REVOLVING CREDIT LOAN AGREEMENT
By and Between
RESOURCE AMERICA, INC.
and
SOVEREIGN BANK
Dated: July 27, 1999
LOAN AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT (the "Agreement") is made as of
July 27, 1999, by and between RESOURCE AMERICA, INC. ("Borrower") and SOVEREIGN
BANK ("Bank").
BACKGROUND
A. Borrower has requested that Bank extend a line of credit to
Borrower, which Bank is willing to do on the terms set forth herein.
B. Capitalized terms not otherwise defined herein will have the
following meanings:
"Accounting Terms". As used in this Agreement, or any certificate,
report or other document made or delivered pursuant to this Agreement,
accounting terms not defined elsewhere in this Agreement shall have the
respective meanings given to them under GAAP.
"Affiliate", as to any Person, means each other Person that directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Person in question.
"Bank Indebtedness" shall mean all obligations and Indebtedness of
Borrower to Bank, whether now or hereafter owing or existing, including, without
limitation, all obligations under the Loan Documents, all obligations to
reimburse Bank for payments made by Bank pursuant to any letter of credit issued
for the account or benefit of Borrower by Bank, all other obligations or
undertakings now or hereafter made by or for the benefit of Borrower to or for
the benefit of Bank under any other agreement, promissory note or undertaking
now existing or hereafter entered into by Borrower with Bank, including, without
limitation, all obligations of Borrower to Bank under any guaranty or surety
agreement and all obligations of Borrower to immediately pay to Bank the amount
of any overdraft on any deposit account maintained with Bank, together with all
interest and other sums payable in connection with any of the foregoing.
"Borrowing Base" has the meaning given to such term in Section 1.4
herein.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Pennsylvania are authorized by law to close.
"Collateral" has the meaning given to such term in Section 4.1 herein.
"Corporation" means a corporation, partnership, trust, unincorporated
organization, association or joint stock company.
"Default Rate" has the meaning given to such term in Section 2.2
herein.
"Deferred Compensation Plan" means any plan described in Section 3(3)
of ERISA or any other plan or arrangement under which Borrower or any ERISA
Affiliate may become obligated to pay deferred, bonus, incentive, or other
compensation or health, life, medical, dental, or other welfare benefits,
excluding only any fully insured major medical, hospital, or dental program for
which Borrower or such ERISA Affiliate has no obligation other than the payment
of premiums.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules or regulations issued in connection therewith.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) that, together with Borrower, would be treated as a single
employer under Section 4001(b)(1) of ERISA or Section 414(b) or 414(c) of the
Internal Revenue Code.
"Event of Default" means each of the events specified in Section 12.1.
"Expiration Date" has the meaning given to such term in Section 1.1
herein.
"GAAP" means generally accepted accounting principles in the United
States of America, in effect from time to time, consistently applied and
maintained.
"Guarantor" means Resource Properties, Inc., Resource Properties 53,
Inc., Resource Properties XXIV, Inc., and Resource Properties XL, Inc.,
collectively.
"Indebtedness", as applied to a Person, means:
(a) all items (except items of capital stock or of surplus)
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person as at the date
as of which Indebtedness is to be determined;
(b) to the extent not included in the foregoing, all
indebtedness, obligations, and liabilities secured by any mortgage, pledge,
lien, conditional sale or other title retention agreement or other security
interest to which any property or asset owned or held by such Person is subject,
whether or not the indebtedness, obligations or liabilities secured thereby
shall have been assumed by such Person; and
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(c) to the extent not included in the foregoing, all
indebtedness, obligations and liabilities of others which such Person has
directly or indirectly guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business), sold with recourse, or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire or in
respect of which such Person has agreed to supply or advance funds (whether by
way of loan, stock purchase, capital contribution or otherwise) or otherwise to
become directly or indirectly liable.
Notwithstanding the foregoing, the term "Indebtedness" shall not
include any amounts which are non-recourse to Borrower (other than usual and
customary carveouts).
"Line" has the meaning given to such term in Section 1.1 herein.
"Line Note" has the meaning given to such term in Section 1.1 herein.
"Line Request" has the meaning given to such term in Section 1.3
herein.
"Loan Documents" means this Agreement, the Line Note, the Pledge
Agreement referred to in Section 10.1(d) hereof, the Surety Agreement, and all
other documents, executed or delivered by Borrower pursuant to this Agreement,
as they may be amended from time to time.
"Market Value" means, on any Business Day, (i) the last reported sale
price of the Pledged Shares regular way, or in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case, on the New York Stock Exchange, or (ii) if the
Pledged Shares are not listed or admitted to trading on the New York Stock
Exchange, the last reported sale price regular way or, in case no such reported
sale takes place on such day, the average of the reported closing bid and asked
prices regular way, on the principal national securities exchange on which the
Pledged Shares are listed or admitted to trading, or (iii) if the Pledged Shares
are not listed or admitted to trading on any national securities exchange, the
last reported sale price of the Pledged Shares on the National Association of
Securities Dealers National Market System ("NASDAQ"), or (iv) if the Pledged
Shares are not listed or admitted to trading on any national securities exchange
or NASDAQ, the closing sale price (or the quoted closing bid price if there were
no sales) as reported by the National Association of Securities Dealers
Automated Quotation System. If none of the conditions set forth above is met,
Market Value shall be the fair market value of the Pledged Shares, as determined
by a member firm of the New York Stock Exchange selected by Bank.
"Multiemployer Plan" means a plan described in Section 3(37) or
4001(a)(3) of ERISA or Section 414 of the Internal Revenue Code of 1986, as
amended from time to time, which cover employees of Borrower or any ERISA
Affiliate.
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"Person" means an individual, a Corporation or a government or any
agency or subdivision thereof, or any other entity.
"Pledge Agreement" has the meaning given to such term in Section 8.1(c)
herein.
"Pledged Shares" means Restricted Stock and the Unrestricted Stock.
"Potential Default" means the occurrence of any event which with the
giving of notice or passage of time or both, would constitute an Event of
Default.
"Prime Rate" means the Wall Street Journal Prime Rate as established
from time to time.
"Restricted Stock" means 500,000 shares of Resource Asset Investment
Trust, a Maryland business trust, represented by certificate no. RA-0012 or any
substitute or replacement thereof.
