THIRD AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT AND JOINDER
This THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AND JOINDER (“Amendment”), dated as of November 16, 2012, is among Resource America, Inc., a Delaware corporation (“Borrower”), TD BANK, N.A., a national banking association, in its capacity as agent (“Agent”), TD BANK, N.A., a national banking association, in its capacity as issuing bank (“Issuing Bank”) and each of the financial institutions which are now or hereafter identified as Lenders on Schedule A (as such Schedule may be amended, modified or replaced from time to time) attached to the Loan Agreement (as defined below) (each such financial institution, individually a “Lender” and collectively all “Lenders”).
BACKGROUND
A. Pursuant to the terms of a certain Amended and Restated Loan and Security Agreement dated as of March 10, 2011 among Borrower, Agent and Lenders (as the same has been or may be supplemented, restated, superseded, amended or replaced from time to time, the “Loan Agreement”), Lenders initially made available to Borrower, inter alia, a revolving line of credit and term loan (the “Loans”). All capitalized terms used herein without further definition shall have the respective meaning set forth in the Loan Agreement and all other Loan Documents.
B. The Loans are secured by, inter alia, continuing perfected security interests in the Collateral.
C. Pursuant to the Loan Agreement, certain affiliates of Borrower (each a “Subsidiary Guarantor” and collectively the “Subsidiary Guarantors”) delivered to Agent various security and collateral documents, including, without limitation: (i) the Surety and Guaranty Agreement made by Subsidiary Guarantors in favor of Agent, (ii) the Guarantor Security Agreement made by Subsidiary Guarantors in favor of Agent, and (iii) the Subsidiary Collateral Pledge Agreement made by certain Subsidiaries in favor of Agent relating to the assets described therein, each as amended, restated, extended, supplemented or otherwise modified in writing from time to time.
D. The Loan Agreement provides that no Subsidiary Guarantor shall create or acquire any Subsidiary unless (a)(i) such Subsidiary becomes party to the Surety and Guaranty Agreement and Guarantor Security Agreement, or (ii) Borrower otherwise provides an opinion of counsel that such Subsidiary is prohibited from becoming a Subsidiary Guarantor pursuant to its organizational documents or any loan documents to which it is a party, and (b) the Capital Stock of such Subsidiary is pledged to Lender.
E. Resource Real Estate, Inc. has created a new Subsidiary, Resource Real Estate Funding II, Inc., a Delaware corporation (“Joining Guarantor”). Joining Guarantor is an indirect Subsidiary of Borrower and, in recognition of the benefits and privileges under the Loan Documents, Joining Guarantor and Borrower have requested that Joining Guarantor be permitted to join into the Loan Documents, as if an original signatory thereto, and Agent and Lender have so consented subject to the terms and conditions hereof.
F. Borrower has requested that Agent and Lenders consent to the payment in full of the Existing Subordinated Debt on its scheduled maturity date and modify, in certain respects, the terms of the Loan Agreement, and Agent and Lenders have agreed to provide such consent and modifications in accordance with and subject to the satisfaction of the conditions hereof.
NOW, THEREFORE, with the foregoing Background incorporated by reference and intending to be legally bound hereby, the parties agree as follows:
1. Joinder.
a. Joining Guarantor hereby becomes a Subsidiary Guarantor under the Loan Agreement and the Loan Documents. All references to Subsidiary Guarantors contained in the Loan Agreement and Loan Documents are hereby deemed for all purposes to also refer to and include Joining Guarantor as a Subsidiary Guarantor and Joining Guarantor hereby agrees to comply with all of the terms and conditions of the Loan Documents (to which the other Subsidiary Guarantors are a party) as if an original signatory thereto.
b. Joining Guarantor hereby joins in, assumes, adopts and becomes an Undersigned (as defined therein) under the Surety and Guaranty Agreement. All references to Undersigned contained in the Guaranty are hereby deemed for all purposes to also refer to and include Joining Guarantor as an Undersigned and Joining Guarantor hereby agrees to comply with all of the terms and conditions of the Surety and Guaranty Agreement as if an original signatory thereto. Joining Guarantor is jointly and severally liable for, and hereby guarantees and becomes surety for, the unconditional and prompt payment and performance to Secured Parties of all Obligations.
c. Joining Guarantor hereby joins in, assumes, adopts and becomes a Debtor (as defined therein) under the Guarantor Security Agreement and hereby grants Agent, for the ratable benefit of Secured Parties, a security interest in all of Joining Guarantor’s Collateral (as defined in the Guarantor Security Agreement). All references to Debtors contained in the Guarantor Security Agreement are hereby deemed for all purposes to also refer to and include Joining Guarantor as a Debtor and Joining Guarantor hereby agrees to comply with all of the terms and conditions of the Guarantor Security Agreement as if an original signatory thereto.
