing signed by an authorized
representative of Lender and directed to Borrower specifying such suspension or
waiver.
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SECTION VII.3. Non-Recourse. Anything contained herein, in the
Note or in any other Loan Document to the contrary notwithstanding, no recourse
shall be had for the payment of the principal or interest on the Note or for any
other Obligation hereunder or for any claim based hereon or thereon or otherwise
in respect hereof or thereof against Manager, any director, officer, employee or
shareholder of Borrower or any partner, director, shareholder, officer or
employee of any partner or shareholder of Borrower or Manager. Notwithstanding
the foregoing (1) nothing in this Agreement shall (a) prevent recourse to any
Collateral that is pledged by Borrower, (b) constitute a waiver, release or
discharge of any Obligation, and the same shall continue until paid or
discharged in full, or (c) be construed or be deemed to relieve or release
Borrower from personal liability for damages actually incurred by Lender (i) as
a result of the fraudulent conduct of Borrower or any of Borrower's
shareholders, directors, officers, employees or agents (collectively, the
"Borrower Parties") in connection with this Loan, including the misapplication
of any cash collected with respect to the Collateral or its disposition, (ii) if
any of the representations and warranties set forth in this Agreement, or any
other instrument, document or certificate delivered pursuant to this Agreement
or in connection with the making of the Loan shall prove to have been
intentionally false or misleading in any material respect, (iii) for any tenant
security deposits in the possession of any of the Borrower Parties and not
turned over to Lender upon foreclosure, sale pursuant to power of sale, or
conveyance by deed in lieu of foreclosure of the Mortgaged Property, (iv) for
insurance proceeds and condemnation proceeds or awards received by any of
Borrower Parties and not turned over to Lender or used by any of the Borrower
Parties for restoration or repair of the Mortgaged Property in accordance with
the terms of this Agreement, or (v) for any Collections not deposited in the
Borrower Collection Account or otherwise not applied in accordance with the
terms of this Agreement or as approved by Lender in writing and (2) the
exculpation from personal liability of Borrower shall be of no further force and
effect (a) if the Collateral or any part thereof shall become an asset in a
voluntary bankruptcy or insolvency proceeding in respect of Borrower or any
Affiliate of Borrower or (b) if an Event of Default occurs and continues and
Lender or its designee fails to obtain title to the Mortgage Loan or the
Mortgaged Property pursuant to an exercise of a power of sale, a consensual
foreclosure or a conveyance in lieu of foreclosure within one hundred and eighty
(180) days of notice to Borrower of such Event of Default by reason of
Borrower's impeding or restricting any action to enforce this Agreement or any
other Loan Document or failing to deliver to Lender or its designee all
instruments necessary to convey title to the Mortgage Loan or the Mortgaged
Property free and clear of all liens and encumbrances.
SECTION VII.4. Indemnification. Borrower shall indemnify
Lender and its officers, directors, employees, representatives and agents from,
and hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not such indemnified Person is a party thereto)
related to the entering into and/or performance of any Loan Document or the use
of proceeds of the Loan hereunder or the consummation of any other transactions
contemplated in any Loan Document, including the reasonable fees and expenses of
counsel incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the
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<PAGE>
extent incurred by reason of gross negligence or wilful misconduct on the part
of the Person to be indemnified).
SECTION VII.5. Severability. Wherever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable laws, then to the extent permitted by
law such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
SECTION VII.6. Parties. (1) This Agreement shall be binding
upon and inure to the benefit of the successors and permitted assigns of
Borrower and Lender; provided that Borrower may not assign any of its rights or
delegate any of its duties hereunder without the prior written consent of
Lender, which Lender may withhold in its sole discretion.
(20 Lender may sell, transfer, grant or assign all or any part
of Lender's interest and obligations hereunder, including by way of
participations.
(30 Upon the effectiveness of any assignment of Lender's
rights and/or obligations in accordance with its terms, the assignee shall
become a "Lender" for all purposes of this Agreement and the other Loan
Documents. To the extent of such assignment and of the amount being assigned,
the assigning Lender shall be relieved of its obligations hereunder. Upon
effectiveness of any such assignment and surrender of the appropriate promissory
note, Borrower shall promptly provide to the assigning Lender and to the
assignee separate promissory notes in the amount of their respective interests
substantially in the form of Exhibit A (but, if applicable, with notation
thereon that such promissory notes are given in substitution for and replacement
of the original Note or any replacement promissory notes therefor).
(40 Lender shall have the right to disclose, on a confidential
basis, all information it has received from Borrower to prospective assignees or
participants.
SECTION VII.7. Waivers by Borrower. Except as otherwise
provided for in this Agreement, Borrower waives presentment, demand and protest
and notice of presentment, demand, protest, default, nonpayment and maturity.
SECTION VII.8. Debtor-Creditor Relationships; No Partnership.
The relationship between Borrower and Lender is, and at all times shall remain,
solely that of debtor and creditor. No covenant or provision of the Loan
Documents is intended, nor shall it be deemed or construed, to create a
partnership, joint venture, agency or common interest in profits or income
between Lender and Borrower or to create an equity in any asset in Lender.
Lender neither undertakes nor assumes any responsibility or duty to Borrower or
to any other Person with respect to the Mortgage Loan except as expressly
provided in the Loan Documents. Notwithstanding any provision of the Loan
Documents: (1) Lender is not, and shall not be construed as, a partner, joint
venturer, alter ego,
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manager, controlling person or other business associate or participant of any
kind of Borrower; (2) Lender shall in no event be liable for any debts, expenses
or losses incurred or sustained by Borrower; and (3) Lender shall not be deemed
responsible for, or a participant in, any acts, omissions or decisions of
Borrower. Lender and Borrower disclaim any intention to create any partnership,
joint venture, agency or common interest in profits or income between Lender and
Borrower, or to create an equity in any asset in Lender, or any sharing of
liabilities, losses, costs or expenses.
SECTION VII.9. Governing Law; Submission to Non-exclusive
Jurisdiction; Waiver of Objection to Inconvenient Forum. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflict of law. Borrower and Lender hereby
irrevocably submit to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
Court sitting in New York County for purposes of all legal proceedings arising
out of or relating to this Agreement. Each of Borrower and Lender irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION VII.10. Wavier of Jury Trial. Each of Borrower and
Lender hereby irrevocably waives any and all rights to trial by jury in any
legal proceeding arising out of or relating to this Agreement, the Collateral or
the transactions contemplated hereby.
SECTION VII.11. Restoration of Set Aside. If, for any reason,
any portion of Borrower's payments to Lender pursuant to this Agreement is set
aside or restored, whether voluntarily or involuntarily, after the making
thereof, then the obligation intended to be satisfied thereby shall be revived
and shall continue in full force and effect as if said payment or payments had
not been made, and Borrower shall be liable for the full amount Lender is
required to repay plus any and all costs and expense (including (i) attorneys'
fees and expenses and (ii) attorneys' fees and expenses incurred pursuant to the
Bankruptcy Code) paid by Lender in connection therewith.
SECTION VII.12. Notices. All notices, requests, demands and
other communications required under the terms and provisions hereof shall be in
writing and shall become effective when delivered by hand or received by
telecopier, telegram, certified or registered mail, postage prepaid, or an
established overnight delivery service, addressed as follows:
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<PAGE>
If to Lender:
Merrill Lynch Mortgage Capital Inc.
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Attention: David Mahoney
Facsimile No.: (212) 449-0735
Confirmation: (212) 449-9293
With a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: George Petrow
Facsimile No.: (212) 906-2021
Confirmation: (212) 906-2000
If to Borrower:
Resource Properties XLIX, Inc.
The Ledgewood Law Firm Building
1521 Locust Street, Suite 400
Philadelphia, Pennsylvania 19102
Attention: Scott Schaeffer
Facsimile No.: (215) 546-5388
Confirmation: (215) 546-2005
With a copy to:
Ledgewood Law Firm
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Jeffrey Brotman
Facsimile: (215) 735-5005
Confirmation: (215) 731-5388
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<PAGE>
or to such other address as the party to receive the notice shall designate by
notice to the other party.
SECTION VII.13. Headings and References. The headings used in
this Agreement are for convenience only and constitute no part of this
Agreement, and references herein to Articles, Sections, paragraphs or clauses,
unless otherwise specified, are to the Articles, Sections, paragraphs or clauses
of this Agreement.
SECTION VII.14. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
SECTION VII.15. Survival of Representations and Warranties.
All representations and warranties made by Borrower herein or in the other Loan
Documents shall survive delivery of the Note and the making of the Loan
hereunder.
SECTION VII.16. Entirety. The Loan Documents represent the
entire agreement of the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements and understandings,
whether express or implied, written or oral.
[Signatures begin on next page]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this
Loan Agreement to be duly executed, as of the day and year first above written.
RESOURCE PROPERTIES XLIX, INC.
By:________________________________________
Name: Scott Schaeffer
Title: President
MERRILL LYNCH MORTGAGE CAPITAL INC.
By:________________________________________
Name: David W. Mahoney
Title: Vice President
<PAGE>
RESOURCE PROPERTIES XLIX, INC.
Secured Promissory Note
$55,000,000 March 12, 1998
RESOURCE PROPERTIES XLIX, INC., a Delaware corporation
("Borrower"), for value received, promises to pay to the order of
MERRILL LYNCH MORTGAGE CAPITAL INC.,
a Delaware corporation ("Lender") or assigns, the principal amount of Fifty-Five
Million Dollars ($55,000,000) or the outstanding aggregate principal amount of
the Loan shown on Schedule A, whichever is less, on July 1, 1999.
This Note is the secured promissory note of Borrower referred
to in the Secured Loan Agreement, dated as of March 12, 1998 (the "Loan
Agreement"), between Borrower and Lender. The Loan Agreement, and the Pledge and
Security Agreement (referred to in the Loan Agreement), dated as of March 12,
1998 (the "Security Agreement"), between Borrower and Lender, contain additional
rights of the holder of, and provide the security for, this Note. Capitalized
terms used but not defined herein have the respective meanings assigned to them
in the Loan Agreement.
This Note shall bear interest on the outstanding balance
hereof as provided in Section 2.03 of the Loan Agreement. Interest accrued
hereon shall be paid on each Payment Date and on the Maturity Date. Any amount
of principal of or (to the extent permitted by law) interest on this Note which
is not paid when due (whether at the stated maturity hereof, by acceleration or
otherwise) shall bear interest from the due date thereof until the date of
actual payment in full (after as well as before judgment), payable on demand, at
the rate specified in Section 2.03 of the Loan Agreement. Interest shall be
payable in arrears and shall be calculated on the basis of the actual number of
days elapsed and a 360-day year.
If an Event of Default shall occur and be continuing, the
unpaid balance of the principal of this Note together with all accrued but
unpaid interest hereon may be declared or become forthwith due and payable in
the manner and with the effect provided in the Loan Agreement.
This Note shall be prepaid in part, or as a whole, as the case
may be, on one or more Payment Dates as provided in Section 2.06 of the Loan
Agreement, without premium or penalty (but together with accrued and unpaid
interest to the date of prepayment). This Note may also be prepaid at the option
of Borrower, in whole or in part, as provided in Section 2.07(a) of the
<PAGE>
Loan Agreement, together with accrued and unpaid interest to the date of
prepayment at the rate set forth in Section 2.03 of the Loan Agreement on the
amount prepaid and together with the Exit Fee and with break-funding costs to
the extent provided in Section 2.07(b) of the Loan Agreement (and, if prepaid in
whole, all other Obligations).
Upon the occurrence and continuation on of an Event of
Default, if the proceeds of sale, collection or other realization of or upon the
Collateral pursuant to Section 4.01 of the Security Agreement are insufficient
to cover the costs and expenses of such realization and the payment in full of
the Obligations, Borrower (and, as provided in Section 7.03 of the Loan
Agreement, not the shareholders thereof individually) shall be liable to Lender
for the deficiency.
All repayments of the principal hereof shall be recorded by
Lender and, prior to any transfer hereof, appropriate notations to evidence the
foregoing information with respect to the Loan then outstanding shall be
endorsed by Lender on the schedule attached hereto or on a continuation of such
schedule attached to and made a part hereof; provided that the failure by Lender
to make any such recordation or endorsement shall not affect the obligations of
Borrower hereunder or under the Loan Agreement.
Payments of principal and interest and any other amounts due
hereon shall be made in the lawful currency of the United States.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to principles of
conflict of laws.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be duly
executed as of the day and year first above written.
RESOURCE PROPERTIES XLIX, INC.
By:____________________________________
Name: Scott Schaeffer
Title: President
<PAGE>
EXHIBIT 2.5
- ------------------------------------------------------------------------------
PLEDGE AND SECURITY AGREEMENT
dated as of March 12, 1998
between
RESOURCE PROPERTIES XLIX, INC., as Pledgor
and
MERRILL LYNCH MORTGAGE CAPITAL INC., as Lender
- ------------------------------------------------------------------------------
<PAGE>
PLEDGE AND SECURITY AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
CERTAIN DEFINITIONS......................................................................................1
ARTICLE II
COLLATERAL; GENERAL TERMS................................................................................3
Section 2.01. Security Interest.........................................................................3
Section 2.02. Collections...............................................................................5
Section 2.03. Lender Account............................................................................5
Section 2.04. Delivery of Certificates, etc.............................................................5
Section 2.05. Release of Security Interest..............................................................6
Section 2.06. Pledgor Remains Liable....................................................................6
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR.....................................................7
Section 3.01. Representations and Warranties............................................................7
(a) General Representations and Warranties.................................................7
(b) Title to Collateral....................................................................8
(c) Perfection.............................................................................8
(d) Principal Place of Business; Taxpayer Identification Number............................8
Section 3.02. Covenants.................................................................................8
(a) Defense of Title.......................................................................8
(b) [Reserved].............................................................................8
(c) Additional Liens.......................................................................8
(d) Change in Location of Principal Place of Business......................................8
Section 3.03. Protection of Collateral..................................................................8
Section 3.04. Sale or Pledge of Collateral..............................................................9
Section 3.05. Further Assurances, Preservation and Perfection of
Security Interest......................................................................9
Section 3.06. Preservation of Collateral................................................................9
Section 3.07. Maintenance of Papers, Records and Files..................................................9
</TABLE>
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<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE IV
LENDER'S RIGHTS AND REMEDIES............................................................................10
Section 4.01. Remedies.................................................................................10
Section 4.02. [Intentionally Omitted...................................................................12
Section 4.03. Application of Proceeds..................................................................12
Section 4.04. Deficiency...............................................................................13
Section 4.05. Appointment of Lender as Pledgor's Lawful Attorney.......................................13
(a) To Endorse Pledgor's Name.............................................................13
(b) To Sign Pledgor's Name to Perfection Documents........................................13
(c) To Sign Pledgor's Name on Other Documents.............................................13
Section 4.06. Reimbursement............................................................................13
Section 4.07. Exoneration of Lender; Certain Reimbursements............................................14
(a) Lender's Powers for Lender's Sole Benefit.............................................14
(b) Pledgor to Reimburse Lender for Collateral-Preservation
Fees and Taxes........................................................................14
Section 4.08. Waiver of Redemption and Deficiency Rights...............................................14
ARTICLE V
MISCELLANEOUS...........................................................................................14
Section 5.01. Remedies Cumulative......................................................................14
Section 5.02. Prejudgment Remedy Provision.............................................................14
Section 5.03. Security Interest Absolute...............................................................15
Section 5.04. [Intentionally Omitted]..................................................................15
Section 5.05. No Delay; Waivers........................................................................15
Section 5.06. Further Assurances.......................................................................15
Section 5.07. Waivers and Amendments...................................................................15
Section 5.08. Notices..................................................................................15
Section 5.09. Governing Law............................................................................17
Section 5.10. Submission to Jurisdiction; Waiver of Objection to
Inconvenient Forum....................................................................17
Section 5.11. Waiver of Jury Trial.....................................................................17
Section 5.12. Binding Agreement; Assignments...........................................................17
Section 5.13. Indemnification..........................................................................18
Section 5.14. Restoration or Set Aside.................................................................18
Section 5.15. Severability.............................................................................18
Section 5.16. Section Headings.........................................................................18
Section 5.17. Counterparts.............................................................................18
Section 5.18. No Rights of Others......................................................................18
Section 5.19. Entire Agreement.........................................................................18
</TABLE>
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<PAGE>
PLEDGE SECURITY AGREEMENT, dated as of March 12, 1998, between
RESOURCE PROPERTIES XLIX, INC., a Delaware corporation ("Pledgor"), and MERRILL
LYNCH MORTGAGE CAPITAL INC., a Delaware corporation ("Lender," and Pledgor and
Lender, together, the "Parties").