"Subsidiary" means a Corporation (a) which is organized under the laws
of the United States or any state thereof, or any other county or jurisdiction,
(b) which conducts substantially all of its business and has substantially all
of its assets within the United States, and (c) of which more than fifty percent
(50%) of its outstanding voting stock of every class (or other voting equity
interest) is owned by Borrower or one or more of its Subsidiaries.
"Substitute Collateral" means marketable securities or other liquid
collateral, in either case, acceptable to Bank in its sole discretion as to
form, substance and amount.
"Surety Agreement" has the meaning given to such term in Section 4.2
herein.
"Unrestricted Stock" means 335,937 shares of Resource Asset Investment
Trust, a Maryland business trust, represented by certificate no. RA-0082, or any
substitute or replacement thereof.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any extensions of credit now or hereafter made to or for the
benefit of Borrower by Bank, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. THE LINE; USE OF PROCEEDS.
1.1 Line of Credit. Bank will establish for Borrower for and during the
period from the date hereof and until July 27, 2001 (the "Expiration Date"),
subject to the terms and conditions hereof (including without limitation the
Borrowing Base set forth in Section 1.4 herein), a revolving line of credit (the
"Line") pursuant to which Bank will from time to time
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make loans to Borrower in an aggregate outstanding principal amount not to
exceed at any time Five Million Dollars ($5,000,000). Within the limits of the
Line, Borrower may borrow, repay and reborrow under the Line. The Line shall be
subject to all terms and conditions set forth in all of the Loan Documents which
terms and conditions are incorporated herein. Borrower's obligation to repay
advances under the Line shall be evidenced by Borrower's promissory note (the
"Line Note") in the face amount of Five Million Dollars ($5,000,000), dated the
date of this Agreement, payable to the order of Bank, and otherwise in form and
substance satisfactory to Bank.
1.2 Use of Proceeds. Borrower agrees to use advances under the Line (i)
to repay, in part (i.e., $3,000,000) the existing $18,000,000 line of credit
from Jefferson Bank to Guarantor being repaid concurrently herewith; (ii) to
acquire commercial real estate or an interest therein, (iii) to fund loans
secured by commercial real estate, (iv) to purchase loans secured by commercial
real estate, or an interest therein, (v) to reduce indebtedness secured by
senior liens on property which Borrower owns or holds a loan or an interest in a
loan, and (vi) for any other proper corporate purpose (including without
limitation working capital).
1.3 Advances of the Line. Borrower shall give Bank not less than 3
Business Days prior written notice of a proposed advance of the Line (each a
"Line Request"). Each Line Request shall (i) state the use of the proceeds of
the Line being requested (including the real estate project to which such use
relates), and (ii) contain such other information as Bank may request in the
exercise of its reasonable discretion. Provided that all of the conditions
precedent to Bank making such advance have occurred, and provided further that
the making of such advance will not cause Borrower to be in default of the
covenants and conditions set forth in this Agreement, Bank shall make the
proceeds of such advance available to Borrower by crediting the amount thereof
to Borrower's deposit account with Bank.
1.4 Borrowing Base. Notwithstanding anything contained herein to the
contrary, the aggregate outstanding principal balance of the Line shall not
exceed at any time the sum of (i) sixty five percent (65 %) of the Market Value
of the Unrestricted Stock, plus (ii) fifty percent (50%) of the Market Value of
the Restricted Stock ("Borrowing Base"). In the event the aggregate unpaid
principal balance of the Line exceeds the limits stated in the previous
sentence, Borrower shall, within five (5) days thereafter, either (x) repay an
aggregate amount of principal of the Line equal to the amount of such excess, or
(y) in lieu of such repayment, deliver to Bank Substitute Collateral in an
amount equal to such excess. Any such delivery of Substitute Collateral shall be
accompanied by all such financing statement amendments and other documents and
instruments as Bank may require to reflect its security interest in and to the
Substitute Collateral (including without limitation appropriate amendments to
the Pledge Agreement). Upon the delivery of any Substitute Collateral to Bank,
it shall become Collateral hereunder. Bank shall retain the Substitute
Collateral until such time as the Market Value of the Pledged Shares has equaled
or exceeded for a consecutive 30-day period, the amount that would be necessary
to permit borrowings in the full amount of the Line.
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2. INTEREST RATE.
2.1 Interest on the Line. Interest on the unpaid outstanding principal
balance of the Line will accrue from the date of advance until final payment
thereof at a per annum rate equal to the Prime Rate in effect from time to time
(such interest rate to change immediately upon any change in the Prime Rate).
2.2 Default Interest. From the maturity of the obligations evidenced by
the Line Note, as well as upon the occurrence of an Event of Default, the
outstanding principal balance and all other sums due hereunder and under the
Line Note shall bear interest at a rate which is four percent (4%) in excess of
the non-default rate otherwise set forth herein ("Default Rate").
Notwithstanding the provisions of 42 Pa. C.S. Section 8101 to the contrary, the
Default Rate shall apply to all sums evidenced by the Line Note as set forth
above, including after entry of a judgment or judgments against Borrower, and
said judgment or judgments shall bear interest at the Default Rate until
satisfied in full.
2.3 Calculation. Interest will be computed on the basis of a year of
360 days and paid for the actual number of days elapsed.
2.4 Limitation of Interest to Maximum Lawful Rate. In no event will the
rate of interest payable hereunder exceed the maximum rate of interest permitted
to be charged by applicable law (including the choice of law rules) and any
interest paid in excess of the permitted rate will be refunded to Borrower. Such
refund will be made by application of the excessive amount of interest paid
against any sums outstanding hereunder and will be applied in such order as Bank
may determine. If the excessive amount of interest paid exceeds the sums
outstanding, the portion exceeding the sums outstanding will be refunded in cash
by Bank. Any such crediting or refunding will not cure or waive any default by
Borrower. Borrower agrees, however, that in determining whether or not any
interest payable hereunder exceeds the highest rate permitted by law, any
non-principal payment, including without limitation prepayment fees and late
charges, will be deemed to the extent permitted by law to be an expense, fee,
premium or penalty rather than interest.
3. PAYMENTS AND FEES.
3.1 Interest Payments on the Line. Borrower will pay interest on the
outstanding principal balance of the Line monthly, on the first day of each
calendar month commencing on August 1, 1999.
3.2 Principal Payments on the Line. Borrower will pay the outstanding
principal balance of the Line, together with any accrued and unpaid interest
thereon, and any other sums due pursuant to the terms hereof, on the Expiration
Date.