2. Amendment to Loan Documents. Upon the effectiveness of this Amendment, the Loan Documents shall be amended as follows:
a. Section 1 of the Loan Agreement shall be amended by deleting the definitions of “Applicable Base Rate”, “Applicable LIBOR Rate” and “Maturity Date” and replacing each as follows:
“Applicable Base Rate” – The Base Rate plus two hundred twenty five (225) basis points.
“Applicable LIBOR Rate” – The Adjusted LIBOR Rate plus three hundred (300) basis points.
“Maturity Date” – The earlier of (a) the date on which the RCM Management Agreement is terminated or expires in accordance with its terms and (b) December 31, 2014.
b. �� Schedule I to the Sponsored CDO Pledge Agreement is hereby deleted in its entirety and replaced with Schedule I attached to this Amendment as Exhibit A.
3. Consent. Subject to the effectiveness of this Amendment, Agent and Lenders hereby consent to the payment on October 15, 2013 of all amounts then due on the Existing Subordinated Debt in accordance with its terms (the “Subordinated Debt Maturity Payment”), provided that no Significant Default then exists. Agent’s and Lenders’ consent to the Subordinated Debt Maturity Payment shall not otherwise affect the right of Agent and Lenders to demand compliance by Borrower and Subsidiary Guarantors with all of the terms, conditions and provisions of the Loan Agreement and Loan Documents or be deemed a waiver of any other transaction or future action on the part of Borrower and Subsidiary Guarantors requiring Agent or Required Lenders’ consent or approval under the Loan Agreement.
4. Representations and Warranties. Borrower represents and warrants to Agent, Issuing Bank and Lenders that:
a. Prior Representations. Schedule C, Schedule 5.1, Schedule 5.2, Schedule 5.7, Schedule 5.9, Schedule 5.10(a), Schedule 5.11(c)(ii), Schedule 5.14(a), Schedule 5.14(b), Schedule 5.17, Schedule 5.22 and Schedule 7.4(a), are amended and restated in their entirety and collectively attached as Schedule A to this Amendment. After giving effect to the amended and restated Schedules attached hereto as Schedule A to this Amendment, the representations and warranties made to Agent, Issuing Bank and Lenders in the Loan Agreement are true and correct in all material respects.
b. Authorization. The execution and delivery by Borrower of this Amendment (i) are and will be within its powers, (ii) have been duly authorized by all necessary action on behalf of Borrower and (iii) are not and will not be in contravention of any order of court or other agency of government, of law or of any indenture, agreement or undertaking to which Borrower is a party or by which the property of Borrower is bound, or be in conflict with, result in a breach of or constitute (with due notice and/or lapse of time) a default under any such indenture, agreement or undertaking, or result in the imposition of any lien, charge or encumbrance of any nature on any of the properties of Borrower.
c. Valid, Binding and Enforceable. This Amendment and any assignment or other instrument, document or agreement executed and delivered in connection herewith, will be valid, binding and enforceable in accordance with their respective terms except as such enforceability may be limited by any federal or state law affecting debtor and creditor rights or relating to the bankruptcy, insolvency, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar laws, proceedings, or equitable principles affecting the enforcement of creditors’ rights, as amended from time to time
d. No Default. No Default or Event of Default exists.
5. Ratification of Loan Documents. This Amendment is hereby incorporated into and made a part of the Loan Agreement and all other Loan Documents respectively, the terms and provisions of which, except to the extent expressly modified by this Amendment, are each ratified and confirmed and continue unchanged in full force and effect. Any reference to the Loan Agreement and all other Loan Documents respectively in this or any other instrument, document or agreement related thereto or executed in connection therewith shall mean the Loan Agreement and all other Loan Documents respectively as amended by this Amendment. As security for the payment of the Obligations, and satisfaction by Borrower of all covenants and undertakings contained in the Loan Agreement, Borrower hereby confirms its prior grant to Agent, for the ratable benefit of Secured Parties, of a continuing first lien on and security interest in, upon and to all of Borrower’s now owned or hereafter acquired, created or arising Collateral.