PRELIMINARY STATEMENT
Pledgor and Lender have entered into a secured loan agreement
dated as of the date hereof (as amended from time to time, the "Loan Agreement")
pursuant to which Lender has agreed, subject to the terms and conditions of the
Loan Agreement, to make a loan to Pledgor to finance Pledgor's acquisition of
the Mortgage Loan (as defined in the Loan Agreement).
To induce Lender to enter into the Loan Agreement, pledgor has
agreed to pledge and grant a security interest in and to the Collateral (as
defined herein) to secure the obligations of Pledgor under the Loan Agreement.
In consideration of the mutual promises of the Parties, and of
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually agreed by and between the Parties as follows:
ARTICLE I
CERTAIN DEFINITIONS
Capitalized terms used herein shall have the meanings ascribed
to them in the Loan Agreement except as set forth below:
"Accounts" means all "accounts" (as defined in the UCC) now
owned or hereafter acquired by Pledgor, all accounts receivable, contract
rights, book debts, notes, drafts and other obligations or indebtedness owing to
Pledgor arising from the sale, lease or exchange of goods or other property by
Pledgor and/or the performance of services by Pledgor (including any such
obligation which might be characterized as an account, contract right or general
intangible under the UCC), and all of Pledgor's rights in, to and under all
purchase orders for goods, services or other property, and all of Pledgor's
rights to any goods, services or other property represented by any of the
foregoing (including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit), and all
Monies due to or to become due to Pledgor under all contracts for the sale,
lease or exchange of goods or other property and/or the performance of services
by Pledgor (whether or not yet earned by performance on the part of Pledgor), in
each case whether now existing or hereafter arising or acquired, including the
right to receive the proceeds of such purchase orders and contracts and all
collateral security and guarantees of any kind given by any Person with respect
to any of the foregoing.
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<PAGE>
"Agreement" means this Pledge and Security Agreement, as
amended from time to time.
"Borrower Account" has the meaning specified in the Loan
Agreement.
"Borrower Collection Account" has the meaning specified in the
Loan Agreement.
"Borrower Working Capital Account" has the meaning specified
in the Loan Agreement.
"Collateral" has the meaning specified in Section 2.01.
"Documents" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods now owned or hereafter
acquired by Pledgor.
"Equipment" means all "equipment" (as defined in the UCC) now
owned or hereafter acquired by Pledgor.
"Event of Default" has the meaning specified in the Loan
Agreement.
"General Intangibles" means all "general intangibles" (as
defined in the UCC) now owned or hereafter acquired by Pledgor, including (i)
all obligations or indebtedness owing to Pledgor (other than Accounts) from
whatever source arising, (ii) all patent licenses, patents, trademark licenses,
trademarks, rights in intellectual property, goodwill, trade names, service
marks, trade secrets, copyrights, permits and licenses, (iii) all rights or
claims in respect of refunds for taxes paid, and (iv) all rights in respect of
any pension plan or similar arrangement maintained for employees of Pledgor or
its subsidiaries, if any.
"Goods" means all personal property, excluding Instruments (as
defined below) and Monies (as defined below) now owned or hereafter acquired by
Pledgor.
"Instruments" means all "instruments," "chattel paper" or
"letters of credit" (each as defined in the UCC) evidencing, representing,
arising from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including promissory notes,
drafts, bills of exchange and trade acceptances, now owned or hereafter acquired
by Pledgor.
"Lender" has the meaning specified in the Preliminary
Statement.
"Lender Account" has the meaning specified in the Loan
Agreement.
"Monies" means all cash, checks, notes, drafts or similar
items of payment.
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<PAGE>
"Obligations" means (i) all indebtedness, obligations and
liabilities of Pledgor to Lender arising under, or in connection with, the Loan
Documents, whether now existing or hereafter arising; (ii) any and all sums paid
by Lender in order to preserve the Collateral or its security interest therein;
(iii) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of Pledgor referred to in clause (i),
the expenses of retaking, holding, collection, preparing for sale, selling or
otherwise disposing of or realizing on the Collateral, or of any exercise by
Lender of its rights with respect to the Collateral under the Loan Documents,
together with attorneys' fees and expenses and court costs; and (iv) all
indemnity obligations of Pledgor to Lender pursuant to the Loan Documents.
"Parties" has the meaning specified in the first paragraph
hereof.
"Permitted Lien" has the meaning specified in the Loan
Agreement.
"Pledgor" has the meaning specified in the first paragraph
hereof.
"UCC" means at any time the Uniform Commercial Code as in
effect in the State of New York; provided, that if, by reason of mandatory
provisions of law, the validity or perfection of Lender's security interest in
any item of collateral is governed by the UCC or any similar law as in effect in
a jurisdiction other than New York, "UCC" means the UCC or such similar law as
in effect in such other jurisdiction for purposes of the provisions hereof
relating to such validity or perfection.
ARTICLE II
COLLATERAL; GENERAL TERMS
Section 2.01. Security Interest. As security for the
Obligations, Pledgor hereby grants to Lender a continuing first-priority
security interest in, Lien on and right of set-off against, and hereby assigns
to Lender as security, all of Pledgor's right, title and interest, if any, in,
to and under the following property and interests in property, whether now owned
or hereafter acquired or existing and wherever located (collectively, the
"Collateral"):
(a) The Mortgage Loan and all proceeds, products and profits
derived therefrom, including all scheduled payments of principal of and
interest on the Mortgage Loan, and all prepayments and other amounts
due or payable or to become due or payable in respect thereof
(including any contingent interest); all monies, goods, insurance
proceeds, condemnation awards and other tangible or intangible property
received upon the liquidation or sale thereof;
(b) Each of the Underlying Loan Documents, including (i) all
rights in respect of each deed of trust, security agreement and
assignment of rents executed in connection with the Mortgage Loan; (ii)
all rights in respect of each collateral assignment of leases and
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<PAGE>
rents executed in connection with the Mortgage Loan; (iii) each UCC-1
financing statement filed in connection with the Mortgage Loan; (iv)
[each title insurance policy, title binder or commitment to issue title
insurance with respect to the Mortgage Loan (together with all related
endorsements); and (v) each policy of hazard, flood, boiler, liability,
business interruption or other form of insurance now or hereafter
issued with respect to the premises and improvements encumbered by the
Underlying Loan Documents, including any commitment to insure];
(c) All of Pledgors' right, title and interest in the claims,
rights and benefits accruing to Pledgor under that certain Lender's
Plan of Reorganization for Debtor dated February 11, 1998, as confirmed
by the U.S. Bankruptcy Court for the District of Columbia on February
24, 1998 (the "Plan") as set forth in the Purchase Agreement;
(d) the Purchase Agreement;
(e) the Management Agreement;
(f) All tangible and intangible personal property of whatever
kind that relates to the Mortgage Loan;
(g) All right, title and interest of Pledgor now existing or
hereafter acquired in the Mortgaged Property and any personal property
pledged to secure the Mortgage Loan;
(h) All Monies and other rights on deposit from time to time
in the Borrower Collection Account, the Borrower Working Capital
Account or any other Borrower Account, any sums deposited therein, all
investments made with such Monies, any interest or other income earned
thereon, and all proceeds thereof;
(i) All right, title and interest of Pledgor now existing or
hereafter acquired in and to the Transaction Documents and all
instruments or other documents, if any, evidencing or representing the
same, including the right to enforce all rights of Pledgor under the
Transaction Documents;
(j) All right, title and interest of Pledgor now existing or
hereafter acquired in and to Accounts, Documents, General Intangibles,
Goods, Equipment and Instruments;
(k) All books and records (including credit files, computer
programs, printouts and other computer materials and records) of
Pledgor pertaining to any of the Collateral; and
(l) All cash and non-cash proceeds and products of the
foregoing, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed when
Collateral or proceeds are sold, leased, collected, exchanged
-4-
<PAGE>
or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes, without limitation, all rights to payment,
including return premiums, with respect to any insurance relating
thereto;
*[All of Pledgor's interest in the Mortgaged Property and
other property at the time such property is conveyed by Underlying
Borrower to Borrower pursuant to the Plan]*
provided, however, that any amounts distributed by Borrower to the Manager or
any of the partners or shareholders of Borrower shall not constitute Collateral,
and shall be free and clear of any security interest granted by Pledgor
hereunder, upon and after such distribution or payment.
Section 2.02. Collections. Except as otherwise provided in
Section 2.03, Pledgor shall continue to service and administer or cause the
servicing and administration, at its own expense, of the Mortgage Loan (or any
property acquired in respect thereof), subject to and in accordance with the
Loan Agreement, and shall cause all Collections to be deposited into the
Borrower Collection Account, and all Net Cash Flow (net of Borrower Amounts) to
be remitted to Lender, at the times and in the manner set forth in the Loan
Agreement. All right, title and interest of Pledgor in and to the cash amounts
on deposit from time to time in the Borrower Collection Account, Borrower
Working Capital Account or any other Borrower Account shall constitute part of
the Collateral hereunder and cash amounts on deposit from time to time in the
Borrower Collection Account shall not constitute payment of the Obligations
until applied thereto pursuant to Section 2.06(c) of the Loan Agreement or
Section 4.03 hereof. Notwithstanding any provisions of this Agreement to the
contrary, in no event shall any amount (including interest on amounts or other
income on deposit in the Borrower Collection Account) be paid or released to or
for the account of, or withdrawn by or for the account of, Pledgor, Servicer,
Custodian, Manager or any other Person, except as provided in Section 2.06 of
the Loan Agreement or Section 4.03 hereof.
Section 2.03. Lender Account. (a) If an Event of Default shall
have occurred and be continuing, (i) Lender shall be entitled (in addition to
any other right it may have in respect of such Event of Default under any Loan
Document or applicable law), immediately and without notice to Pledgor, to cause
Underlying Borrower to make payments to a Lender Account, (ii) Pledgor shall,
promptly upon request by Lender, cause [Servicer] immediately to remit all
amounts then on deposit in the Borrower Collection Account to a Lender Account
and cause each other depository institution at which a Borrower Account is
established to remit all amounts then on deposit in such account to a Lender
Account and (iii) Lender shall immediately be entitled to transfer or cause to
be transferred to a Lender Account any and all amounts on deposit in each
Borrower Account. In addition, if an Event of Default shall have occurred and be
continuing, all Collections, amounts and proceeds (including instruments)
received by Pledgor in respect of the Mortgage Loan or the Mortgaged Property
shall be received in trust for the ratable benefit of Lender.
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Section 2.04. Delivery of Certificates, etc. Pledgor shall
deliver to Lender:
(a) concurrently with the execution and delivery of this
Agreement, among other things, the original secured promissory notes
issued in connection with the Mortgage Loan, (collectively, the
"Underlying Note"), an original executed counterpart of the loan
agreement entered into in connection with the Mortgage Loan (the
"Underlying Loan Agreement"), copies of all other Underlying Loan
Documents, a copy of the Plan, a copy of each of the Purchase Agreement
and the Management Agreement, such delivery to be effected, in the case
of the original Underlying Note, the original executed counterpart of
the Underlying Loan Agreement and copies of other Underlying Loan
Documents, by Pledgor delivering the same to Custodian pursuant to the
Custodial Agreement and Custodian delivering to Lender the Initial
Certification;
(b) within five days after Pledgor's receipt thereof, the
original certificates, instruments or other documents, if any,
evidencing or representing all other Collateral not delivered pursuant
to clause (a) above.
Section 2.05. Release of Security Interest. At such time as
(a) all Obligations shall have been paid and (b) the Loan Agreement shall have
been terminated, Lender shall take all steps necessary to release the security
interest in the Collateral granted hereunder. When so released, the Collateral
shall be free and clear of any Lien created hereunder in favor of Lender. Upon
such termination and at the written request of Pledgor, and at the cost and
expense of Pledgor, Lender shall execute a satisfaction of this Agreement and
such instruments, documents or agreements as are necessary or desirable to
terminate, radiate, discharge and remove of record any documents constituting
public notice of this Security Agreement and the security interests and
assignment granted hereunder and shall deliver or cause to be delivered to
Pledgor all property (if any), including Monies, of Pledgor then held by Lender
(including Collateral held by the Custodian).
Section 2.06. Pledgor Remains Liable. Anything herein to the
contrary notwithstanding, (a) Pledgor shall remain liable under the Underlying
Loan Documents and the Transaction Documents to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed; (b) the exercise by Lender of any of the
rights hereunder shall not release Pledgor from any of its duties or obligations
under the Underlying Loan Documents and the Transaction Documents, except to the
extent that such duties and obligations may be terminated pursuant to the terms
of the Underlying Loan Documents and the Transaction Documents by reason of a
sale, transfer or other disposition of the Collateral as provided in Article IV
hereof; and (c) Lender shall not have any obligation or liability under the
Underlying Loan Documents or the Transaction Documents by reason of this
Agreement, nor shall Lender be obligated to perform any of the obligations or
duties of Pledgor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder; provided that Lender and any other
transferee of the Collateral shall take the same subject to the Underlying Loan
Documents and the Transaction Documents.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR
Section 3.01. Representations and Warranties. Pledgor makes
the representations and warranties set forth below to Lender:
(a) General Representations and Warranties.
(i) Due Organization; Power. Pledgor is duly organized
and validly existing as a corporation in good standing under the laws
of the State of Delaware and has all requisite power to own its
properties, conduct its business, enter into this Agreement and perform
its obligations hereunder.
(ii) Due Authorization; Enforceability. This Agreement
and the granting of a continuing first-priority security interest in
the Collateral have been duly authorized by Pledgor; this Agreement has
been validly entered into by Pledgor; and this Agreement constitutes a
valid and binding instrument of Pledgor, enforceable against Pledgor in
accordance with its terms (except to the extent enforceability may be
limited by applicable bankruptcy, insolvency or other similar laws of
general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law)).
(iii) No Consents. Except as required for perfection of
the security interest in the Collateral as described in Section
3.01(c), no permits, licenses, franchises, approvals, authorizations,
qualifications or consents of, or registrations or filings with,
governmental authorities are required in connection with the execution
or delivery by Pledgor of, or the performance by Pledgor of its
obligations under, this Agreement, except such as have been obtained or
made and are in full force and effect.
(iv) No Conflict. The execution and delivery of, and the
performance by Pledgor of its obligations under, this Agreement do not
and will not result in a breach or constitute a violation of, conflict
with, or constitute a default under, the Certificate of Incorporation
or the Bylaws of Pledgor, or any law, regulation, order or judgment
applicable to Pledgor or any agreement or instrument to which Pledgor
is a party or by which Pledgor or any of its property is bound.
(v) No Material Litigation. There are no actions,
suits, proceedings or claims pending or, to the knowledge of Pledgor,
threatened against or affecting Pledgor or any of its property which
may have, individually or in the aggregate, a Material Adverse Effect.
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<PAGE>
(b) Title to Collateral. Pledgor is the sole owner of all of
the Collateral, beneficially and of record, free and clear of any Liens other
than the Liens created hereunder and under the other Loan Documents. The
Collateral is not subject to any option to purchase or similar rights of any
kind.
(c) Perfection. Upon (i) the execution and delivery of this
Agreement and the Custodial Agreement, (ii) the delivery of the Underlying Note
to Custodian pursuant thereto and (iii) the filing of a UCC-1 financing
statement against Pledgor and naming Lender as the secured party in the office
of the Secretary of State of the State of Delaware and the Secretary of State of
The Commonwealth of [Pennsylvania], and in the office of the prothonotary of the
[County of Philadelphia], Pennsylvania, Lender will have a valid, perfected,
continuing, first-priority security interest in or lien on, respectively, (a)
the Underlying Note and the proceeds thereof, and (b) that portion of the
Collateral in which a security interest is perfected by filing a financing
statement under the UCC.