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3.3 Commitment Fee. Borrower shall pay to Bank a commitment fee of
Fifty Thousand Dollars ($50,000) to be paid upon the execution of this
Agreement.
3.4 Late Charge. In the event that Borrower fails to pay any principal,
interest or other fees or expenses payable hereunder for a period of at least
ten (10) days after the same shall become due, in addition to paying such sums,
Borrower will pay to Bank a late charge equal to four percent (4%), of such past
due payment as compensation for the expenses incident to such past due payment.
3.5 Payment Method. Borrower irrevocably authorizes Bank to debit all
payments required to be made by Borrower hereunder or otherwise under the Line,
on the date due, from any deposit account maintained by Borrower with Bank.
Otherwise, Borrower will be obligated to make such payments directly to Bank.
All payments are to be made in immediately available funds. If Bank accepts
payment in any other form, such payment shall not be deemed to have been made
until the funds comprising such payment have actually been received by or made
available to Bank.
3.6 Application of Payments. Prior to the occurrence of an Event of
Default, any and all payments on account of the Line will be applied first, to
any amounts due to Bank pursuant to the Loan Documents, other than principal and
interest on the Line; second, to accrued interest due under the Line; and third,
to outstanding principal under the Line. Following the occurrence of an Event of
Default, any and all payments on account of the Line will be applied to accrued
and unpaid interest, outstanding principal and other sums due hereunder or under
the Loan Documents, in such order as Bank, in its discretion, elects. If
Borrower makes a payment or payments and such payment or payments, or any part
thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside or are required to be repaid to a trustee, receiver, or
any other person under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or payments, the obligations
or part thereof hereunder intended to be satisfied shall be revived and
continued in full force and effect as if said payment or payments had not been
made.
3.7 Loan Account. Bank will open and maintain on its books a loan
account with respect to advances made, repayments, prepayments, the computation
and payment of interest and fees and the computation and final payment of all
other amounts due and sums paid to Bank under this Agreement. Except in the case
of manifest error in computation, such account will be conclusive and binding on
the Borrower as to the amount at any time due to Bank from Borrower under this
Agreement or the Note.
3.8 Indemnity; Loss of Margin. Borrower will indemnify Bank against any
loss or expense which Bank sustains or incurs as a consequence of an Event of
Default, including, without limitation, any failure of Borrower to pay when due
(at maturity, by acceleration or otherwise) any principal, interest, fee or any
other amount due under this Agreement or the
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other Loan Documents. If Bank sustains or incurs any such loss or expense it
will from time to time notify Borrower in writing of the amount determined in
good faith by the Bank to be necessary to indemnify Bank for the loss or
expense. Such amount will be due and payable by Borrower to Bank within ten (10)
days after presentation by Bank of a statement setting forth a brief explanation
of and Bank's calculation of such amount, which statement shall be conclusively
deemed correct absent manifest error. Any amount payable to the Bank under this
Section will bear interest at the default rate payable under the Line from the
due date until paid, both before and after judgment.
In the event that any present or future law, rule, regulation, treaty
or official directive or the interpretation or application thereof by any
central bank, monetary authority or governmental authority, or the compliance
with any guideline or request of any central bank, monetary authority or
governmental authority (whether or not having the force of law):
(a) subjects Bank to any tax with respect to any amounts
payable under this Agreement or the other Loan Documents by Borrower or
otherwise with respect to the transactions contemplated under this Agreement or
the other Loan Documents (except for taxes on the overall net income and/or
revenues of Bank imposed by the United States of America, the Commonwealth of
Pennsylvania, or any political subdivision of either of them); or
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit, capital maintenance, capital adequacy, or
similar requirement against assets held by, or deposits in or for the account
of, or loans or advances or commitment to make loans or advances by, the Bank;
or
(c) imposes upon Bank any other condition with respect to
advances or extensions of credit or the commitment to make advances or
extensions of credit under this Agreement,
and the result of any of the foregoing is to increase the costs of Bank, reduce
the income receivable by or return on equity of Bank or impose any expense upon
Bank with respect to any advances or extensions of credit or commitments to make
advances or extensions of credit under this Agreement, Bank shall so notify
Borrower in writing. Borrower agrees to pay Bank the amount of such increase in
cost, reduction in income, reduced return on equity or capital, or additional
expense within ten (10) days after presentation by Bank of a statement
concerning such increase in cost, reduction in income, reduced return on equity
or capital, or additional expense. Such statement shall set forth a brief
explanation of the amount and Bank's calculation of the amount (in determining
such amount the Bank may use any reasonable averaging and attribution methods),
which statement shall be conclusively deemed correct absent manifest error. If
the amount set forth in such statement is not paid within ten (10) days after
such presentation of such statement, interest will be payable on the unpaid
amount at
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the default rate payable under the Line from the due date until paid, both
before and after judgment.
3.9 Extension of Expiration Date. On or before August 31 of each year
commencing on August 31, 2000, Bank will notify Borrower that (i) it has elected
to extend the Expiration Date then in effect by twelve (12) months, or (ii) it
will not extend the Expiration Date then in effect. A failure by Bank to send
any such notice shall be deemed to be an election by Bank not to extend the
Expiration Date then in effect. In the event Bank determines in the exercise of
its sole discretion that it will extend the Expiration Date then in effect,
Borrower shall, at least five (5) days prior to the then current Expiration Date
pay to Bank an extension fee of Twenty Five Thousand Dollars ($25,000). If
Borrower shall fail to pay such extension fee to Bank as and when required,
Bank's election to extend the Expiration Date shall be deemed to be canceled and
shall be null and void and of no further force or effect and the Expiration Date
then in effect shall continue as if Bank had not provided any notice of election
to extend.
4. COLLATERAL.
4.1 Security Interest. As security for the performance of this
Agreement and the payment of the Line Note and all other liabilities of Borrower
to Bank (whether absolute or contingent, matured or unmatured, direct or
indirect, sole, joint, several or joint and several, similar or dissimilar,
related or unrelated, due or to become due or heretofore or hereafter contracted
or acquired), Borrower hereby assigns, transfers and sets over to Bank and
grants to Bank a security interest in all of Borrower's right, title and
interest in and to the Pledged Shares, together with all proceeds and products
thereof (the "Collateral").