6. Confirmation of Indebtedness. Borrower confirms and acknowledges that as of the close of business on November 15, 2012, (a) it is indebted to Agent and Lenders under the Loan Documents in the aggregate principal amount of $0.00 and (b) Issuing Bank has issued Letters of Credit in the aggregate face amount of $503,057.00, in each case without any deduction, defense, setoff, claim or counterclaim of any nature as of the date of this Amendment, plus all fees, costs and Expenses incurred to date in connection with the Loan Documents.
7. Confirmation of Subsidiary Guarantors. By its signature below, each Subsidiary Guarantor hereby consents to and acknowledges the terms and conditions of this Amendment and agrees that its obligations under the Surety and Guaranty Agreement are ratified and confirmed and shall continue in full force and effect and shall continue to cover all Obligations of Borrower outstanding from time to time under the Loan Agreement as amended hereby. As security for the payment of the Obligations, and satisfaction by each Subsidiary Guarantor of all covenants and undertakings contained in the Loan Documents, each Subsidiary Guarantor hereby confirms its prior grant to Agent, for the ratable benefit of Secured Parties, of a continuing first lien on and security interest in, upon and to all of such Subsidiary Guarantor’s now owned or hereafter acquired, created or arising Collateral.
8. Effectiveness Conditions. This Amendment shall become effective upon the satisfaction of the following conditions:
a. Execution and delivery of this Amendment by the parties hereto;
b. Payment to Agent for the ratable benefit of Lenders of a fully earned, non-refundable amendment fee in the amount of $50,000.00;
c. Delivery to Agent of (A) certified copies of resolutions of the board of directors of Joining Guarantor authorizing the execution, delivery and performance of this Amendment and the transactions contemplated hereby, and (B) Joining Guarantor’s certificate of incorporation and by-laws, as applicable;
d. Delivery to Agent of an incumbency certificate for Joining Guarantor identifying all individuals authorized to execute this Amendment, with specimen signatures;
e. Delivery to Agent of a good standing certificate for Joining Guarantor showing Joining Guarantor to be in good standing in its state of organization and in each other state in which it is doing business;
f. Filing of a UCC Financing Statement against Joining Guarantor;
g. Delivery to Agent of an opinion of counsel that each of RA Equityco, LLC, RFIG Partners, LLC, and RFIG Partners II, LLC is prohibited from becoming a Subsidiary Guarantor; and
h. Payment by Borrower of all of Agent’s Expenses.
9. Governing Law. THIS AMENDMENT, AND ALL RELATED AGREEMENTS AND DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AMENDMENT AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE AND EFFECT.
10. Modification. No modification hereof or any agreement referred to herein shall be binding or enforceable unless in writing and signed by Borrower and Agent or Lenders, as required under the Loan Agreement.
11. Duplicate Originals. Two or more duplicate originals of this Amendment may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument.
12. Release. As further consideration for the agreement of Agent, Issuing Bank and Lenders to enter into this Amendment, Borrower (and by its execution below, each Subsidiary Guarantor) hereby waives, releases, and discharges Agent, Issuing Bank and each Lender, all affiliates of Agent, Issuing Bank and each Lender and all of the directors, officers, employees, attorneys and agents of Agent, Issuing Bank and each Lender and all affiliates of such Persons, from any and all claims, demands, actions or causes of action existing as of the date hereof, arising out of or in any way relating to this Amendment, the Loan Agreement, the Loan Documents and/or any documents, agreements, instruments, dealings or other matters connected with this Amendment, the Loan Agreement, the Loan Documents or the administration thereof.
13. Waiver of Jury Trial. BORROWER, AGENT AND EACH LENDER EACH HEREBY WAIVE ANY AND ALL RIGHTS EACH MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS OR WITH RESPECT TO ANY CLAIMS ARISING OUT OF ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS INVOLVING OR RELATED TO ANY PROPOSED RENEWAL, EXTENSION, AMENDMENT, MODIFICATION, RESTRUCTURE, FORBEARANCE, WORKOUT, OR ENFORCEMENT OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS.
[Balance of Page Intentionally Blank]