(d) Principal Place of Business; Taxpayer Identification
Number. The principal place of business of Pledgor is the address indicated in
Section 5.08. Pledgor's federal taxpayer identification number is 23-2953181.
Section 3.02. Covenants.
(a) Defense of Title. Pledgor shall defend its title to the
Collateral against all claims of all Persons whomsoever, except with respect to
Liens created hereby or Permitted Liens.
(b) [Reserved].
(c) Additional Liens. Pledgor shall not permit any Lien except
Permitted Liens to be created or exist with respect to the Collateral.
(d) Change in Location of Principal Place of Business. Pledgor
shall not, without ten (10) days prior written notification to Lender, relocate
its principal place of business to a new location. At the time of such written
notification, Pledgor shall execute and file any documents necessary to perfect
(and to continue the perfection of) Lender's security interests.
Section 3.03. Protection of Collateral. Pledgor will not
create, permit or suffer to exist, and will defend the Collateral against and
take such other action as is necessary to remove, any Lien on such Collateral
other than Permitted Liens, and if Pledgor fails to do so, Lender may, without
waiving or releasing any obligation or liability of Pledgor hereunder or any
Event of Default, at any time thereafter (but shall be under no obligation to),
make such payment or any part thereof, obtain such discharge or otherwise defend
Pledgor's title to the Collateral. All sums so paid by Lender and any expenses
incurred by Lender in connection therewith, including reasonable attorneys'
fees, court costs, expenses and other charges relating thereto, shall be
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<PAGE>
payable, upon demand, by Pledgor to Lender, and shall be deemed additional
Obligations secured by the Collateral.
Section 3.04. Sale or Pledge of Collateral. Pledgor shall not
sell, assign, transfer or otherwise dispose of, or pledge or otherwise encumber
(except to the extent otherwise permitted by this Agreement or the other Loan
Documents) any of the Collateral or any interest therein.
Section 3.05. Further Assurances, Preservation and Perfection
of Security Interest. (a) At Pledgor's expense, Pledgor shall do all such acts,
and shall execute and deliver to Lender all such financing statements,
certificates, instruments and other documents and shall do and perform or cause
to be done all actions and such other things necessary or expedient to be done
as Lender may reasonably request from time to time in order to give full effect
to this Agreement, and for the purpose of effectively perfecting, maintaining
and preserving Lender's security interest and the benefits intended to be
granted to Lender hereunder. To the extent permitted by applicable law, Pledgor
hereby authorizes Lender to execute and file, in the name of Pledgor or
otherwise, UCC financing statements, including continuation statements, and
similar recording documents which Lender in its sole discretion may deem
necessary or appropriate.
(b) If Pledgor fails to perform any act required by this
Agreement, Lender may, but shall not be obligated to, perform or cause the
performance of such act, and the expenses of Lender incurred in connection
therewith shall be governed by Section 4.6.
Section 3.06. Preservation of Collateral. Pledgor will, in its
dealing with the Collateral, comply with all laws, regulations and rules of any
Governmental Authority, provided that this covenant shall not prohibit Pledgor
from, and Pledgor shall not be construed to be in default of this Agreement
solely by, contesting in good faith and by appropriate proceedings Permitted
Liens, if Pledgor maintains reserves therefor in an amount reasonably designated
by Lender. Pledgor will not allow any material or monetary default for which it
is responsible to occur under any Collateral, and shall fully perform or cause
to be performed when due all of its obligations under the Collateral.
Section 3.07. Maintenance of Papers, Records and Files. (a)
Pledgor shall acquire and shall assemble, maintain and have available a complete
file (or direct [Disbursing Agent] to do so), in accordance with industry custom
and practice, for the Mortgage Loan. Pledgor shall maintain (or direct
[Disbursing Agent] to maintain) all such papers, records and files not in the
possession of Lender or Custodian in good and complete condition in accordance
with industry practice and shall preserve them against loss.
(b) Pledgor to Hold Records in Trust for Lender. For so long
as Lender has a security interest in any Collateral, Pledgor will hold or cause
to be held any paper, record or file related to the Collateral in trust for
Lender, except for such papers, records or files that are delivered to the
Custodian.
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(c) Lender's Rights of Inspection. Upon reasonable advance
notice from Lender, and during regular business hours, Pledgor shall make any or
all such papers, records or files available (or direct Servicer to do so) to
Lender in order that Lender may examine any such papers, records and files,
either by its employees or by agents or contractors, or both, and make copies of
all or any portion thereof.
ARTICLE IV
LENDER'S RIGHTS AND REMEDIES
Section 4.01. Remedies. (a) Should any Event of Default occur,
Lender, at its option, in addition to its rights and remedies under the Loan
Agreement or any other Loan Documents, shall have any or all of the following
rights and remedies:
(i) Lender May Sell Collateral. Lender may cause the
disposition of all or any portion of the Collateral to be conducted,
immediately upon such occurrence or upon the expiration of any period
of delay or notice required by law. Should Lender decide to conduct
more than one such sale or disposition, Lender may at its option cause
the same to be conducted simultaneously or successively on the same day
or upon such different days or at such different times and in such
order as Lender may deem to be in its best interests. Pledgor waives,
to the fullest extent permitted by law, any prejudice resulting to it
from any such decision.
(ii) Lender to Determine Terms and Conditions of Sale. Lender
shall have the right to sell the Collateral in one or more lots, at one
or more times, at such place or places, at public or private sales and
with or without notice of any kind (except as otherwise provided
herein), as Lender may elect, at such prices and on such terms, as to
cash or credit, as Lender may deem proper. Lender shall have the right
to become a purchaser at any such sale which is open to the public, and
to apply all unpaid obligations toward the purchase price of all or any
portion of the Collateral sold to Lender. If notice is given of public
sale, it is agreed that notice shall be satisfactorily given if such
notice is published at least once in the Wall Street Journal (Eastern
edition) and at least once in the Philadelphia Inquirer not less than
five (5) Business Days prior to such sale. The foregoing notice
provisions shall not preclude Lender's rights to foreclose upon the
Collateral in any other manner permitted under the UCC; provided,
however, that a sale of the Collateral in accordance with such notice
requirements shall be deemed a disposition of the Collateral in a
commercially reasonable manner. Should any Event of Default occur and
be continuing, Lender shall have the right to sell the Collateral, or
to foreclose, sue upon, or otherwise seek to enforce the same in its
own name or in the name of Pledgor as provided herein. Subject to the
foregoing provisions of this paragraph, once Lender is entitled to
exercise its rights and remedies hereunder, Lender shall have the right
to renew, extend the time of payment of, or otherwise modify, amend,
supplement, settle or compromise, in any manner, any obligations for
the payment of money included in the
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Collateral, any security therefor and any other agreements,
instruments, claims or choices in action of any kind which may be
included in the Collateral.
(iii) Lender May Take Possession of Collateral. Lender may
take possession of all or any portion of the Collateral that is not
already in its possession, and Pledgor agrees to assemble and make
available the Collateral to Lender at a convenient location. Should any
Event of Default occur and be continuing, Lender may manage and protect
the Collateral, do any acts which it deems proper to protect the
Collateral as security hereunder, and sue upon any contract claim
relating to the Collateral and receive any payments due thereon or any
damages thereunder, and apply all sums received to the payment of the
Obligations in such order as Lender shall determine. Any such actions
of Lender shall not be deemed, as between Pledgor and Lender, to impose
upon Lender any of Pledgor's obligations under any contracts.
(iv) Lender May Set Off Lender Obligations to Pledgor. Lender
shall be entitled to set off any obligation of Lender to Pledgor
against all unpaid amounts of principal and interest on the Loans and
any other amounts owing by Pledgor hereunder or otherwise, whether or
not any such obligation is liquidated, unliquidated, matured, unmatured
or contingent.
[(v) Lender May Direct Disbursing Agent. Lender shall be
entitled to direct Disbursing Agent to remit all payments of principal
of and interest on, or any other proceeds derived from, the Mortgage
Loan, to Lender or to such person or entity as Lender may designate,
and Pledgor shall, upon request by Lender, execute and consent to all
such notices and directions given by Lender to Disbursing Agent or
Custodian.]
(vi) Lender May Take Possession of Files and Documents.
Lender shall be entitled to require Pledgor to deliver or cause to be
delivered to Lender or Custodian all files and documents in the
possession of Pledgor or Disbursing Agent relating to the Mortgage
Loan, and Pledgor shall promptly take such actions and furnish to
Lender such documents as Lender deems necessary or appropriate to
enforce its rights with respect to the Mortgage Loan.
(vii) Lender May Direct Underlying Borrower [and Disbursing
Agent and Liquidating Trustee] to make Payments to Lender. Lender shall
be entitled to notify the Underlying Borrower and any other Persons now
or hereafter liable in whole or in part for the payment of any amount
due on or in respect of the Mortgage Loan [and Disbursing Agent and
Liquidating Trustee] of the pledge thereof to Lender, and to direct the
Underlying Borrower and any such other Person [and Disbursing Agent and
Liquidating Trustee] to make all payments of principal, interest and
other sums with respect to such Mortgage Loans, in whole or in part,
directly to Lender or its designee, and Pledgor shall, upon request by
Lender, execute and consent to all notices and directions given by
Lender
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to the Underlying Borrower or any such other persons [and Disbursing
Agent and Liquidating Trustee] pursuant hereto.
(vii) Lender May Exercise Pledgor's Rights Under Collateral.
Lender shall be entitled to exercise Pledgor's rights under or in
respect of any item of Collateral.
(ix) Lender May Withdraw Funds from Accounts. Lender shall be
entitled to exercise complete dominion and control over each of the
Borrower Collection Account, the Borrower Working Capital Account and
each other Borrower Account, and all funds on deposit in such accounts,
including the right to make withdrawals therefrom or require the
liquidation of investments in which funds therein are invested for
application pursuant to this agreement.
(x) Other Remedies. Lender shall be entitled to exercise any
other rights or remedies provided herein, in any document or instrument
delivered pursuant hereto, under any other agreement or under
applicable law.
(b) Pledgor Waives Rights to Judicial Process, Defenses.
Lender may enforce its rights and remedies hereunder without prior judicial
process or hearing, and Pledgor hereby expressly waives, to the fullest extent
permitted by law, any right Pledgor might otherwise have to require Lender to
enforce its rights by judicial process. Pledgor also waives, to the fullest
extent permitted by law, any defense Pledgor might otherwise have to the
Obligations secured hereby arising from use of nonjudicial process, enforcement
and sale of all or any portion of the Collateral or from any other election of
remedies.
Section 4.02. [Intentionally Omitted.]
Section 4.03. Application of Proceeds. Except as otherwise
herein expressly provided, the proceeds of any collection, sale or other
realization of all or any part of the Collateral pursuant hereto following
Lender's exercise of remedies hereunder, and any other cash at the time held by
Lender hereunder, shall be applied by Lender in the following manner:
first, to the reimbursement of sums expended by Lender
pursuant to Section 4.06, and to the payment of the costs and expenses
of such collection, sale or realization, or any other enforcement
action pursuant hereto, including attorney's fees (including the
allocated expenses of internal counsel to Lender), and all other
expenses incurred in connection therewith, with a reasonable reserve
for any liabilities incurred in connection therewith; and
second, to the Pledgor, provided, however, that so long as the
Loan is outstanding, all such amounts shall be distributed concurrently
to Lender for application in the following order of priority:
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first, to any Loan Fees and Expenses, if any (without
duplication of amounts applied pursuant to clause first above);
second, to any interest accrued and unpaid on the Loan, if
any;
third, to the Principal Amount of the Loan (until paid in
full); and
fourth, to the payment to Pledgor.
As used in Sections 4.03 and 4.04, "proceeds" of the Collateral shall mean cash
and other property realized in respect of, and distributions in kind of,
Collateral, including any thereof received under any reorganization, liquidation
or adjustment of debt of Pledgor or any other issuer of or obligor on any of the
Collateral.
Section 4.04. Deficiency. If the proceeds of sale, collection
or other realization of or upon the Collateral pursuant to Section 4.01 are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Obligations, Pledgor (but not its shareholders individually
except as otherwise provided in Section 7.03 of the Loan Agreement (including as
to any distributions made thereto by Pledgor)) shall be liable to Lender for the
deficiency.
Section 4.05. Appointment of Lender as Pledgor's Lawful
Attorney. Pledgor irrevocably designates, makes, constitutes and appoints Lender
(and all Persons designated by Lender) as its true and lawful attorney (and
agent-in-fact) to take the following actions and upon the occurrence and during
the continuance of an Event of Default:
(a) To Endorse Pledgor's Name. At such time or times hereafter
as Lender or its agent in its sole discretion may determine, in
Pledgor's or Lender's name, to endorse Pledgor's name on any checks,
notes, drafts, instruments, documents or any other payment relating to
the Collateral and/or proceeds of the Collateral which come into the
possession of Lender or come under Lender's control;
(b) To Sign Pledgor's Name to Perfection Documents. To the
extent permitted by law, to sign Pledgor's name on any documents
(including financing statements and continuations thereof) necessary or
desirable for the purpose of maintaining or achieving the perfection of
a security interest in the Collateral; and
(c) To Sign Pledgor's Name on Other Documents. To the extent
permitted by law, to sign Pledgor's name to any document necessary or
appropriate in order to permit Lender fully to exercise its rights
under Section 4.01, or in order to further effectuate the purposes of
Sections 3.05 and 5.06.
Section 4.06. Reimbursement. All sums expended by Lender in connection
with the exercise of any right or remedy provided for herein shall be and shall
remain the obligation
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of Pledgor. At the option of Lender, all such sums may be paid from the
Collateral or may be advanced by Lender, in which event they shall be deemed to
have been advanced to Pledgor and shall be reimbursed by Pledgor to Lender.
Section 4.07. Exoneration of Lender; Certain Reimbursements.
(a) Lender's Powers for Lender's Sole Benefit. The powers
conferred on Lender hereunder are solely for Lender's benefit, and do not impose
any duty on Lender to exercise any such powers. Following an Event of Default or
the occurrence of any other event entitling Lender to exercise remedies
hereunder, Lender shall have no duty of care to Pledgor as to any Collateral or
with respect to the taking of any steps necessary to preserve rights against
other parties or any other obligation pertaining to the Collateral. Pledgor
waives, to the fullest extent permitted by law, all rights whatsoever against
Lender for any loss, expense, liability or damage suffered by Pledgor as a
result of actions taken pursuant to this Agreement, including those arising
under any "mortgagee in possession" doctrine or the like, except to the extent
such losses, expenses, liabilities or damages result from the gross negligence
or willful misconduct of Lender.
(b) Pledgor to Reimburse Lender for Collateral-Preservation
Fees and Taxes. Without limiting the application of Section 4.07(a), Pledgor
shall pay or reimburse Lender for all fees and taxes in connection with
preserving the Collateral and Lender's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Collateral, except to the
extent such fees and taxes result from the gross negligence or willful
misconduct of Lender.
Section 4.08. Waiver of Redemption and Deficiency Rights.
Pledgor hereby expressly waives, to the fullest extent permitted by law, every
statute of limitation, any right of redemption, any moratorium or redemption
period, any limitation on a deficiency judgment, and any right which Pledgor may
have to direct the order in which any of the Collateral shall be disposed of in
the event of any disposition thereof pursuant hereto.
ARTICLE V
MISCELLANEOUS
Section 5.01. Remedies Cumulative. The rights, remedies and
benefits of Lender herein expressly specified are cumulative and not exclusive
of any other rights, remedies or benefits which Lender may have under this
Agreement or any other Loan Document at Law, in equity, by statute or otherwise.
Without limiting the generality of the foregoing, Lender shall have all rights
and remedies of a secured creditor under Article 9 of the UCC in each applicable
jurisdiction.
Section 5.02. Prejudgment Remedy Provision. In the event of
any legal action between Pledgor and Lender hereunder, Pledgor expressly waives,
to the extent permitted by law,
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any and all rights Pledgor may have under the law as now constituted or
hereafter amended that may constitute a limitation on prejudgment remedies, and
Lender may invoke any prejudgment remedy available to it, including garnishment,
attachment, foreign attachments and replevin, with respect to the Collateral to
enforce the provisions of this Agreement.