4.2 Surety. As further security for the Bank Indebtedness, Borrower
shall cause to be executed and delivered to Bank, the absolute, unconditional,
unlimited surety agreement (the "Surety Agreement") of Guarantor in form and
content satisfactory to Bank. The obligations of Guarantor under the Surety
Agreement shall be secured by a pledge and assignment of all collateral being
granted by Guarantor to Bank as collateral for the $15,000.000 Revolving Line of
Credit from Bank to Guarantor being extended concurrently herewith.
4.3 General. The above-described security interests, assignments,
sureties, and liens shall not be rendered void by the fact that no Bank
Indebtedness exists as of any particular date, but shall continue in full force
and effect until the Bank Indebtedness has been repaid, Bank has no agreement or
commitment outstanding pursuant to which Bank may extend credit to or on behalf
of Borrower and Bank has executed termination statements or releases with
respect thereto (which Bank shall do as soon as is practical following the
occurrence of such other events). IT IS THE EXPRESS INTENT OF THE BORROWER THAT
ALL OF THE COLLATERAL SHALL SECURE NOT ONLY THE
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OBLIGATIONS UNDER THE LOAN DOCUMENTS, BUT ALSO ALL OTHER PRESENT AND FUTURE
OBLIGATIONS OF BORROWER TO BANK.
4.4 Additional Documents and Future Actions. Borrower will, at its sole
cost, take such actions and provide Bank from time to time with such agreements,
financing statements and additional instruments, documents or information as the
Bank may in its reasonable discretion deem necessary or advisable to perfect,
protect, maintain or enforce the security interests in the Collateral, to permit
Bank to protect or enforce its interest in the Collateral, or to carry out the
terms of the Loan Documents. Borrower hereby authorizes and appoints Bank as its
attorney-in-fact, with full power of substitution, to take such actions as Bank
may deem advisable to protect the Collateral and its interests thereon and its
rights hereunder, to execute on Borrower's behalf and file at Borrower's expense
financing statements and assignments, and amendments thereto, in those public
offices deemed necessary or appropriate by Bank to establish, maintain and
protect a continuously perfected security interest in the Collateral, and to
execute on Borrower's behalf such other documents and notices as Bank may deem
advisable to protect the Collateral and its interests therein and its rights
hereunder. Such power being coupled with an interest is irrevocable. Borrower
irrevocably authorizes the filing of a carbon, photographic or other copy of
this Agreement, or of a financing statement, as a financing statement and agrees
that such filing is sufficient as a financing statement.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as follows:
5.1 Valid Organization, Good Standing and Qualification. Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full power and authority to execute, deliver and
comply with the Loan Documents, and to carry on its business as it is now being
conducted and is duly licensed or qualified as a foreign corporation in good
standing under the laws of each jurisdiction in which the character or location
of the properties owned by it or the business transacted by it requires such
licensing or qualification.
5.2 Licenses. Borrower has all licenses, registrations, approvals and
other authority as may be necessary to enable it to own and operate its business
and perform all services and business which it has agreed to perform in any
state, municipality or other jurisdiction.
5.3 Financial Statements. Borrower has furnished to Bank the audited
consolidated financial statements of Borrower, certified without qualification
by independent public accountants as of September 30, 1998 and all management
and comment letters from such accountants in connection therewith, and its
internally prepared interim financial statements as of March 31, 1999. Such
financial statements of Borrower (together with the related notes and comments),
are correct and complete, fairly present the financial condition
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and the assets and liabilities of Borrower at such date, and have been prepared
in accordance with GAAP. With respect to the interim statements, such statements
are subject to year-end adjustment and any accompanying footnotes.
5.4 No Material Adverse Change in Financial Condition. There has been
no material adverse change in the financial condition of Borrower since
September 30, 1998.
5.5 Pending Litigation or Proceedings. Except as set forth on Schedule
5.5 attached hereto, there are no judgments outstanding or actions, suits or
proceedings pending or, to the best of Borrower's knowledge, threatened against
or affecting Borrower, at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
5.6 Due Authorization; No Legal Restrictions. The execution and
delivery by Borrower of the Loan Documents, the consummation of the transactions
contemplated by the Loan Documents and the fulfillment and compliance with the
respective terms, conditions and provisions of the Loan Documents: (a) have been
duly authorized by all requisite corporate action by Borrower, (b) will not
conflict with or result in a breach of, or constitute a default (or might, upon
the passage of time or the giving of notice or both, constitute a default)
under, any of the terms, conditions or provisions of (i) any applicable statute,
law, rule, regulation or ordinance, (ii) Borrower's Certificate of Incorporation
or Bylaws, (iii) any indenture, mortgage, loan or credit agreement or instrument
to which Borrower is a party or by which it may be bound or affected, or (iv)
any judgment or order of any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, and (c) will not
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of Borrower under the terms
or provisions of any such agreement or instrument, except liens in favor of
Bank.
5.7 Enforceability. The Loan Documents have been duly executed by
Borrower and delivered to Bank and, when duly executed by Bank, will constitute
legal, valid and binding obligations of Borrower, enforceable in accordance with
their terms.
5.8 No Default Under Other Obligations, Orders or Governmental
Regulations. Borrower is not in violation of its Certificate of Incorporation or
Bylaws or in default in the performance or observance of any of its obligations,
covenants or conditions contained in any indenture or other agreement creating,
evidencing or securing any Indebtedness or pursuant to which any such
Indebtedness is issued, nor is Borrower in violation of or in default under any
other agreement or instrument or any judgment, decree, order, statute, rule or
governmental regulation, applicable to it or by which its properties may be
bound or affected.
5.9 Governmental Consents. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of Borrower is
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required in connection with the execution, delivery or performance by Borrower
of the Loan Documents or the consummation of the transactions contemplated
thereby.
5.10 Taxes. Borrower has filed all tax returns which it is required to
file and has paid, or made provision for the payment of, all taxes which have or
may have become due pursuant to such returns or pursuant to any assessment
received by them. Such tax returns are complete and accurate in all respects.
Borrower does not know of any proposed additional assessment or basis for any
assessment of additional taxes.
5.11 Current Compliance. Borrower is currently in compliance with all
of the terms and conditions of the Loan Documents.
5.12 Deferred Compensation Plans. Neither Borrower nor any ERISA
Affiliate has ever been a participant in or has in any way provided or
maintained, any Deferred Compensation Plan for the benefit of Borrower's or any
ERISA Affiliate's employees, or has ever contributed to a Multiemployer Plan.