Section 5.03. Security Interest Absolute. All rights of Lender
hereunder, the grant of a security interest in the Collateral and all
obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Loan Documents
or the Transaction Documents, (b) any change in time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any release,
amendment or waiver of or any consent to any departure from the Loan Agreement
or any other agreement or instrument, (c) any exchange, release or nonperfection
of any other collateral, of any release, amendment or waiver of or consent to or
departure from any guarantee, for all or any of the Obligations, or (d) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, Pledgor in respect of the Obligations or in respect of this
Agreement.
Section 5.04. [Intentionally Omitted]
Section 5.05. No Delay; Waivers. No delay on the part of
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power or right. Lender shall not be deemed to have waived any rights
hereunder unless such waiver shall be in writing and signed by Lender.
Section 5.06. Further Assurances. Each Party shall execute
such deeds, assignments, endorsements and other instruments and documents and
shall give such further assurances as shall be necessary to perform its
obligations hereunder.
Section 5.07. Waivers and Amendments. This Agreement may be
amended, superseded or canceled, and the terms hereof may be waived, only by a
written instrument signed by authorized representatives of the Parties or, in
the case of a waiver, by an authorized representative of the party waiving
compliance. No such written instrument shall be effective unless it expressly
recites that it is intended to amend, supersede or cancel this Agreement or to
waive compliance with one or more of the terms hereof, as the case may be.
Section 5.08. Notices. All notices, requests, demands and
other communications required under the terms and provisions hereof shall be in
writing and shall become effective when delivered by hand or received by
telecopier, telegram, registered or certified mail, postage prepaid, or an
established overnight delivery service, addressed as follows:
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If to Lender:
Merrill Lynch Mortgage Capital Inc.
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Attention: David Mahoney
Facsimile No.: (212) 449-0735
Confirmation: (212) 449-9293
and:
Attention: Michael Nash
Facsimile No.: (212) 449-0769
Confirmation: (212) 449-5080
with a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: George Petrow
Facsimile No.: (212) 906-2021
Confirmation: (212) 906-2258
If to Pledgor:
Resource Properties XLIX, Inc.
c/o Resource America, Inc.
Ledgewood Law Firm Building
1521 Locust Street, 4th Floor
Philadelphia, Pennsylvania 19102
Attention: Scott Schaeffer
Facsimile No.: (215) 546-5005
Confirmation: (215) 546-5388
-16-
<PAGE>
with a copy to:
Ledgewood Law Firm
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Jeffrey Brotman, Esq.
Facsimile No.: (215) 735-2513
Confirmation: (215) 731-9540
or to such other address as the party to receive the notice shall designate by
notice to the other party.
Section 5.09. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflict of laws, except to the extent that the validity
or perfection of the security interest hereunder, or remedies hereunder, in
respect of any particular Collateral is required, pursuant to mandatory
choice-of-law rules, to be governed by the laws of a jurisdiction other than the
State of New York.
Section 5.10. Submission to Jurisdiction; Waiver of Objection
to Inconvenient Forum. Each Party hereby irrevocably submits to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York County
for purposes of all legal proceedings arising out of or relating to this
Agreement. Each Party hereto irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Section 5.11. Waiver of Jury Trial. Each of Pledgor and Lender
hereby irrevocably waives any and all rights to trial by jury in any legal
proceeding arising out of or relating to this Agreement, the Collateral or the
transactions contemplated hereby.
Section 5.12. Binding Agreement; Assignments. This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. Pledgor shall not assign this
Agreement or any interest herein or in the Collateral, or any part thereof, or
any cash or property held by Lender as Collateral under this Agreement, except
(i) with the prior written consent of Lender in its sole discretion. Any
purported assignment in violation of this Section shall be null and void. Lender
may assign its rights and/or delegate its duties to the extent permitted by
Section 7.06 of the Loan Agreement, and any such assignment shall in all respect
be subject to the terms of such Section.
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<PAGE>
Section 5.13. Indemnification. Pledgor shall indemnify, defend
and hold Lender harmless from and against any and all claims, liabilities,
costs, expenses, losses, demands, damages, judgments and awards (including
attorneys' fees of every kind) arising from or in connection with this
Agreement, any other Loan Document, the Collateral, the Certificate of
Incorporation or the Bylaws or any Transaction Document (including expenses of
or incidental to the enforcement of any of the provisions of this Agreement or
any actual or attempted sale of the Collateral but excluding any such claims,
liabilities, costs, losses, demands, damages, judgments and awards to the extent
incurred by reason of gross negligence or willful misconduct on the part of
Lender as determined by a court of competent jurisdiction). All such amounts
owing to Lender hereunder shall be deemed additional Obligations.
Section 5.14. Restoration or Set Aside. If, for any reason,
any portion of Pledgor's payments to Lender pursuant to the Obligations is set
aside or restored, whether voluntarily or involuntarily, after the making
thereof, then the obligation intended to be satisfied thereby shall be revived
and shall continue in full force and effect as if said payment or payments had
not been made, and Pledgor shall be liable for the full amount Lender is
required to repay plus any and all costs and expenses (including (i) attorneys'
fees and expenses and (ii) attorneys' fees and expenses incurred pursuant to the
United States Bankruptcy Code) paid by Lender in connection therewith.
Section 5.15. Severability. If any provision of this Agreement
shall be invalid, illegal or unenforceable, then, to the extent permitted by
law, the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
Section 5.16. Section Headings. Section headings used herein
are for convenience of reference only and are not to affect the construction of,
or to be taken into consideration in interpreting, this Agreement.
Section 5.17. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
Section 5.18. No Rights of Others. No Person other than a
Party shall have any legal or equitable right, remedy or claim under or in
respect of this Agreement.
Section 5.19. Entire Agreement. This Agreement, taken together
with the other Loan Documents, supersedes all prior written agreements and
understandings between the Parties with respect to the subject matter hereof,
whether express or implied, written or oral.
[Signatures begin on the next page]
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<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Pledge and
Security Agreement to be executed by their duly authorized representatives, as
of the day and year first above written.
RESOURCE PROPERTIES XLIX, INC.
By:
-------------------------------------
Name: Scott Schaeffer
Title: President
MERRILL LYNCH MORTGAGE CAPITAL INC.
By:
-------------------------------------
Name: David W. Mahoney
Title: Vice President
-19-
<PAGE>
- --------------------------------------------------------------------------------
STOCK PLEDGE AGREEMENT
dated as of March 12, 1998
between
RESOURCE PROPERTIES, INC., as Pledgor
and
MERRILL LYNCH MORTGAGE CAPITAL INC., as Lender
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE I
CERTAIN DEFINITIONS......................................................................................1
ARTICLE II
COLLATERAL: GENERAL TERMS................................................................................3
Section 2.01. Security Interest......................................................................3
Section 2.02. Delivery of Certificates, Instruments, Etc.............................................4
Section 2.03. Release of Security Interest...........................................................4
Section 2.04. Pledgor Remains Liable.................................................................5
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS....................................................5
Section 3.01. Representations and Warranties.........................................................5
Section 3.02. Covenants..............................................................................6
Section 3.03. Protection of Collateral...............................................................7
Section 3.04. Sale or Pledge of Related Collateral...................................................7
Section 3.05. Further Assurances, Preservation and Perfection of Security Interest...................7
Section 3.06. Rights of Pledgor......................................................................8
Section 3.07. Preservation of Related Collateral.....................................................8
[Section 3.09. Agreements of Pledgor.......... .......................................................8]
ARTICLE IV
NEGATIVE PLEDGE AGREEMENT................................................................................9
ARTICLE V
LENDER' RIGHTS AND REMEDIES..............................................................................9
Section 5.01. Remedies...............................................................................9
Section 5.02. [Intentionally Omitted................................................................10
Section 5.03. Application of Proceeds...............................................................10
Section 5.04. Deficiency............................................................................11
Section 5.05. Appointment of Lender as Pledgors' Lawful Attorney....................................11
Section 5.06. Reimbursement.........................................................................12
Section 5.07. Exoneration of Lender; Certain Reimbursements.........................................12
Section 5.08. Waiver of Redemption and Deficiency Rights............................................12
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE VI
MISCELLANEOUS...........................................................................................13
Section 6.01. Remedies Cumulative...................................................................13
Section 6.02. Prejudgment Remedy Provision..........................................................13
Section 6.03. Security Interest Absolute............................................................13
Section 6.04. [Intentionally Omitted]...............................................................13
Section 6.05. No Delay; Waivers.....................................................................13
Section 6.06. Further Assurances....................................................................13
Section 6.07. Waivers and Amendments................................................................14
Section 6.08. Notices...............................................................................14
Section 6.09. Governing Law.........................................................................15
Section 6.10. Submission to Jurisdiction; Waiver of Objection to
Inconvenient Forum....................................................................15
Section 6.11. Waiver of Jury Trial..................................................................15
Section 6.12. Binding Agreement; Assignments........................................................16
Section 6.13. [Reserved]. ..........................................................................16
Section 6.14. Restoration or Set Aside..............................................................16
Section 6.15. Severability..........................................................................16
Section 6.16. Section Headings......................................................................16
Section 6.17. Counterparts..........................................................................16
Section 6.18. No Rights of Others...................................................................16
Section 6.19. Entire Agreement......................................................................17
</TABLE>
ii
<PAGE>
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated as of March 12, 1998 (as
amended, modified or supplemented from time to time, this "Agreement") between
RESOURCE PROPERTIES, INC., a Delaware corporation ("Pledgor"), and MERRILL LYNCH
MORTGAGE CAPITAL, INC., a Delaware corporation (with its successors and
permitted assigns, "Lender").
PRELIMINARY STATEMENT
Pledgor is the sole shareholder and holds one hundred percent
(100%) interest in Resource Properties XLIX, Inc., a Delaware corporation
("Borrower").
Borrower and Lender have entered into a secured loan agreement
dated as of the date hereof (as amended from time to time, the "Loan Agreement")
pursuant to which Lender has agreed, subject to the terms and conditions of the
Loan Agreement, to make a loan to Borrower to finance Borrower's acquisition of
the Mortgage Loan (as defined in the Loan Agreement).
To induce Lender to enter into the Loan Agreement, Pledgor has
agreed to pledge and grant a security interest in and to the Collateral (as
defined herein) to secure the obligations of Borrower under the Loan Agreement.
In consideration of the mutual promises of the Parties, and of
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually agreed by and between the Parties as follows:
ARTICLE I
CERTAIN DEFINITIONS
Capitalized terms used herein shall have the meanings ascribed
to them in the Loan Agreement except as set forth below:
"Accounts" means, as to Pledgor, all "accounts" (as defined in
the UCC as in effect in the State of New York) now owned or hereafter acquired
by Pledgor, including all accounts receivable, contract rights, book debts,
notes, drafts and other obligations or indebtedness owing to Pledgor, whether or
not arising from the sale, lease or exchange of goods or other property by
Pledgor and/or the performance of services by Pledgor (including any such
obligation which might be characterized as an account, contract right or general
intangible under the UCC as in effect in the State of New York), and all of
Pledgor's rights to any goods, services or other property represented by any of
the foregoing.
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"Agreement" means this Stock Pledge Agreement, as amended from
time to time.
"Bylaws" means the bylaws of Borrower, dated as of March __,
1998, as may be amended from time to time.
"Certificate of Incorporation" means the certificate of
incorporation of Borrower, dated as of March __, 1998, as may be amended from
time to time.
"Collateral" has the meaning specified in Section 2.01.
"Documents" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods now owned or hereafter
acquired by Pledgor.
"General Intangibles" means all "general intangibles" (as
defined in the UCC) now owned or hereafter acquired by Pledgor, including (i)
all obligations or indebtedness owing to Pledgor (other than Accounts) from
whatever source arising and (ii) all rights or claims in respect of refunds for
taxes paid.
"Instruments" means all "instruments," "chattel paper" or
"letters of credit" (each as defined in the UCC) evidencing, representing,
arising from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including promissory notes,
drafts, bills of exchange and trade acceptances, now owned or hereafter acquired
by Pledgor.
"Lender" has the meaning specified in the Loan Agreement.
"Monies" means all cash, checks, notes, drafts or similar
items of payment.
"Obligations" means (i) all indebtedness, obligations and
liabilities of Borrower to Lender arising under, or in connection with, the Loan
Documents, whether now existing or hereafter arising; (ii) any and all sums paid
by Lender in order to preserve the Collateral or its security interest therein;
(iii) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of Borrower referred to in clause (i),
the expenses of retaking, holding, collection, preparing for sale, selling or
otherwise disposing of or realizing on the Collateral, or of any exercise by
Lender of its rights with respect to the Collateral under the Loan Documents,
together with attorneys' fees and expenses and court costs; and (iv) all
indemnity obligations of Borrower to Lender pursuant to the Loan Documents.
"Parties" has the meaning specified in the first paragraph
hereof.
"Permitted Lien" has the meaning specified in the Loan
Agreement.
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"Person" means any natural person, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any government or political
subdivision or any agency, department or instrumentality thereof.
"Pledgor" has the meaning specified in the first paragraph
hereof.
"UCC" means at any time the Uniform Commercial Code as in
effect in the State of New York; provided, that if, by reason of mandatory
provisions of law, the validity or perfection of Lender's security interest in
any item of collateral is governed by the UCC or other similar law as in effect
in a jurisdiction other than New York, "UCC" means the UCC or such similar law
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such validity or perfection.
ARTICLE II
COLLATERAL: GENERAL TERMS
Section 2.01. Security Interest. As security for the
Obligations, Pledgor hereby grants Lender a continuing first-priority security
interest in, Lien on and right of set-off against, and hereby assigns to Lender
as security, all of Pledgor's right, title and interest, if any, in, to and
under the following property and interests in property, whether now owned or
hereafter acquired or existing and wherever located, (collectively, the related
"Collateral"):
(a) (i) all of Pledgor's right, title and interest in and to its
equity interests in Borrower (the "Pledged Interests"), and the
certificates, if any, representing the Pledged Interests, in each case
whether now owned or hereafter acquired; and (ii) all cash, securities,
dividends, proceeds and other property whether constituting Accounts,
Documents, General Intangibles and/or Instruments or otherwise at any
time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the Pledged
Interests;
(b) to the extent not included in clause (a) above, any and all
rights and remedies of Pledgor under the Certificate of Incorporation
and the Bylaws, including the right to enforce any and all
representations, warranties, covenants, obligations, agreements and
indemnities of any party thereto made to or for the benefit of, or that
otherwise inure to the benefit of, Pledgor;
(c) all securities hereafter delivered to Lender in substitution
for or in addition to any of the foregoing, and all certificates and
instruments representing or evidencing such securities and all cash,
securities, dividends, proceeds and other property at any time and from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the foregoing;
3
<PAGE>
(d) All books and records (including credit files, computer
programs, printouts and other computer materials and records) of
Pledgor pertaining to any of the foregoing;
(e) All of Pledgor's right, title and interest in and to the
profits and losses of Borrower and Pledgor's right as a shareholder of
Borrower to receive distributions of Borrower's assets, upon complete
or partial liquidation or otherwise; and
(f)All cash and non-cash proceeds and products of the foregoing,
and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed when Collateral or
proceeds are sold, leased, collected, exchanged or otherwise disposed
of, whether such disposition is voluntary or involuntary, and includes,
without limitation, all rights to payment, including return premiums,
with respect to any insurance relating thereto;
provided, however, that any amounts distributed to Pledgor in its
capacity as shareholder of Borrower shall not constitute Collateral,
and shall be free and clear of any security interest granted by Pledgor
to Lender hereunder, upon and after such distribution.
Section 2.02. Delivery of Certificates, Instruments, Etc.
Pledgor shall deliver to Lender concurrently with the execution and delivery of
this Agreement all original certificates, instruments and other documents, if
any, evidencing or representing the related Collateral, together with copies of
the Certificate of Incorporation and the Bylaws, in each case accompanied by, if
applicable, a duly executed instrument of transfer in blank and shall execute
and deliver to Lender such UCC financing statements as Lender shall specify to
ensure Lender the benefits of the first priority Lien (as defined below) on and
to the Collateral.
Section 2.03. Release of Security Interest. At such time as
(a) all Obligations shall have been paid and (b) the Loan Agreement shall have
been terminated, Lender shall take all steps necessary to release the security
interest in the Collateral granted hereunder. When so released, the Collateral
shall be free and clear of any Lien created hereunder in favor of Lender. Upon
such termination and at the written request of Pledgor, and at the cost and
expense of Pledgor, Lender shall execute a satisfaction of this Agreement and
such instruments, documents or agreements as are necessary or desirable to
terminate, radiate, discharge and remove of record any documents constituting
public notice of this Agreement and the security interests and assignment
granted hereunder and shall deliver or cause to be delivered to Pledgor all
property (if any), including Monies, of Pledgor then held by Lender.
Section 2.04. Pledgor Remains Liable. Anything herein to the
contrary notwithstanding, (a) Pledgor shall remain liable under the Certificate
of Incorporation, the Bylaws and any other shareholder agreements affecting the
rights, limitations, preferences or obligations of Pledgor (collectively, the
"Shareholder Documents") to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been
4
<PAGE>
executed; (b) the exercise by Lender of any of the rights hereunder shall not
release Pledgor from any of its duties or obligations under the Shareholder
Documents; and (c) Lender shall not have any obligation or liability under the
Shareholder Documents by reason of this Agreement, nor shall Lender be obligated
to perform any of the obligations or duties of Pledgor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder; provided
that Lender and any other transferee of the Collateral shall take the same
subject to the Shareholder Documents.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR
Section 3.01. Representations and Warranties. Pledgor
makes the representations and warranties set forth below to Lender:
(a) General Representations and Warranties.
(i) Due Organization; Power. Pledgor is duly organized
and validly existing as a corporation in good standing under the laws of the
State of Delaware and has all requisite power to own its properties, conduct its
business, enter into this Agreement and perform its obligations hereunder.
(ii) Due Authorization. This Agreement and the granting
of a continuing first-priority security interest in the related Collateral have
been duly authorized by Pledgor; this Agreement has been validly entered into by
Pledgor; and this Agreement constitutes a valid and binding instrument of
Pledgor, enforceable against Pledgor in accordance with its terms (except to the
extent enforceability may be limited by applicable bankruptcy, insolvency or
other similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principals of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law));
(iii) No Consents. Except as required for perfection of
the security interest in the Collateral as described in Section 3.01(c), no
permits, licenses, franchises, approvals, authorizations, qualifications or
consents of, or registrations or filings with, governmental authorities are
required in connection with the execution or delivery by Pledgor of, or the
performance by Pledgor of its obligations under, this Agreement, except such as
have been obtained or made and are in full force and effect;
(iv) No Conflict. The execution and delivery of, and the
performance by Pledgor of its obligations under, this Agreement do not and will
not result in a breach or constitute a violation of, conflict with, or
constitute a default under, the Certificate of Incorporation or the Bylaws of
Pledgor, or any law, regulation, order or judgment applicable to Pledgor or any
agreement or instrument to which Pledgor is a party or by which Pledgor or any
of its property is bound;
5
<PAGE>
(v) No Material Litigation. There are no actions, suits,
proceedings or claims pending or, to the knowledge of Pledgor, threatened
against or affecting Pledgor or any of its property which may have, individually
or in the aggregate, a Material Adverse Effect.
(b) Title to Related Collateral. Pledgor is the sole owner of
all of the related Collateral, beneficially and of record, free and clear of any
Liens other than the Liens created hereunder. The Collateral is not subject to
any option to purchase or similar rights of any kind.
(c) Perfection. Upon (i) the execution and delivery of this
Agreement and (ii) the filing of a UCC-1 financing statement against Pledgor and
naming Lender as the secured party in the office of the Secretary of State of
The Commonwealth of [Pennsylvania], the office of the prothonotary of the County
of Philadelphia, Pennsylvania, and the office of the Secretary of State of the
State of Delaware, Lender will have a valid, perfected, continuing,
first-priority security interest in or lien on, respectively, that portion of
the related Collateral in which a security interest is perfected by filing a
financing statement under the UCC.
(d) Principal Place of Business; Taxpayer Identification
Number. The principal place of business of Pledgor is the address indicated in
Section 6.08. Pledgor's federal taxpayer identification number is 23-2720234.
Section 3.02. Covenants. Pledgor covenants and agrees with
Lender as set forth
below:
(a) Defense of Title. Pledgor shall defend its title to the
related Collateral against all claims of all Persons whomsoever, except with
respect to Liens created hereby or Permitted Liens.
(b) Additional Liens. Pledgor shall not (i) permit any Lien
except Permitted Liens to be created or exist with respect to the related
Collateral, or (ii) agree to amend, modify or supplement the Certificate of
Incorporation and the Bylaws or any other agreements, documents or certificates
related to the related Collateral in any material respect without the prior
written consent of Lender.
(c) Change in Location of Principal Place of Business. Pledgor
shall not, without ten (10) days prior written notification to Lender, relocate
its principal place of business to a new location. At the time of such written
notification, such Pledger shall execute and file any documents necessary to
perfect (and to continue the perfection of) Lender's security interests.
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Section 3.03. Protection of Collateral. Pledgor will not
create, permit or suffer to exist, and will defend the related Collateral
against and take such other action as is necessary to remove, any Lien on such
related Collateral other than Permitted Liens, and if Pledgor fails to do so,
Lender may, without waiving or releasing any obligation or liability of Pledgor
hereunder or any Event of Default, at any time thereafter (but shall be under no
obligation to), make such payment or any part thereof, obtain such discharge or
otherwise defend Pledgor's title to the related Collateral. All sums so paid by
Lender and any expenses incurred by Lender in connection therewith, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by Pledgor to Lender, and shall be
deemed additional Obligations secured by the Collateral.
Section 3.04. Sale or Pledge of Related Collateral. Pledgor
shall not sell, assign, transfer or otherwise dispose of, or pledge or otherwise
encumber (except to the extent permitted by this Agreement or the other Loan
Documents), any of the related Collateral or any interest therein.
Section 3.05. Further Assurances, Preservation and Perfection
of Security Interest. (a) At its own expense, Pledgor shall do all such acts,
and shall execute and deliver to Lender all such financing statements,
certificates, instruments and other documents and shall do and perform or cause
to be done all matters and such other things necessary or expedient to be done
as Lender may reasonably request from time to time in order to give full effect
to this Agreement, and for the purpose of effectively perfecting, maintaining
and preserving Lender's security interest and the benefits intended to be
granted to Lender hereunder. To the extent permitted by applicable law, Pledgor
hereby authorizes Lender to execute and file, in the name of Pledgor or
otherwise, UCC financing statements, including continuation statements, which
Lender in its sole discretion may deem necessary or appropriate.
(b) If Pledgor fails to perform any act required by this
Agreement, Lender may, but shall not be obligated to, perform or cause the
performance of such act, and the expenses of Lender incurred in connection
therewith shall be governed by Section 5.06 hereof.
Section 3.06. Rights of Pledgor. Unless an Event of Default
shall have occurred and be continuing, notwithstanding any other provision of
this Agreement to the contrary, Pledgor shall be entitled to (i) exercise any
and all voting and other consensual rights pertaining to the related Pledged
Interests or any part thereof for any purpose not inconsistent with the terms of
this Agreement and (ii) receive and use, free and clear of any Lien created
hereby or any security interest granted by Pledgor to Lender hereunder, for any
purpose any distributions actually made, and any allocations actually made, with
respect to the Pledged Interests (whether as a distribution of net cash flow or
otherwise).
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Section 3.07. Preservation of Related Collateral. Pledgor will
not allow any material default for which it is responsible to occur under any
related Collateral, and shall fully perform or cause to be performed when due
all of its obligations under the related Collateral.
Section 3.08. Papers, Records and Files.
(a) Maintenance . Pledgor shall acquire and shall assemble,
maintain and have available a complete file relating to the Pledged Interests,
including all statements and other information delivered to Pledgor pursuant to
the Certificate of Incorporation, the Bylaws and any other Shareholder
Documents. Pledgor shall maintain all such papers, records and files not in the
possession of Lender in good and complete condition and shall preserve them
against loss.
(b) Pledgor to Hold Records in Trust for Lender. For so long
as Lender has a security interest in any related Collateral, Pledgor will hold
or cause to be held any paper, record or file related to the such Collateral in
trust for Lender.
(c) Lender's Rights of Inspection. Upon reasonable advance
notice from Lender, and during regular business hours, Pledgor shall make any or
all such papers, records or files available to Lender in order that Lender may
examine any such papers, records and files, either by its employees or by agents
or contractors, or both, and make copies of all or any portion thereof.
Section 3.09. Agreements of Pledgor. Until the Obligations are
performed in full, Pledgor covenants and agrees with the Lender not to permit
Borrower, while equity interests in Borrower have been pledged pursuant to this
Agreement, to elect to have such equity interests treated as securities governed
by Article 8 of the Uniform Commercial Code.
The representations and warranties set forth in this Section 3
shall survive the execution and delivery of this Agreement.
ARTICLE IV
NEGATIVE PLEDGE AGREEMENT
Pledgor covenants and agrees that until such time as (i) all
Obligations shall have been paid and (ii) the Loan Agreement shall have been
terminated, Pledgor will not, without the written consent of Lender:
(a) Sell, assign, pledge, grant any Lien other than a
Permitted Lien on, transfer, dispose of or otherwise encumbers the related
Collateral or any part thereof, including, without limitation, entering into any
lock-up or any other arrangement with respect to the related Collateral that
adversely affects the interests of the Lender (as determined by the Lender); or
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(b) Amend, waive, modify or otherwise change any of the terms
or provisions of the Certificate of Incorporation, the Bylaws, any document
setting forth the designation, amount, relative rights, limitations and
preferences of any class of equity of the Borrower or any equivalent documents
(in each case as in effect on the Closing Date), or consent to any such
amendment, modification or change, provided that if any of the terms or
provisions of the Certificate of Incorporation or the Bylaws or other
Shareholder Documents is, or is proposed to be, amended, waived, or modified
without the consent of Pledgor, Pledgor shall provide Lender with prompt written
notice of every such proposed and actual amendment or modification to the extent
that Pledgor has notice or knowledge thereof.
ARTICLE V
LENDER' RIGHTS AND REMEDIES
Section 5.01. Remedies. (a) Should any Event of Default occur,
Lender is hereby authorized and empowered, at its election, (i) to transfer and
register in its or its nominee's name the whole or any part of the Collateral,
including by means of the completion of the instrument of transfer referred to
in Section 2.02, (ii) to exercise all voting rights with respect to the
Collateral, (iii) to demand, sue for, collect, receive and give acquittance for
any and all cash distributions or monies due or to become due upon or by virtue
thereof, and to settle, prosecute or defend any action or proceeding with
respect thereto, (iv) to sell in one or more sales (public or private) the whole
or any part of the Collateral or otherwise to transfer or assign the same, (v)
to receive and retain all distributions on the Collateral, and (vi) to otherwise
enforce and act with respect to the Collateral or the proceeds thereof as though
Lender were the outright owner thereof. Pledgor hereby irrevocably constitutes
Lender as its proxy and attorney-in-fact, with full power of substitution, to
accomplish any of the foregoing, which appointment is coupled with an interest.
(b) In the event of any disposition of the Collateral as
provided in Section 5.01(a)(iv), Lender shall give to Pledgor at least ten (10)
days prior written notice of the time and place of any public sale of the
related Collateral or of the time after which any private sale or any other
intended disposition is to be made. Pledgor hereby acknowledges that ten (10)
days prior written notice of such sale or sales shall be reasonable notice.
Lender may enforce its rights hereunder without any other notice and without
compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived by
Pledgor, to the fullest extent permitted by law). Lender may buy any part or all
of the related Collateral at any public sale and, if any part or all of the
related Collateral is of a type customarily sold in a recognized market or is of
the type which is the subject of widely distributed standard price quotations or
as otherwise permitted by law, Lender may buy any part or all of the related
Collateral at a private sale and may make payments thereof by any means.
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<PAGE>
(c) Pledgor recognizes that Lender may be unable to effect a
public sale of the related Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
other applicable laws, but may be compelled to resort to one or more private
sales thereof to a restricted group of purchasers and may otherwise be required
to impose additional limitations on sales as a result thereof. Pledgor agrees
that any such private sales may be at prices and other terms less favorable to
the seller than if sold at public sales and that such private sales shall not by
reason thereof be deemed not to have been made in a commercially reasonable
manner. Pledgor agrees to use its best efforts to cause Borrower to execute and
deliver all such instruments and documents and to do or cause to be done all
such other acts and things as may be necessary or, in the opinion of the Lender,
advisable (i) to cause the related Collateral to be exempt from registration
under the provisions of the Securities Act, (ii) to amend such instruments and
documents which, in the opinion of the Lender, are necessary or advisable to
meet the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto, and (iii) to make any
sales of any portion or all of the Collateral pursuant to this Section 5.01
valid and binding and in compliance with any and all applicable laws. Pledgor
further agrees to cause Borrower to comply with the provisions of the state
securities or "Blue Sky" laws of any jurisdiction which the Lender shall
designate, to the extent that any such laws apply under circumstances under
which the related Collateral is exempt from registration under the provisions of
the Securities Act.
Section 5.02. [Intentionally Omitted].
Section 5.03. Application of Proceeds. Except as otherwise
herein expressly provided, the proceeds of any collection, sale or other
realization of all or any part of the Collateral pursuant hereto following
Lender's exercise of remedies hereunder, and any other cash at the time held by
Lender hereunder, shall be applied by Lender in the following manner:
first, to the reimbursement of sums expended by Lender
pursuant to Section 5.06, and to the payment of the costs and expenses
of such collection, sale or realization, or any other enforcement
action pursuant hereto, including attorney's fees (including the
allocated expenses of internal counsel to Lender), and all other
expenses incurred in connection therewith, with a reasonable reserve
for any liabilities incurred in connection therewith; and
second, to Pledgor, or its successors or assigns, provided,
however, that so long as the Loan is outstanding, all such amounts
shall be distributed concurrently to Lender for application in the
following order of priority:
first, to any Loan Fees and Expenses, if any (without
duplication of amounts applied pursuant to clause first above);
second, to any interest accrued and unpaid on the Loan, if
any;
third, to the Principal Amount of the Loan (until paid in
full); and
fourth, to the payment to Pledgor or its successors or
assigns.
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As used in Sections 5.03 and 5.04, "proceeds" of Collateral shall mean cash and
other property realized in respect of, and distributions in kind of, such
Collateral, including any thereof received under any reorganization, liquidation
or adjustment of debt of the Pledgor or any other issuer of or obligor on any of
such Collateral.
Section 5.04. Deficiency. If the proceeds of the sale,
collection or other realization of or upon the Collateral pursuant to Section
5.01 are insufficient to cover the costs and expenses of such realization and
the payment in full of the Obligations, neither Pledgor nor the shareholders in
Pledgor shall be liable to Lender for the deficiency (except as otherwise
provided in the Loan Agreement).
Section 5.05. Appointment of Lender as Pledgors' Lawful
Attorney. Pledgor irrevocably designates, makes, constitutes and appoints Lender
(and all Persons designated by Lender) as its true and lawful attorney (and
agent-in-fact) to take the following actions and upon the occurrence and during
the continuance of an Event of Default:
(a) To Endorse Pledgor's Name. At such time or times hereafter
as Lender or its agent in its sole discretion may determine, in
Pledgor's or Lender's name, to endorse Pledgor's name on any checks,
notes, drafts, instruments, documents or any other payment relating to
the related Collateral and/or proceeds of the related Collateral which
come into the possession of Lender or come under Lender's control;
(b) To Sign Pledgor's Name to Perfection Documents. To the
extent permitted by law, to sign Pledgor's name on any documents
(including financing statements and continuations thereof) necessary or
desirable for the purpose of maintaining or achieving the perfection of
a security interest in the related Collateral; and
(c) To Sign Pledgor's Name on Other Documents. To the extent
permitted by law, to sign Pledgor's name to any document necessary or
appropriate in order to permit Lender to fully exercise its rights
under Section 5.01.