5.13 Leases and Contract. Borrower has complied with the provisions of
all material leases, contracts or commitments of any kind to which it is a party
and is not in default thereunder. No other party is in default under any such
leases, contracts or other commitments and no event has occurred which, but for
the giving of notice or the passage of time or both, would constitute an event
of default thereunder.
5.14 Contingent Liabilities. There are no suretyship agreements,
guarantees or other contingent liabilities of Borrower which are not disclosed
by the financial statements mentioned in Section 5.3 herein.
5.15 Encumbrances. The property and assets of Borrower are not subject
to any lien, encumbrance or security interest except as set forth on Exhibit
5.15 attached.
5.16 Securities Act. Borrower has not, directly or through any agent,
offered the Line Note or any part thereof or any similar security for sale to,
or solicited offers to buy the same from, or otherwise approached or negotiated
in respect thereof with, anyone other than Bank so as to bring the issue or sale
of the Line Note or any part thereof within the provisions of Section 5 of the
Securities Act 1933, as amended.
5.17 Disclosure. Neither this Agreement, nor the schedules attached to
this Agreement, nor the financial statements referred to in this Agreement, nor
any certificate, statement, report or other document furnished or to be
furnished by Borrower to Bank in connection with this Agreement, contain any
untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements contained in any of the foregoing not
misleading. Borrower has disclosed to Bank in writing every fact that materially
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and adversely affects the business or financial condition of Borrower or its
ability to perform its obligations under this Agreement, the Line Note, or any
other documents or instruments required hereby.
5.18 Margin Stock. Borrower is not engaged in, nor does it have as one
of its substantial activities, the business of extending or obtaining credit for
the purpose of purchasing or carrying "margin stock" (as that term is defined in
Regulation U, G, T, or X of the Board of Governors of the Federal Reserve
System) and no proceeds of any advance of the Line will be used for such purpose
of for the purpose of purchasing or carrying any shares of margin stock.
6. GENERAL COVENANTS. So long as the Line Note remains unpaid or Bank has any
obligation hereunder with respect to the Line, unless Bank otherwise consents in
writing, which consent shall not be unreasonably withheld or delayed:
6.1 Taxes; Claims for Labor and Materials. Borrower will pay or cause
to be paid when due all taxes, assessments, governmental charges or levies
imposed upon it or its income, profits, payroll or any property belonging to it,
including without limitation all withholding taxes, and all claims for labor,
materials and supplies which, if unpaid, might become a lien or charge upon any
of its properties or assets.
6.2 Existence; Approvals; Qualification; Business Operations;
Compliance with Laws. Borrower (a) will obtain, preserve and keep in full force
and effect its separate corporate existence and all rights, licenses,
registrations and franchises necessary to the proper conduct of its business or
affairs; (b) will qualify and remain qualified as a foreign corporation, in each
jurisdiction in which the character or location of the properties owned by it or
the business transacted by it requires such qualification; (c) will continue to
operate its business as presently operated and will not engage in any new
businesses without the prior written consent of Bank; and (d) will comply with
the requirements of all applicable laws and all rules, regulations (including
environmental regulations) and orders of regulatory agencies and authorities
having jurisdiction over it.
6.3 Maintenance of Properties. Borrower will maintain, preserve,
protect and keep or cause to be maintained, preserved, protected and kept its
real and personal property used or useful in the conduct of its business in good
working order and condition, reasonable wear and tear excepted, and will pay and
discharge when due the cost of repairs to and maintenance of the same.
6.4 Insurance. Borrower will carry adequate insurance issued by an
insurer acceptable to Bank, in amounts acceptable to Bank (at least adequate to
comply with any co-insurance provisions) and against all such liability and
hazards as are usually carried by entities engaged in the same or a similar
business similarly situated or as may be required by Bank.
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6.5 Inspections; Examinations. Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by Borrower at any time to
exhibit and deliver to Bank copies of any and all of Borrower's financial
statements, or other accounting records of any sort in the accountant's or
auditor's possession and copies of all reports submitted to Borrower by such
accountants or auditors, including management letters, "comment" letters and
audit reports, and, following the occurrence of an Event of Default, to disclose
to Bank any information they may have concerning Borrower's financial status and
business operations. Borrower further authorizes all federal, state and
municipal authorities to furnish to Bank copies of reports or examinations
relating to Borrower, whether made by Borrower or otherwise.
The officers of Bank, or such Persons as any of them may designate, may
visit and inspect any of the properties of Borrower, examine (either by Bank's
employees or by independent accountants) any of the Collateral or other assets
of Borrower, including the books of account of Borrower, and discuss the
affairs, finances and accounts of Borrower with its officers and with its
independent accountants, at such times as Bank may desire.
6.6 Default Under Other Indebtedness. Borrower shall not permit any of
its material Indebtedness to be in default. If any Indebtedness of Borrower is
declared or becomes due and payable before its expressed maturity by reason of
default or otherwise or to the knowledge of Borrower, the holder of any such
Indebtedness shall have the right (or upon the giving of notice or the passage
of time, or both, shall have the right) to declare such Indebtedness to be so
due and payable, Borrower will immediately give Bank written notice of such
declaration, acceleration or right of declaration.
6.7 Deferred Compensation Plans. Neither Borrower nor any ERISA
Affiliate shall become a participant in, or in any way provide or maintain, any
Deferred Compensation Plan for the benefit of any or Borrower's or any ERISA
Affiliates' employees, or shall contribute to any Multiemployer Plan, without
giving Bank prior written notice of such action and executing such related
amendments to this Agreement as Bank may request.
6.8 Bank Accounts. As additional compensation to Bank, and in
consideration of the rate of interest being charged by Bank to Borrower,
Borrower will, upon the request of Bank, maintain deposit accounts with Bank,
including without limitation the Loan Account referred to in Section 3.7 herein.
6.9 Maintenance of Management. Borrower will cause its business to be
continuously managed by its present management or such other persons (serving in
such management positions) as may be reasonably satisfactory to Bank.