Section 5.06. Reimbursement. All sums expended by Lender in
connection with the exercise of any right or remedy provided for herein shall be
and shall remain the obligation of Pledgor. At the option of Lender, all such
sums may be paid from the related Collateral or may be advanced by Lender, in
which event they shall be deemed to have been advanced to Pledgor and shall be
reimbursed by Pledgor to Lender upon demand therefor.
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Section 5.07. Exoneration of Lender; Certain Reimbursements.
(a) Lender's Powers for Lender's Sole Benefit. The powers
conferred on Lender hereunder are solely for Lender's benefit, and do not impose
any duty on Lender to exercise any such powers. Following an Event of Default or
the occurrence of any other event entitling Lender to exercise remedies
hereunder, Lender shall have no duty of care to Pledgor as to any Collateral or
with respect to the taking of any steps necessary to preserve rights against
other parties or any other obligation pertaining to the related Collateral.
Pledgor waives, to the fullest extent permitted by law, all rights whatsoever
against Lender for any loss, expense, liability or damage suffered by Pledgor as
a result of actions taken pursuant to this Agreement, including those arising
under any "mortgagee in possession" doctrine or the like, except to the extent
such losses, expenses, liabilities or damages result from the gross negligence
or willful misconduct of Lender.
(b) Pledgor to Reimburse Lender for Collateral-Preservation
Fees and Taxes. Without limiting the application of Section 5.07(a), Pledgor
shall pay or reimburse Lender for all fees and taxes in connection with
preserving the related Collateral and Lender's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the related Collateral,
except to the extent such fees and taxes result from the gross negligence or
willful misconduct of Lender.
Section 5.08. Waiver of Redemption and Deficiency Rights.
Pledgor hereby waives, to the fullest extent permitted by law, every statute of
limitation, any right of redemption, any moratorium or redemption period, and
any right which Pledgor may have to direct the order in which any of the related
Collateral shall be disposed of in the event of any disposition thereof pursuant
hereto.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Remedies Cumulative. The rights, remedies and
benefits of Lender herein expressly specified are cumulative and not exclusive
of any other rights, remedies or benefits which Lender may have under this
Agreement or any other Loan Document, at law, in equity, by statute or
otherwise. Without limiting the generality of the foregoing, Lender shall have
all rights and remedies of a secured party under Article 9 of the UCC in each
applicable jurisdiction.
Section 6.02. Prejudgment Remedy Provision. In the event of
any legal action between Pledgor and Lender hereunder, Pledgor expressly waives,
to the extent permitted by law, any and all rights Pledgor may have under the
law as now constituted or hereafter amended that may constitute a limitation on
prejudgment remedies, and Lender may invoke any prejudgment remedy available to
it, including garnishment, attachment, foreign attachments and replevin, with
respect to the related Collateral to enforce the provisions of this Agreement.
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Section 6.03. Security Interest Absolute. All rights of Lender
hereunder, the grant of a security interest in the Collateral and all
obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Underlying
Loan Documents or the Transaction Documents, (b) any change in time, manner or
place of payment of, or in any other term of, all or any of the Obligations, or
any release, amendment or waiver of or any consent to any departure from the
Loan Agreement or any other agreement or instrument, (c) any exchange, release
or nonperfection of any other collateral, or any release, amendment or waiver of
or consent to or departure from any guarantee, for all or any of the
Obligations, or (d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor in respect of the Obligations
or in respect of this Agreement.
Section 6.04. [Intentionally Omitted]
Section 6.05. No Delay; Waivers. No delay on the part of
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power or right. Lender shall not be deemed to have waived any rights
hereunder unless such waiver shall be in writing and signed by Lender.
Section 6.06. Further Assurances. Each Party shall execute
such deeds, assignments, endorsements and other instruments and documents and
shall give such further assurances as shall be necessary to perform its
obligations hereunder.
Section 6.07. Waivers and Amendments. This Agreement may be
amended, superseded or canceled, and the terms hereof may be waived, only by a
written instrument signed by authorized representatives of the Parties or, in
the case of a waiver, by an authorized representative of the party waiving
compliance. No such written instrument shall be effective unless it expressly
recites that it is intended to amend, supersede or cancel this Agreement or to
waive compliance with one or more of the terms hereof, as the case may be.
Section 6.08. Notices. All notices, requests, demands and
other communications required under the terms and provisions hereof shall be in
writing and shall become effective when delivered by hand or received by
telecopier, telegram, registered or certified mail, postage prepaid, or an
established overnight delivery service, addressed as follows:
If to Lender:
Merrill Lynch Mortgage Capital Inc.
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Attention: David Mahoney
Facsimile No.: (212) 449-0735
Confirmation: (212) 449-9293
and:
Attention: Michael Nash
Facsimile No.: (212) 449-0769
Confirmation: (212) 449-5080
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<PAGE>
with a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: George Petrow
Facsimile No.: (212) 906-2021
Confirmation: (212) 906-2258
If to Pledgor:
Resource Properties, Inc.
c/o Resource America, Inc.
1521 Locust Street, 4th Floor
Philadelphia, Pennsylvania 19102
Attention: Scott Schaeffer
Facsimile No.: (215) 546-5005
Confirmation: (215) 546-5388
with a copy to:
Ledgewood Law Firm
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Jeffrey Brotman, Esq.
Facsimile No.: (215) 735-2513
Confirmation: (215) 731-9450
or to such other address as the party to receive the notice shall designate by
notice to the other party.
14
<PAGE>
Section 6.09. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflict of laws, except to the extent that the validity
or perfection of the security interest hereunder, or remedies hereunder, in
respect of any particular Collateral is required, pursuant to mandatory
choice-of-law rules, to be governed by the laws of a jurisdiction other than the
State of New York.
Section 6.10. Submission to Jurisdiction; Waiver of Objection
to Inconvenient Forum. Each Party hereby irrevocably submits to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York County
for purposes of all legal proceedings arising out of or relating to this
Agreement. Each Party hereto irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Section 6.11. Waiver of Jury Trial. Pledgor and Lender hereby
irrevocably waives any and all rights to trial by jury in any legal proceeding
arising out of or relating to this Agreement, the related Collateral or the
transactions contemplated hereby.
Section 6.12. Binding Agreement; Assignments. This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. Pledgor shall not assign this
Agreement or any interest herein or in the Collateral, or any part thereof, or
any cash or property held by Lender as Collateral under this Agreement, except
with the prior written consent of Lender. Any purported assignment in violation
of this Section shall be null and void. At any time that two or more Persons are
participants in the interests of Lender hereunder, Lender or its designee shall
serve as representative ("Lender Representative") for all of them under all the
Loan Documents. The Lender Representative will serve as the sole source of
communication from such Persons and delivery of notices or information to Lender
Representative by Pledgor shall be deemed to constitute delivery to all such
participants. Except as otherwise provided in the preceding sentence, the
designation of a Lender Representative shall not relieve Pledgor of its
obligations to any Person participating in the interests of Lender hereunder.
Section 6.13. [Reserved].
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Section 6.14. Restoration or Set Aside. If, for any reason,
any portion of Borrower's payments to Lender pursuant to the Obligations is set
aside or restored, whether voluntarily or involuntarily, after the making
thereof, then the obligation intended to be satisfied thereby shall be revived
and shall continue in full force and effect as if said payment or payments had
not been made, and the full amount Lender is required to repay, plus any and all
costs and expenses (including (i) attorneys' fees and expenses and (ii)
attorneys' fees and expenses incurred pursuant to the United States Bankruptcy
Code) paid by Lender in connection therewith, shall constitute additional
Obligations.
Section 6.15. Severability. If any provision of this Agreement
shall be invalid, illegal or unenforceable, then, to the extent permitted by
law, the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
Section 6.16. Section Headings. Section headings used herein
are for convenience of reference only and are not to affect the construction of,
or to be taken into consideration in interpreting, this Agreement.
Section 6.17. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
Section 6.18. No Rights of Others. No Person other than a
Party shall have any legal or equitable right, remedy or claim under or in
respect of this Agreement.
Section 6.19. Entire Agreement. This Agreement, taken together
with the other Loan Documents, supersedes all prior written agreements and
understandings between the Parties with respect to the subject matter hereof,
whether express or implied, written or oral.
[Signature begin on the next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Stock
Pledge Agreement to be duly executed as of the date first above written.
RESOURCE PROPERTIES, INC.
as Pledgor
By:_________________________________
Name: Scott Schaeffer
Title: President
MERRILL LYNCH MORTGAGE CAPITAL INC.,
as Lender
By:________________________________
Name: David W. Mahoney
Title: Vice President
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<PAGE>
GUARANTY OF RECOURSE OBLIGATIONS
This GUARANTY OF RECOURSE OBLIGATIONS (this Guaranty), dated
as of March 12, 1998, made by RESOURCE AMERICA, INC., a Delaware corporation
(Guarantor), in favor of MERRILL LYNCH MORTGAGE CAPITAL, INC., a Delaware
corporation, having an office at World Financial Center, North Tower, 250 Vesey
Street, New York, New York 10281 (together with its successors and assigns,
Lender).
R E C I T A L S:
A. Pursuant to that certain Secured Loan Agreement dated as of
the date hereof (as the same may be amended, modified, supplemented or replaced
from time to time, the Loan Agreement) between Resource Properties XLIX, Inc.
(Borrower) and Lender, Lender has agreed to make a loan (the Loan) to Borrower
in an aggregate principal amount not to exceed $55,000,000, subject to the terms
and conditions of the Loan Agreement;
B. As a condition to Lender's making the Loan, Lender is
requiring that Guarantor execute and deliver to Lender this Guaranty; and
C. Guarantor hereby acknowledges that Guarantor will
materially benefit from Lender's agreeing to make the Loan;
NOW, THEREFORE, in consideration of the premises set forth
herein and as an inducement for and in consideration of the agreement of Lender
to make the Loan pursuant to the Loan Agreement, Guarantor hereby agrees,
covenants, represents and warrants to Lender as follows:
SECTION 1. Definitions All capitalized terms used and not
defined herein shall have the respective meanings given such terms in the Loan
Agreement.
SECTION 2. Guaranty
(a) Guarantor hereby irrevocably, absolutely and
unconditionally (x) guarantees to Lender the due and punctual payment of the
Debt and all portions of the Debt, as and when the same shall become due and
payable under the Note or any of the other Loan Documents, whether at maturity
(by acceleration or otherwise) or at any other time; provided that until the
occurrence of one or more of the following events, the Guarantor shall have no
liability under this Guaranty; and (y) assumes liability for, guarantees payment
to Lender of, and agrees to pay, protect, defend, indemnify and save harmless
Lender from and against any and all liabilities, obligations, losses, damages,
costs and expenses (including, without limitation, attorneys' fees), causes of
action, suits, claims, demands and judgments of any nature or description
whatsoever which may at any time be imposed upon, suffered or incurred by or
awarded against Lender as a result of any of the following:
<PAGE>
(i) fraud or intentional misrepresentation by
Borrower or Guarantor in connection with the Plan of Reorganization
(including, without limitation, its rights and obligations under the
Disbursing Agreement and the Liquidating Trust Agreement), the Mortgage
Loan, the Underlying Loan Documents, the Loan or any of the Loan
Documents;
(ii) the gross negligence or wilful misconduct of
Borrower in connection with its rights under the Plan of Reorganization
(including, without limitation, its rights and obligations under the
Disbursing Agreement and the Liquidating Trust Agreement), the Mortgage
Loan, the Underlying Loan Documents, the Loan or the Loan Documents;
(iii) material physical waste of the Mortgaged
Property;
(iv) any action by Borrower or Guarantor that (A)
materially impairs the value of any portion of the Collateral under
each of the Security Agreement and the Stock Pledge Agreement or (B),
after Borrower has taken title to the Mortgaged Property, results in
the sale or disposal of any portion of such Mortgaged Property in
violation of the Loan Documents;
(v) the misapplication or conversion by Borrower
of (A) any insurance proceeds paid by reason of any loss, damage or
destruction to the Mortgaged Property or (B) any awards or other
amounts received in connection with the condemnation of all or a
portion of the Mortgaged Property, the failure of Borrower to deposit
any Collections into the Borrower Account or to pay Net Cash Flow to
Lender pursuant to the Loan Agreement or the failure of Borrower to
deposit monies into the account established under the Disbursing
Agreement or to obtain Lender's approval of any withdrawals from such
account if required;
(vi) the failure by Borrower to obtain Lender's
approval if required under the Agent Recognition Agreement or the
Management Recognition Agreement.
(vii) failure to pay charges for labor or
materials or other charges that can create liens on any portion of the
Mortgaged Property or any of the Underlying Loan Documents, prior to
such liens actually being created;
(viii) any security deposits collected with respect
to the Mortgaged Property which are not delivered to the Disbursing
Agent pursuant to the Disbursing Agreement or otherwise in accordance
with the Plan of Reorganization;
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<PAGE>
(ix) the commencement by Borrower or any Person
owning at least a ten percent (10%) interest (directly or indirectly)
in Borrower of any action, suit, claim, arbitration, governmental
investigation or other proceeding (A) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors seeking to have an
order for relief entered with respect to Borrower, or seeking to
adjudicate Borrower a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to Borrower or Borrower's
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for Borrower or for all or substantially all of
Borrower's assets; and
(x) the contest or interference by Borrower or
Guarantor, directly or indirectly, with any enforcement of Lender's
rights, powers or remedies under any of the Loan Documents (whether by
making any motion, seeking any extension, asserting any defense, claim,
counterclaim or right of offset, seeking any injunction or other
restraint, commencing any action, seeking to consolidate any
enforcement with any other action, or otherwise).
The obligations which are the subject of the guaranty referred to in this
Section 2(a) are hereinafter collectively referred to as the Guaranteed
Obligations.
(b) All sums payable to Lender under this Guaranty shall be
payable on demand and without reduction for any offset, claim, counterclaim or
defense.
SECTION 3. Representations and Warranties. Guarantor hereby
represents and warrants to Lender as follows (which representations and
warranties shall be given as of the date hereof and shall survive the execution
and delivery of this Guaranty):
(a) Due Execution. This Guaranty has been duly executed and
delivered by Guarantor.
(b) Enforceability. This Guaranty constitutes a legal, valid
and binding obligation of Guarantor, enforceable against Guarantor in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally.
(c) No Violation. The execution, delivery and performance by
Guarantor of its obligations under this Guaranty do not and will not violate any
law, regulation, order, writ, injunction or decree of any court or governmental
body, agency or other instrumentality applicable to Guarantor, or result in a
breach of any of the terms, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of any mortgage, lien, charge or
encumbrance of any nature whatsoever upon any of the assets of Guarantor
pursuant to the terms of any mortgage, indenture, agreement or instrument to
which Guarantor is a party or by which it or any of its properties is bound.
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<PAGE>
(d) No Litigation. There are no actions, suits or proceedings
at law or at equity, pending or, to Guarantor's best knowledge, threatened
against or affecting Guarantor or which involve or might involve the validity or
enforceability of this Guaranty or which might materially adversely affect the
financial condition of Guarantor or the ability of Guarantor to perform any of
its obligations under this Guaranty. Guarantor is not in default beyond any
applicable grace or cure period with respect to any order, writ, injunction,
decree or demand of any Governmental Authority which might materially adversely
affect the financial condition of Guarantor or the ability of Guarantor to
perform any of its obligations under this Guaranty.
(e) Consents. All consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, all
Governmental Authorities (collectively, the Consents) that are required in
connection with the valid execution, delivery and performance by Guarantor of
this Guaranty have been obtained and Guarantor agrees that all Consents required
in connection with the carrying out or performance of any of Guarantor's
obligations under this Guaranty will be obtained when required.
(f) Financial Statements and Other Information. All financial
statements of Guarantor heretofore delivered to Lender are true and correct in
all material respects and fairly present the financial condition of Guarantor as
of the respective dates thereof, and no materially adverse change has occurred
in the financial conditions reflected therein since the respective dates
thereof. None of the aforesaid financial statements or any certificate or
statement furnished to Lender by or on behalf of Guarantor in connection with
the transactions contemplated hereby, and none of the representations and
warranties in this Guaranty contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained therein or herein not misleading. Guarantor is not insolvent within
the meaning of the United States Bankruptcy Code or any other applicable law,
code or regulation and the execution, delivery and performance of this Guaranty
will not render Guarantor insolvent.
(g) Consideration. Guarantor is the owner, directly or
indirectly, of all of the legal and beneficial equity interests in Borrower.
SECTION 4. Financial Statements. Guarantor hereby agrees for
the benefit of Lender that Guarantor will deliver to Lender, (a) within 90 days
after the end of each fiscal year of Guarantor, a complete copy of such
Guarantor's annual financial statements audited by an independent certified
public accountant reasonably acceptable to Lender and (b) 20 days after request
by Lender, such other financial information with respect to Guarantor as Lender
may reasonably request.
SECTION 5. Unconditional Character of Obligations of
Guarantor.
(a) The obligations of Guarantor hereunder shall be
irrevocable, absolute and unconditional, irrespective of the validity,
regularity or enforceability, in whole or in part, of (1) the Plan of
Reorganization (including, without limitation, the Disbursing Agreement and the
Liquidating
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<PAGE>
Trust Agreement), (2) the Mortgage Loan or any of the Underlying Loan Documents
or (3) the Note, the Loan Agreement, or the other Loan Documents or any
provision of (1), (2) or (3), or the absence of any action to enforce the same,
any waiver or consent with respect to any provision thereof, the recovery of any
judgment against Borrower, Guarantor or any other Person or any action to
enforce the same, any failure or delay in the enforcement of the obligations of
Borrower under the Note, the Loan Agreement, or any other Loan Documents or
Guarantor under this Guaranty, or any setoff, counterclaim, and irrespective of
any other circumstances which might otherwise limit recourse against Guarantor
by Lender or constitute a legal or equitable discharge or defense of a guarantor
or surety. Lender may enforce the obligations of Guarantor under this Guaranty
by a proceeding at law, in equity or otherwise, independent of any deficiency
action against Borrower or any other Person at any time or, after Borrower takes
title to the Mortgaged Property, either before or after a foreclosure action
against the Mortgaged Property or any part thereof. This Guaranty is a guaranty
of payment and performance and not merely a guaranty of collection. Guarantor
waives diligence, notice of acceptance of this Guaranty, filing of claims with
any court, any proceeding to enforce any provision of the Note, the Loan
Agreement, or any other Loan Documents, against Guarantor, Borrower or any other
Person, any right to require a proceeding first against Borrower or any other
Person, or to exhaust any security (including, without limitation, the
Collateral under each of the Security Agreement and the Stock Pledge Agreement,
or the Mortgaged Property after title of such is transferred to Borrower) for
the performance of the Guaranteed Obligations or any other obligations of
Borrower or any other Person, or any protest, presentment, notice of default or
other notice or demand whatsoever (except to the extent expressly provided to
the contrary in this Guaranty), and Guarantor hereby covenants and agrees that
Guarantor shall not be discharged of its obligations hereunder.
(b) The obligations of Guarantor under this Guaranty, and the
rights of Lender to enforce the same by proceedings, whether by action at law,
suit in equity or otherwise, shall not be in any way affected by any of the
following:
(i) any insolvency, bankruptcy, liquidation,
reorganization, readjustment, composition, dissolution, receivership,
conservatorship, winding up or other similar proceeding involving or
affecting Borrower, the Collateral under the Security Agreement and the
Stock Pledge Agreement, the Mortgaged Property or any part thereof,
Guarantor or any other Person;
(ii) any failure by Lender or any other Person,
whether or not without fault on its part, to perform or comply with any
of the terms of the Plan of Reorganization (including, without
limitation, the Disbursing Agreement and the Liquidating Trust
Agreement), the Underlying Loan Documents, or the Loan Agreement or any
other Loan Documents, or any document or instrument relating thereto;
(iii) the sale, transfer or conveyance of the
Collateral under either of the Security Agreement or the Stock Pledge
Agreement or, after title of such has been transferred to Borrower, the
Mortgaged Property or any interest therein to any Person, whether now
or hereafter having or acquiring an interest in the Collateral or the
Mortgaged Property or any interest therein and whether or not pursuant
to any enforcement action,
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<PAGE>
foreclosure, trustee sale or similar proceeding against Borrower, the
Collateral or the Mortgaged Property or any interest therein;
(iv) the conveyance to Lender, any Affiliate of
Lender or Lender's nominee of the Mortgaged Property or any interest
therein pursuant to the Plan of Reorganization;
(v) the release of Borrower or any other Person
from the performance or observance of any of the agreements, covenants,
terms or conditions contained in any of the Plan of Reorganization
(including, without limitation, the Disbursing Agreement and the
Liquidating Trust Agreement), the Underlying Loan Documents, or the
Loan Documents by operation of law or otherwise; or
(vi) the release in whole or in part of any
collateral for any or all Guaranteed Obligations or for the Loan or any
portion thereof.
(c) Except as otherwise specifically provided in this
Guaranty, Guarantor hereby expressly and irrevocably waives all defenses in an
action brought by Lender to enforce this Guaranty based on claims of waiver,
release, surrender, alteration or compromise and all setoffs, reductions, or
impairments, whether arising hereunder or otherwise.
(d) Lender may deal with Borrower and Affiliates of Borrower
in the same manner and as freely as if this Guaranty did not exist and shall be
entitled, among other things, to grant Borrower or any other Person such
extension or extensions of time to perform any act or acts as may be deemed
advisable by Lender, at any time and from time to time, without terminating,
affecting or impairing the validity of this Guaranty or the obligations of
Guarantor hereunder.
(e) No compromise, alteration, amendment, modification,
extension, renewal, release or other change of, or waiver, consent, delay,
omission, failure to act or other action with respect to, any liability or
obligation under or with respect to, or of any of the terms, covenants or
conditions of the Plan of Reorganization (including, without limitation, the
Disbursing Agreement and the Liquidating Trust Agreement), the Mortgage Loan or
any of the Underlying Loan Documents, the Note, the Loan Agreement or the other
Loan Documents shall in any way alter, impair or affect any of the obligations
of Guarantor hereunder, and Guarantor agrees that if any Loan Documents are
modified with Lender's consent, the Guaranteed Obligations shall automatically
be deemed modified to include such modifications.
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<PAGE>
(f) Lender may proceed to protect and enforce any or all of
its rights under this Guaranty by suit in equity or action at law, whether for
the specific performance of any covenants or agreements contained in this
Guaranty or otherwise, or to take any action authorized or permitted under
applicable law, and shall be entitled to require and enforce the performance of
all acts and things required to be performed hereunder by Guarantor. Each and
every remedy of Lender shall, to the extent permitted by law, be cumulative and
shall be in addition to any other remedy given hereunder or now or hereafter
existing at law or in equity.
(g) No waiver shall be deemed to have been made by Lender of
any rights hereunder unless the same shall be in writing and signed by Lender,
and any such waiver shall be a waiver only with respect to the specific matter
involved and shall in no way impair the rights of Lender or the obligations of
Guarantor to Lender in any other respect or at any other time.
(h) At the option of Lender, Guarantor may be joined in any
action or proceeding commenced by Lender against Borrower in connection with or
based upon the Note, the Loan Agreement or any other Loan Documents and recovery
may be had against Guarantor in such action or proceeding or in any independent
action or proceeding against Guarantor to the extent of Guarantor's liability
hereunder, without any requirement that Lender first assert, prosecute or
exhaust any remedy or claim against Borrower or any other Person, or any
security for the obligations of Borrower or any other Person.
(i) Guarantor agrees that this Guaranty shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
is made by Borrower or Guarantor to Lender and such payment is rescinded or must
otherwise be returned by Lender (as determined by Lender in its sole and
absolute discretion) upon insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, receivership, conservatorship, winding
up or other similar proceeding involving or affecting Borrower or Guarantor, all
as though such payment had not been made.
(j) In the event that Guarantor shall advance or become
obligated to pay any sums under this Guaranty or in connection with the
Guaranteed Obligations or in the event that for any reason whatsoever Borrower
or any subsequent owner of the Property or any part thereof is now, or shall
hereafter become, indebted to Guarantor, Guarantor agrees that (i) the amount of
such sums and of such indebtedness and all interest thereon shall at all times
be subordinate as to lien, the time of payment and in all other respects to all
sums, including principal and interest and other amounts, at any time owed to
Lender under the Loan Documents, and (ii) Guarantor shall not be entitled to
enforce or receive payment thereof until all principal, interest and other sums
due pursuant to the Loan Documents have been paid in full. Nothing herein
contained is intended or shall be construed to give Guarantor any right of
subrogation in or under the Loan Documents or any right to participate in any
way therein, or in the right, title or interest of Lender in or to any
collateral for the Loan, notwithstanding any payments made by Guarantor under
this Guaranty, until the actual and irrevocable receipt by Lender of payment in
full of all principal, interest and other sums due with respect to the Loan or
otherwise payable under the Loan Documents. If any amount shall be paid to
Guarantor on account of such subrogation rights at any time when any such sums
due and owing to Lender shall not have been fully paid, such amount shall be
paid by Guarantor to Lender for credit and application against such sums due and
owing to Lender.
(k) Guarantor's obligations hereunder shall survive the
exercise by Lender of any of all of its remedies pursuant to the Loan Documents
and the transfer of title to the Mortgaged Property to Borrower pursuant to the
Plan of Reorganization.
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<PAGE>
SECTION 6. INTENTIONALLY OMITTED
SECTION 7. Entire Agreement/Amendments. This instrument
represents the entire agreement between the parties with respect to the subject
matter hereof. The terms of this Guaranty shall not be waived, altered,
modified, amended, supplemented or terminated in any manner whatsoever except by
written instrument signed by Lender and Guarantor.
SECTION 8. Successors and Assigns. This Guaranty shall be
binding upon Guarantor, and Guarantor's estate, heirs, personal representatives,
successors and assigns, may not be assigned or delegated by Guarantor and shall
inure to the benefit of Lender and its successors and assigns.
SECTION 9. Applicable Law and Consent to Jurisdiction. This
Guaranty shall be governed by, and construed in accordance with, the substantive
laws of the State of New York. Guarantor irrevocably (a) agrees that any suit,
action or other legal proceeding arising out of or relating to this Guaranty may
be brought in a court of record in the City and County of New York or in the
Courts of the United States of America located in the Southern District of New
York, (b) consents to the jurisdiction of each such court in any such suit,
action or proceeding and (c) waives any objection which it may have to the
laying of venue of any such suit, action or proceeding in any of such courts and
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. Guarantor irrevocably consents to the service of any and all
process in any such suit, action or proceeding by service of copies of such
process to Guarantor at its address provided in Section 14 hereof. Nothing in
this Section 9, however, shall affect the right of Lender to serve legal process
in any other manner permitted by law or affect the right of Lender to bring any
suit, action or proceeding against Guarantor or its property in the courts of
any other jurisdictions.
SECTION 10. Section Headings. The headings of the sections and
paragraphs of this Guaranty have been inserted for convenience of reference only
and shall in no way define, modify, limit or amplify any of the terms or
provisions hereof.
SECTION 11. Severability. Any provision of this Guaranty which
may be determined by any competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Guarantor hereby
waives any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
SECTION 12. WAIVER OF TRIAL BY JURY. GUARANTOR HEREBY WAIVES
THE RIGHT OF TRIAL BY JURY IN ANY LITIGATION, ACTION OR PROCEEDING ARISING
HEREUNDER OR IN CONNECTION THEREWITH.
SECTION 13. Other Guarantees. The obligations of Guarantor
hereunder are separate and distinct from, and in addition to, the obligations of
Guarantor now or hereafter arising under the other Guaranties pursuant to which
Guarantor has guaranteed the payment and performance of certain other
obligations of Borrower described therein.
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<PAGE>
SECTION 14. Notices. All notices, demands, requests, consents,
approvals or other communications (collectively called "Notices") required or
permitted to be given hereunder to Lender or Guarantor or which are given to
Lender or Guarantor with respect to this Guaranty shall be in writing and shall
be sent by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as set forth below, or personally delivered with
receipt acknowledged to such address, or in either case, to such other
address(es) as the party in question shall have specified most recently by like
Notice.
If to Lender, to:
Merrill Lynch Mortgage Capital, Inc.
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Attention: David Mahoney
With a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: George Petrow
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<PAGE>
If to Guarantor, to:
Resource America, Inc.
The Ledgewood Law Firm Building, 4th Floor
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Scott Schaeffer
with a copy to:
Ledgewood Law Firm
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Jeffrey Brotman
Notices which are given in the manner aforesaid shall be deemed to have been
given or served for all purposes hereunder (i) on the date on which such notice
shall have been personally delivered as aforesaid, (ii) on the date of delivery
by mail as evidenced by the return receipt therefor, or (iii) on the date of
failure to deliver by reason of refusal to accept delivery or changed address of
which no Notice was given.
SECTION 15. Guarantor's Receipt of Building Loan Documents.
Guarantor by its execution hereof acknowledges receipt of true copies of all of
the Loan Documents, the terms and conditions of which are hereby incorporated
herein by reference.
SECTION 16. Interest; Expenses.
(a) If Guarantor fails to pay all or any sums due hereunder
upon demand by Lender, the amount of such sums payable by Guarantor to Lender
shall bear interest from the date of demand until paid at the Default Rate.
(b) Guarantor hereby agrees to pay all costs, charges and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements, that may be incurred by Lender in enforcing the covenants,
agreements, obligations and liabilities of Guarantor under this Guaranty.
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<PAGE>
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as
of the date first above written.
RESOURCE AMERICA, INC.
By:__________________________
Name: Scott Schaeffer
Title: Executive Vice President
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<PAGE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT ("Participation Agreement") dated as of
March 12, 1998 is by and between RESOURCE PROPERTIES XLIX, INC. ("RPI 49") and
RAIT PARTNERSHIP, L.P., a Delaware limited partnership ("RAIT").
BACKGROUND
A. On the date hereof RPI 49 shall acquire legal title to that certain
loan (the "Loan") which is subject to the documents, instruments and agreements
(the "Loan Documents") set forth on Exhibit "A" hereto from Dai-Ichi Kangyo
Bank, Limited, New York Branch ("Dai-Ichi"). The Loan Documents create a first
priority mortgage lien on that certain real property located in Washington,
D.C., commonly known as the Evening Star Building, and more fully described on
Exhibit "B" hereto (the "Property").
B. RAIT and RPI 49 will each contribute a portion of the funds
necessary to purchase the Loan and they desire that each of them have an
ownership interest in the Loan subject to the terms and conditions set forth in
this Participation Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. THE LOAN.
a. Contributions; Structure.
(1) Cost. The price payable to Dai-Ichi for the Loan is $85,500,000. An
additional $2,500,000 of costs, expenses, fees and other third party payments is
anticipated to be incurred in connection with the purchase of the Loan, so that
the aggregate cost of the Loan will be deemed to be $88,000,000 (the "Cost") for
the purposes of this Participation Agreement. RPI 49 will contribute $78,000,000
of the Cost (the "RPI 49 Contribution"), which will include $55,000,000 (the
"Purchase Money Financing") which RPI 49 shall borrow from Merrill Lynch
Mortgage Capital, Inc. (the "Purchase Money Lender"). RAIT will contribute
$10,000,000 of the Cost (the "RAIT Contribution"). To the extent that the Cost
is other than $88,000,000, the RPI 49 Contribution shall be increased or reduced
by like amount.
(2) Loan Subject to Purchase Money Financing. RPI 49 and RAIT hereby
acknowledge, agree and covenant that the Loan is and shall be subject to an
absolute perfected first priority security interest of the Purchase Money Lender
and that the interests of RPI 49 and RAIT in and to the Loan and Loan Documents,
and in and to any proceeds or rights to payment therefrom are and shall be
completely and absolutely subject and subordinate to the Purchase Money Lender's
security interest and the Purchase Money Lender's right to payment from the
proceeds and payments from the Loan. As between RAIT and RPI 49, RPI 49 shall
have legal ownership of the Loan, in its name, on behalf of itself and RAIT as
their respective interests shall be described in
<PAGE>
this Participation Agreement. RAIT agrees that it shall not be regarded as a
creditor of RPI 49 and will, at the request of the Purchase Money Lender,
execute a standstill agreement and such other agreements satisfactory to the
Purchase Money Lender in which RAIT will agree to and confirm the terms and
conditions regarding the subordination of its Participation Interest (as
hereinafter defined) to the Purchase Money Financing.
b. Interests. RAIT shall own a Ten Million Dollar ($10,000,000)
participation interest (the "Participation Interest") in the Loan and Loan
Documents senior to the interest of RPI 49 in and to the Loan and Loan Documents
but subject and subordinate to the interests of the Purchase Money Lender in and
to the Loan and Loan Documents. RPI 49 will own the balance of the Loan (the
"Subordinate Interest"). At Closing, RPI 49 shall issue to RAIT a Participation
Certificate in the form of Exhibit C attached hereto, evidencing RAIT's
Participation Interest, which Participation Certificate shall acknowledge and
recite that it is subject and subordinate to the interests of the Purchase Money
Lender.