6.10 Transactions with Affiliates. Borrower shall not enter into or
conduct any transaction with any Affiliate except on terms that would be usual
and customary in a similar
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transaction between Persons not affiliated with each other and except as
disclosed to Bank. Borrower shall not make any loans or extensions of credit to
any of its Affiliates, shareholders, directors or officers, except for the
existing loans described in Schedule 6.10 attached hereto and except for (i)
loans to Affiliates in connection with lease transactions in an aggregate amount
not to exceed $50,000 in any fiscal year, and (ii) loans (whether characterized
as participations or otherwise) to Resource Asset Investment Trust made in the
ordinary course of business. Borrower will cause all of its Indebtedness at any
time owed to its Affiliates (other than JeffBanks, Inc. and its respective
subsidiaries), shareholders, directors and officers to be subordinated in all
respects to all present and future Bank Indebtedness and will not make any
payments thereon, except as approved by Bank in writing.
6.11 Name or Address Change. Borrower shall not change its name or
address except upon thirty (30) days prior written notice to Bank and delivery
to Bank of any items requested by Bank to maintain perfection and priority of
Bank's security interests and access to Borrower's books and records.
6.12 Notices. Borrower will promptly notify Bank of (a) any action or
proceeding brought against Borrower wherein such action or proceeding would, if
determined adversely to Borrower result in liability of Borrower in excess of
$25,000 individually, or $50,000 in the aggregate, (b) the occurrence of any
Event of Default, (c) any fact, condition or event which, with the giving of
notice or the passage of time or both, could become an Event of Default, (d) the
failure of Borrower to observe any of its undertakings under the Loan Documents,
or (e) any material adverse change in the assets, business, operations or
financial condition of Borrower.
6.13 Material Adverse Contracts. Borrower shall not become or be a
party to any contract or agreement which has a materially adverse impact on
Borrower's or Guarantor's ability to perform under this Agreement or any other
agreement with Bank to which Borrower or Guarantor is a party.
7. ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS. Borrower will maintain
and cause Guarantor to maintain books of record and account in which full,
correct and current entries in accordance with GAAP will be made of all of its
dealings, business and affairs, and Borrower will deliver and will cause
Guarantor to deliver to Bank the following:
7.1 Annual Statements. As soon as available and in any event within
ninety (90) days after the end of each fiscal year of Borrower, the form 10K
filed with the Securities Exchange Commission.
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7.2 Quarterly Statements. As soon as available and in any event within
forty five (45) days after the close of each fiscal quarter of Borrower the form
10Q filed with the Securities Exchange Commission.
7.3 Guarantor Statements. At the times required by the Revolving Credit
and Security Agreement of even date herewith between Guarantor and Bank pursuant
to which Bank has extended a $15,000,000 line of credit to Guarantor, the
financial statements set forth therein. The requirement set forth herein shall
survive the termination of such Agreement.
7.4 Requested Information. With reasonable promptness, all such other
data and information in respect of the condition, operation and affairs of
Borrower as Bank may reasonably request from time to time.
8. CONDITIONS OF CLOSING. The obligation of Bank to make available the Line is
subject to the performance by Borrower and Guarantor of all of its agreements to
be performed hereunder and to the following further conditions:
8.1 Documents. Bank shall have received on or before the date hereof
all of the following, in form and substance satisfactory to Bank:
(a) The Line Note.
(b) UCC-1 Financing Statements to be filed in such offices as may be
required by Bank.
(c) An Agreement pursuant to which Borrower pledges the Pledged Shares
to Bank (the "Pledge Agreement").
(d) The Pledged Shares, together with stock powers executed in blank
and proxies relating thereto.
(e) A Line Request.
(f) The Surety Agreement.
(g) An Acknowledgment of Confessions of Judgment.
(h) Copies, certified in writing by the secretary or an assistant
secretary of Borrower, of (i) resolutions of its board of directors evidencing
approval of this Agreement, the Line Note, the Pledge Agreement and the other
matters contemplated hereby, and (ii) each document evidencing other necessary
action and approvals, if any with respect to this Agreement, the Line Note and
the Pledge Agreement.
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(i) Written certificate by the secretary or an assistant secretary of
Borrower as to the names and signatures of its officers who are authorized to
sign this Agreement, the Line Note, the Pledge Agreement and the other documents
or certificates to be executed and delivered by it pursuant hereto. Bank may
conclusively rely on such certificate until it receives a further certificate by
the secretary or an assistant secretary of Borrower amending the prior
certificate.
(j) Copies of Borrower's Certificate of Incorporation and Bylaws,
including all amendments thereto, accompanied by a written certificate of the
secretary or an assistant secretary of Borrower as to the authenticity and
completeness of such copies.
(k) Good standing certificate for Borrower from the State of Delaware
dated not more than 20 days prior to the date hereof.
(l) Copies, certified in writing by the secretary or an assistant
secretary of Guarantor, of (i) resolutions of its board of directors evidencing
approval of this Agreement, the Surety Agreement and the other matters
contemplated hereby, and (ii) each document evidencing other necessary action
and approvals, if any with respect to this Agreement and the Surety Agreement.
(m) Written certificate by the secretary or an assistant secretary of
Guarantor as to the names and signatures of its officers who are authorized to
sign this Agreement, the Surety Agreement and the other documents or
certificates to be executed and delivered by it pursuant hereto. Bank may
conclusively rely on such certificate until it receives a further certificate by
the secretary or an assistant secretary of Guarantor amending the prior
certificate.
(n) Copies of Guarantor's Certificate of Incorporation and Bylaws,
including all amendments thereto, accompanied by a written certificate of the
secretary or an assistant secretary of Guarantor as to the authenticity and
completeness of such copies.
(o) Good standing certificate for Guarantor from the State of Delaware
dated not more than 20 days prior to the date hereof.
(p) A favorable opinion of independent counsel for Borrower and
Guarantor as to the matters mentioned in Sections 5.1, 5.2, 5.5, 5.6, 5.7, 5.8,
and 5.9 herein and as to such other matters as Bank may reasonably request.
(q) Such additional documents and instruments as Bank may request.
8.2 Representations and Warranties. All representations and warranties
of Borrower and Guarantor set forth in the Loan Documents will be true at and as
of the date hereof.
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8.3 No Default. No condition or event shall exist or have occurred
which would constitute an Event of Default or a Potential Default.
8.4 Additional Documents. Copies of record searches (including UCC
searches and judgments, suits, tax and other lien searches) confirming that Bank
has a first priority security interest in the Collateral, acceptable to Bank,
shall have been delivered to Bank.
8.5 No Material Adverse Change. Bank shall have received evidence
satisfactory to it that no material adverse change has occurred with respect to
Borrower since September 30, 1998.