2. PROPERTY; NET CASH FLOW.
a. Bankruptcy; Liquidating Agent.
(1) Plan of Reorganization. The Property is currently subject to
Lender's Plan of Reorganization (the "Plan") confirmed by the United States
Bankruptcy Court for the District of Columbia in the matter "In Re: The Avenue
All Stars Limited Partnership, Case No. 97-1386". Pursuant to the Plan, RPI 49,
as successor to, and designee of, Dai-Ichi, is entitled, as "Lender", to (i)
appoint, in its sole discretion, a "Liquidating Agent" to manage, control and
take possession of the Property and (ii) to, at any time on or before June 30,
1998, designate any party to take legal title to the Property (an "Equity
Holder").
(2) Liquidating Agent. RAIT and RPI hereby agree that, subject to the
approval of the Purchase Money Lender, Brandywine Construction & Management,
Inc. shall be appointed as Liquidating Agent as of Closing. RPI 49 agrees that,
subject to the rights of the Purchase Money Lender, it will designate an Equity
Holder after consulting with RAIT. It is expressly agreed that RAIT may not, in
any manner whatsoever, interfere with, delay or otherwise impair Purchase Money
Lender's rights to require designation of an Equity Holder. As long as the
Purchase Money Financing shall be outstanding, the Liquidating Agent shall be
irrevocably instructed to make all payments due thereon to the Purchase Money
Lender prior to making any payments to RAIT or RPI 49.
(3) Designation of Manager. Any designation of an Equity Holder will be
conditioned on the appointment by RPI 49, after consulting with RAIT of a
"Property Manager" who will manage the Property and make all payments in
accordance herewith and with the Purchase Money Financing. It is expressly
agreed that RAIT may
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<PAGE>
not, in any manner whatsoever, interfere with, delay or otherwise impair
Purchase Money Lender's rights to require appointment (or replacement) of a
Property Manager. As long as the Purchase Money Financing shall be outstanding,
the Property Manager shall be irrevocably instructed to make all payments due
thereon to the Purchase Money Lender prior to making any payments to RAIT or RPI
49.
b. Net Cash Flow.
(1) RPI 49 to Collect Net Cash Flow. RPI 49 and RAIT agree that RPI 49
shall receive all Net Cash Flow (as later defined in this Section 2.b.) from the
Liquidating Agent or Property Manager, in accordance with the provisions of the
Purchase Money Financing and such funds shall be deposited in the Borrower
Collection Account in accordance with the terms of the Purchase Money Financing
documents. The term "Net Cash Flow" shall mean (i) all moneys from whatever
source derived, on account of the Loan or Loan Documents, or as proceeds or from
the Property in any manner whatsoever, less (ii) payments of reasonable,
necessary and appropriate expenses and costs of maintaining, operating and
managing the Property, pursuant to the Property Operating Budget (under and as
defined in the Purchase Money Financing) and less (iii) all interest, principal
and other payments due pursuant to the Purchase Money Financing.
(2) Payments of Net Cash Flow. Provided RPI 49 is otherwise entitled to
receive Net Cash Flow pursuant to the terms of the Purchase Money Financing
documents, then RPI 49 shall distribute Net Cash Flow each month: (i) first to
RAIT in an amount equal to pay interest on its Participation Interest at the
annual rate of ten percent (10%) per annum; and (ii) the balance to RPI 49 on
account of its Subordinate Interest. Notwithstanding the forgoing, if any Net
Cash Flow represents principal payments, or if the Property shall be sold or
refinanced and proceeds shall remain after the payment in full of the Purchase
Money Financing, such Net Cash Flow (or sale or refinance proceeds) shall be
paid to RAIT until its Participation Interest shall have been paid in full. It
is the intent of RAIT and RPI 49 that, provided all payments under the Purchase
Money Financing have been made and RPI 49 is otherwise entitled to receive Net
Cash Flow under the Purchase Money Financing documents, to the extent of
payments required pursuant to this section, the Participation Interest of RAIT
shall be superior and first in payment to the Subordinate Interest, and RAIT
shall be entitled to receive all amounts due to it each month prior to RPI 49
receiving any payments in such month on account of its Subordinated Interest.
c. Loan Administration. RPI 49 will administer the Loan, receiving all
Net Cash Flow from the Property Manager and/or the Liquidating Agent and holding
or distributing the same as required under the Purchase Money Financing
documents and this Agreement. RPI 49 shall provide, or cause to be provided,
monthly statements to RAIT of all revenues and expenses of the Property within
fifteen (15) days after the end of each month. The sole responsibilities of RPI
49 shall be to attend to the administration of the Loan Documents, to keep
accurate books and records with respect
3
<PAGE>
thereto and to administer the Loan as set forth herein. RPI 49 will not be
liable to RAIT for any action taken or omitted, or for any error in judgment,
except as the same may arise from its negligence or misconduct.
3. CLOSING. The closing (the "Closing") of the acquisition of the Loan
and Loan Documents from Dai-Ichi and of the Purchase Money Financing as
described herein shall be consummated on March 12, 1998 (the "Closing Date"). At
Closing:
a. RPI 49 Deliveries. RPI 49 shall deliver to RAIT:
(1) The original Participation Certificate; and
(2) A copy of each other Loan Document.
b. RAIT Deliveries. RAIT shall deliver to RPI 49 a wire transfer of the
RAIT Contribution.
4. DEFAULT AND ENFORCEMENT.
a. Default Under Loan Documents. In accordance with Section 2.c. and
subject to the provisions of Section 1.a.2., the Loan Documents shall be
enforced and the Collateral shall be dealt with by RPI 49 on behalf of itself
and RAIT, with the consent of the Purchase Money Lender. Simultaneous with the
sending of a notice of any event of default under any of the Loan Documents (a
"Loan Default"), RPI 49 shall send such notice to the Purchase Money Lender and
to RAIT.
b. Default Under this Agreement.
(1) Events of Default Affecting RAIT. Any of the following shall be
deemed Events of Default affecting RAIT under this Participation Agreement:
(A) If RPI 49 should:
i. apply for or consent to the appointment of a receiver,
trustee or liquidator of itself or of any of its property;
ii. be unable to pay its debts as they mature or admit in
writing its inability to pay such debts;
iii. make a general assignment for the benefit of creditors;
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<PAGE>
iv. be adjudicated a bankrupt or insolvent; or
v. file a voluntary petition in bankruptcy, or a petition or
an answer seeking reorganization or an arrangement with creditors or to take
advantage of any bankruptcy, reorganization, insolvency, debt readjustment,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceedings under any such law
or if any action shall be taken by RPI 49 for the purpose of effecting any of
the foregoing.
vi. If any order, judgment or decree shall be entered, without
the application, approval or consent of RAIT, by any court of competent
jurisdiction, approving a petition seeking reorganization of RPI 49, appointing
a receiver, trustee or liquidator of RPI 49 or of all or a substantial part of
any of its assets, and such order, judgment of decree shall continue unstayed
and in effect for a period of 30 days from the date of entry thereof.
(B) If Net Cash Flow shall be insufficient to pay when due amounts owed
to RAIT with respect to its Participation Interest.
(C) If RPI 49 shall not disburse amounts to RAIT in accordance with
this Participation Agreement.
(2) Events of Default Affecting RPI 49. Any of the following shall be
deemed Events of Default affecting RPI 49 under this Participation Agreement:
(A) If RAIT should:
i. apply for or consent to the appointment of a receiver,
trustee or liquidator of itself or of any of its property;
ii. be unable to pay its debts as they mature or admit in
writing its inability to pay such debts;
iii. make a general assignment for the benefit of creditors;
iv. be adjudicated a bankrupt or insolvent; or
v. file a voluntary petition in bankruptcy, or a petition or
an answer seeking reorganization or an arrangement with creditors or to take
advantage of any bankruptcy, reorganization, insolvency, debt readjustment,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceedings under any such law
or if any action shall be taken by RAIT for the purpose of effecting any of the
foregoing.
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<PAGE>
vi. If any order, judgment or decree shall be entered, without
the application, approval or consent of RPI 49, by any court of competent
jurisdiction, approving a petition seeking reorganization of RAIT, appointing a
receiver, trustee or liquidator of RAIT or of all or a substantial part of any
of its assets, and such order, judgment of decree shall continue unstayed and in
effect for a period of 30 days from the date of entry thereof.
(3) Remedies.
(A) Affecting RAIT. If an Event of Default affecting RAIT hereunder
shall occur and not be cured within ten (10) days after written notice of the
same from RAIT to RPI 49, then, provided there is not an event of default then
in existence under the Purchase Money Financing, all Net Cash Flow available for
distribution and to which RPI 49 is entitled under the Purchase Money Financing
documents shall be paid by RPI 49 to RAIT to apply first to accrued interest on
its Participation Interest and then to reduce its Participation Interest until
such Participation Interest shall have been paid in full.
(B) Affecting RPI 49. If an Event of Default affecting RPI 49 hereunder
shall occur and not be cured within ten (10) days after written notice of the
same from RPI 49 to RAIT, then, provided there is not an event of default then
in existence under the Purchase Money Financing, all Net Cash Flow available for
distribution and to which RPI 49 is entitled under the Purchase Money Financing
documents shall be paid to RPI 49 to apply first to accrued interest on its
Subordinate Interest and then to reduce its Subordinate Interest until such
Subordinate Interest shall have been paid in full.
c. Transfer of Legal Title to Loan Holder. If RPI 49 or RAIT shall
acquire legal title to the Property, which may only occur with the written
consent of the Purchase Money Lender, as a result of exercise of remedies
pursuant to a Loan Default, Net Cash Flow from the Property shall be distributed
in accordance with the priority of distributions established hereunder.
5. REPRESENTATIONS AND WARRANTIES OF RPI 49. RPI 49 hereby represents,
warrants and covenants to RAIT that:
a. It is a corporation organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite power to execute
this Participation Agreement and to consummate the transactions contemplated
herein;
b. This Participation Agreement has been duly authorized, is valid and
enforceable against any law, rule, regulation, order or agreement by which
resource is bound and the execution, delivery and performance of this
Participation Agreement by
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RPI 49 will not result in and has not resulted in any breach of any provision
of, or constitute a default under (or an event which, with or without notice
and/or lapse of time would constitute a default under) RPI 49's charter
documents or by-laws or any statute, order, rule or regulation applicable to it
or any agreement or instrument binding on RPI 49;
c. No proceedings are pending or threatened against or affecting RPI 49
before any court, arbitration or administrative or governmental body which, in
the aggregate, would materially and adversely affect any action taken or to be
taken by RPI 49 under this Participation Agreement;
d. Upon Closing, RPI 49 will be the lawful holder of the Loan Documents
and, except pursuant to the Purchase Money Financing none of the Loan Documents
shall have been pledged, hypothecated or subordinated by RPI 49, nor have any of
them been discharged, satisfied or released, and RPI 49 shall not have granted a
participation interest in any of the Loan Documents except pursuant to this
Participation Agreement. Further, RPI 49 will not hereafter amend or modify any
of the Loan Documents without informing RAIT, and only if permitted in writing
by the Purchase Money Lender pursuant to the terms of the Purchase Money
Financing.
6. REPRESENTATIONS AND WARRANTIES OF RAIT. RAIT hereby represents,
warrants and covenants to RPI 49 that:
a. RAIT is a limited partnership organized, validly existing and in
good standing under the laws of the State of Delaware and RAIT has the requisite
power and authority to execute this Participation Agreement and to consummate
the transactions contemplated herein;
b. This Participation Agreement has been duly authorized, executed and
delivered by RAIT, is valid and enforceable against RAIT in accordance with its
terms and is not in contravention of any law, rule, regulation, order or
agreement by which RAIT is bond and the execution, delivery and performance of
this Participation Agreement by RAIT will not result in and has not resulted in
any breach of any provision of, or constitute a default under (or an event
which, with or without notice and/or lapse of time would constitute a default
under) RAIT's partnership agreement statute, order, rule or regulation
applicable to it or any agreement or instrument binding on RAIT;
c. No proceedings are pending or threatened against or affecting RAIT
before any court, arbitration or administrative or governmental body which, in
the aggregate, would adversely affect any action taken or to be taken by RAIT
under this Participation Agreement.
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<PAGE>
7. MISCELLANEOUS.
a. RAIT and RPI 49 each hereby agree to execute and deliver to the
other, as requested, such instruments or documents as are reasonably deemed
necessary or appropriate to consummate the transactions contemplated herein.
b. This Participation Agreement and the Exhibits attached hereto
represent the final agreement between the parties and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral or written statements,
documents or agreements. There are no unwritten oral agreements between the
parties Participation Agreement can not be amended, modified or supplemented
except by an instrument in writing executed by both parties hereto. RAIT and RPI
49 expressly agree for the benefit of the Purchase Money Lender that this
Participation Agreement cannot be modified, amended or changed without the
Purchase Money Lender's written consent. It is further agreed that the Purchase
Money Lender is an intended third party beneficiary of this Participation
Agreement.
c. Any notices to parties required or permitted by this Participation
Agreement shall be in writing, and any such notices, and any payments or
documents to be delivered hereunder, shall be delivered by overnight mail
service, in person or by facsimile with written confirmation thereof, and shall
be deemed delivered one (1) business day after mailing by overnight courier
service and upon receipt thereof if personally or by facsimile to the following
addresses:
If to RPI 49:
Resource Properties XLIX, Inc.
1521 Locust Street; Suite 400
Philadelphia, PA 19102
ATTN: Scott F. Schaeffer
If to RAIT:
RAIT Partnership, L.P.
1845 Walnut Street
10th Floor
Philadelphia, PA 19103
ATTN: Jay Eisner
A party may change its address by notifying the other party to this
Participation Agreement of the address change in the manner set forth in this
Section.
d. The terms of this Participation Agreement shall be binding upon, and
shall inure to the benefit of RAIT, RPI 49 and their successors and assigns.
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e. This Participation Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
f. This Participation Agreement may be signed in counterparts, each of
which shall be an original and both of which taken together constitute one
agreement. In making proof of this Participation Agreement, it shall not be
necessary to produce or account for more than one counterpart signed by the
party to be charged.
g. This Participation Agreement may not be recorded in any place of
public record. Any such attempted recording shall be null and void.
h. This Participation Agreement is an agreement of participation only
and neither the execution of this Participation Agreement, nor the sharing by
RPI 49 and RAIT of an interest in the Loan or in the collateral or security for
the Loan is intended to be, nor shall it be construed to be a loan from the RAIT
to RPI 49, nor the formation of a partnership or joint venture between RAIT and
RPI 49. This Participation Agreement may not be amended without the prior
written consent of the Purchase Money Lender.
i. All of the terms, covenants and conditions herein shall inure to the
benefit of and be binding upon the parties hereto. Neither RPI 49 nor RAIT,
however, shall, without the prior consent of the other, assign this
Participation Agreement or any rights thereunder, or any part of its
participation ownership interest covered by this Participation Agreement. A
transfer of any interest herein or in the Loan in violation of any of the
provisions hereof shall confer no rights upon the transferee. Any transfer
permitted hereunder shall bind the assignee to the same extent as the assignor
has been bound.
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IN WITNESS WHEREOF, and intending to be legally bound, the undersigned
have executed and delivered this Participation Agreement as of the date first
above written.
RESOURCE PROPERTIES XLIX, INC.
By:_____________________________
Scott Schaeffer, President
RAIT PARTNERSHIP, L.P.
BY: RAIT GENERAL, INC., ITS
GENERAL PARTNER
By:____________________________
Jay Eisner, President
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