8.6 Commitment Fee. Borrower shall have paid to Bank in full the
commitment fee referred to in Section 3.3 herein.
8.7 Other Documents. Such other documents and instruments as Bank may
reasonably request.
8.8 Non-Waiver of Rights. By completing the closing hereunder, or by
making advances hereunder, Bank does not thereby waive a breach of any warranty
or representation made by Borrower or Guarantor hereunder or under any
agreement, document or instrument delivered to Bank or otherwise referred to
herein, and any claim and rights of Bank resulting from any breach or
misrepresentation by Borrower or Guarantor are specifically reserved by Bank.
9. CERTAIN CONDITIONS TO SUBSEQUENT ADVANCES. Subsequent advances shall be
conditioned upon the following conditions and each Line Request shall constitute
a representation by Borrower to Bank that each condition has been met or
satisfied:
9.1 Representations and Warranties. All representations and warranties
of Borrower and Guarantor contained herein or in the Loan Documents shall be
true at and as of the date of such advance as if made on such date, and each
Line Request shall constitute reaffirmation by Borrower that such
representations and warranties are then true.
9.2 No Default. No condition or event shall exist or have occurred at
or as of the date of such advance which would constitute an Event of Default
hereunder or a Potential Default.
9.3 Other Requirements. Bank shall have received all certificates,
authorizations, affidavits, schedules and other documents which are provided for
hereunder or under the Loan Documents, or which Bank may reasonably request.
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10. DEFAULT AND REMEDIES.
10.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event or Events of Default hereunder:
(a) The failure of Borrower to pay any amount of principal or
interest on the Line Note when due, or any fee or other sums payable hereunder
and the continuation of such failure for five (5) Business Days following notice
thereof from Bank, or the failure to pay any other Bank Indebtedness on the date
on which such payment is due, whether on demand, at the stated maturity or due
date thereof, or by reason of any requirement for the prepayment thereof, by
acceleration or otherwise;
(b) The failure of Borrower to duly perform or observe any
obligation, covenant or agreement on its part contained herein or in any other
Loan Document not otherwise specifically constituting an Event of Default under
this Section 10.1 and such failure continues unremedied for a period of thirty
(30) days after the earlier of (i) notice from Bank to Borrower of the existence
of such failure, or (ii) any officer or principal of Borrower knows or should
have known of the existence of such failure, provided that, in the event such
failure was wilfully caused or permitted by Borrower shall not be entitled to
any notice or grace hereunder;
(c) The failure of Borrower to pay any Indebtedness for
borrowed money due to any third Person or the existence of any other event of
default under any loan, security agreement, mortgage or other agreement
pertaining thereto binding Borrower after the expiration of any notice and/or
grace periods permitted in such documents;
(d) The failure of Borrower to pay or perform any other
obligation to Bank under any other agreement or note or otherwise arising,
whether or not related to this Agreement, after the expiration of any notice
and/or grace periods, if any, permitted in such documents;
(e) The adjudication of Borrower or any Guarantor as a
bankrupt or insolvent, or the entry of an Order for Relief for Borrower or any
Guarantor or the entry of an order appointing a receiver or trustee for Borrower
or any Guarantor of any of its property or approving a petition seeking
reorganization or other similar relief under the bankruptcy or other similar
laws of the United States or any state or any other competent jurisdiction;
(f) A proceeding under any bankruptcy, reorganization,
arrangement of debt, insolvency, readjustment of debt or receivership law is
filed by or (unless dismissed within 75 days) against Borrower or any Guarantor
or Borrower or any Guarantor makes an assignment for the benefit of creditors,
or Borrower or any Guarantor takes any action to authorize any of the foregoing;
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(g) The suspension of the operation of Borrower's or any
Guarantor's present business, or Borrower or any Guarantor becoming unable to
meet its debts as they mature, or the admission in writing by Borrower or any
Guarantor to such effect, or Borrower or any Guarantor calling any meeting of
all or any material portion of its creditors for the purpose of debt
restructure;
(h) All or any part of the Collateral or the assets of
Borrower or any Guarantor are attached, seized, subjected to a writ or distress
warrant, or levied upon, or come within the possession or control of any
receiver, trustee, custodian or assignee for the benefit of creditors;
(i) The entry of a final judgment for the payment of money
against Borrower or any Guarantor in excess of $50,000 which, within ten (10)
days after such entry, shall not have been discharged or execution thereof
stayed pending appeal or shall not have been discharged within five (5) days
after the expiration of any such stay;
(j) Any representation or warranty of Borrower or any
Guarantor in any of the Loan Documents is discovered to be untrue in any
material respect or any statement, certificate or data furnished by Borrower or
any Guarantor pursuant hereto is discovered to be untrue in any material respect
as of the date as of which the facts therein set forth are stated or certified;
(k) Borrower or any Guarantor voluntarily or involuntarily
dissolves or is dissolved, terminates or is terminated;
(1) Borrower or any Guarantor is enjoined, restrained, or in
any way prevented by the order of any court or any administrative or regulatory
agency, the effect of which order restricts Borrower or such Guarantor from
conducting all or any material part of its business;
(m) A breach by Borrower or any Guarantor occurs under any
material agreement, document or instrument, whether heretofore, now or hereafter
existing between Borrower or any Guarantor and any other Person;
(n) A material and adverse change occurs in Borrower's or any
Guarantor's operations, management or financial condition or in the value of the
Collateral; or
(o) The loss, suspension, revocation or failure to renew any
license or permit now held or hereafter acquired by Borrower or any Guarantor,
which loss, suspension, revocation or failure to renew might have a material
adverse effect on the business profits, assets or financial condition of
Borrower or such Guarantor.
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10.2 Remedies. At the option of the Bank, upon the occurrence of an
Event of Default, or at any time thereafter:
(a) The entire unpaid principal of the Line, all other Bank
Indebtedness, or any part thereof, all interest accrued thereon, all fees due
hereunder and all other obligations of Borrower and Guarantor to Bank hereunder
or under any other agreement, note or otherwise arising will become immediately
due and payable without any further demand or notice;
(b) The Line will immediately terminate and the Borrower will
receive no further extensions of credit thereunder;
(c) Bank may increase the interest rate on the Line to the
Default Rate, without notice;
(d) Bank may exercise all of the rights and remedies set forth
in the Pledge Agreement; and/or
(e) Bank may exercise each and every right and remedy granted
to it under the Loan Documents, under the Uniform Commercial Code and under any
other applicable law or at equity.
If an Event of Default occurs under Section 10.1(e) or (f), all Bank
Indebtedness shall become immediately due and payable.
10.3 Set-Off. Without limiting the rights of Bank under applicable law,
Bank has and may exercise a right of set-off, a lien against and a security
interest in all property of Borrower and Guarantor now or at any time in Bank's
possession in any capacity whatsoever, including but not limited to any balance
of any deposit, trust or agency account, or any other bank account with Bank, as
security for all Bank Indebtedness. At any time and from time to time following
the occurrence of an Event of Default or a Potential Default, or Bank may
without notice or demand, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Bank to or for the credit of either Borrower
or any Guarantor against any or all of the Bank Indebtedness and Borrower's or
such Guarantor's obligations under the Loan Documents.
If any bank account of Borrower or any Guarantor with Bank is attached
or otherwise liened or levied upon by any third party, Bank need not await the
running of any applicable grace period hereunder, but Bank shall have and be
deemed to have the immediate right of set-off and may apply the funds or amount
thus set-off against Borrower's or such Guarantor's obligations to the Bank.
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10.4 Delay or Omission Not Waiver. Neither the failure nor any delay on
the part of Bank to exercise any right, remedy, power or privilege under the
Loan Documents upon the occurrence of any Event of Default or otherwise shall
operate as a waiver thereof or impair any such right, remedy, power or
privilege. No waiver of any Event of Default shall affect any later Event of
Default or shall impair any rights of Bank. No single, partial or full exercise
of any rights, remedies, powers and privileges by the Bank shall preclude
further or other exercise thereof. No course of dealing between Bank and
Borrower or any Guarantor shall operate as or be deemed to constitute a waiver
of Bank's rights under the Loan Documents or affect the duties or obligations of
Borrower or any Guarantor.
10.5 Remedies Cumulative; Consents. The rights, remedies, powers and
privileges provided for herein shall not be deemed exclusive, but shall be
cumulative and shall be in addition to all other rights, remedies, powers and
privileges in Bank's favor at law or in equity. Whenever the Bank's consent or
approval is required or permitted, such consent or approval shall be at the sole
and absolute discretion of Bank, which consent will not be unreasonably withheld
or delayed.
10.6 Certain Fees, Costs, Expenses and Expenditures. Borrower agrees to
pay on demand all costs and expenses of Bank, including without limitation:
(a) all costs and expenses in connection with the preparation,
review, negotiation, execution, delivery and administration of the Loan
Documents, and the other documents to be delivered in connection therewith, or
any amendments, extensions and increases to any of the foregoing (including,
without limitation, attorney's fees and expenses, and the cost of appraisals and
reappraisals of Collateral), and the cost of periodic lien searches and tax
clearance certificates, as Bank deems advisable;
(b) all losses, costs and expenses in connection with the
enforcement, protection and preservation of the Bank's rights or remedies under
the Loan Documents, or any other agreement relating to any Bank Indebtedness, or
in connection with legal advice relating to the rights or responsibilities of
Bank (including without limitation court costs, attorney's fees and expenses of
accountants and appraisers); and
(c) any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of the Loan Documents,
and all liabilities to which Bank may become subject as the result of delay in
paying or omission to pay such taxes.
In the event Borrower shall fail to pay taxes, insurance, assessments,
costs or expenses which it is required to pay hereunder, or fails to keep the
Collateral free from security interests or lien (except as expressly permitted
herein), or fails to maintain or repair the Collateral as required hereby, or
otherwise breaches any obligations under the Loan Documents, Bank in its
discretion, may make expenditures for such purposes and the amount so expended
(including
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attorney's fees and expenses, filing fees and other charges) shall be payable by
Borrower on demand and shall constitute part of the Bank Indebtedness.
With respect to any amount required to be paid by Borrower under this
Section, in the event Borrower fails to pay such amount on demand, Borrower
shall also pay to Bank interest thereon at the Default Rate. Borrower's
obligations under this Section shall survive termination of this Agreement.
10.7 Time is of the Essence. Time is of the essence in Borrower's and
Guarantor's performance of their obligations under the Loan Documents.
11. COMMUNICATIONS AND NOTICES.
11.1 Communications and Notices. All notices, requests and other
communications made or given in connection with the Loan Documents shall be in
writing and, unless receipt is stated herein to be required, shall be deemed to
have been validly given if delivered personally to the individual or division or
department to whose attention notices to a party are to be addressed, or by
private carrier, or registered or certified mail, return receipt requested, or
by telecopy with the original forwarded by first-class mail, in all cases, with
charges prepaid, addressed as follows, until some other address (or individual
or division or department for attention) shall have been designated by notice
given by one party to the other:
To Borrower:
Resource America, Inc.
1845 Walnut Street
Philadelphia, PA 19103
Attention: Scott F. Schaeffer
Facsimile Number: 215-546-5388
With a copy to:
Ledgewood Law Firm
1521 Locust Street
Philadelphia, PA 19102-3723
Attention: Jeffrey Brotman, Esquire
Facsimile Number: 215-735-2513
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To Bank:
Sovereign Bank
2000 Market Street
Philadelphia, PA 19103
Attention: Richard Narkiewicz
Facsimile Number: 215-568-5948
12. WAIVERS.
12.1 Waivers. In connection with any proceedings under the Loan
Documents, including without limitation any action by Bank in replevin,
foreclosure or other court process or in connection with any other action
related to the Loan Documents or the transactions contemplated hereunder,
Borrower and each Guarantor waives:
(a) all errors, defects and imperfections in such proceedings;
(b) all benefits under any present or future laws exempting
any property, real or personal, or any part of any proceeds thereof from
attachment, levy or sale under execution, or providing for any stay of execution
to be issued on any judgment recovered under any of the Loan Documents or in any
replevin or foreclosure proceeding, or otherwise providing for any valuation,
appraisal or exemption;
(c) all rights to inquisition on any real estate, which real
estate may be levied upon pursuant to a judgment obtained under any of the Loan
Documents and sold upon any writ of execution issued thereon in whole or in
part, in any order desired by Bank;
(d) presentment for payment, demand, notice of demand, notice
of nonpayment, protest and notice of protest of any of the Loan Documents,
including the Line Note;
(e) any requirement for bonds, security or sureties required
by statute, court rule or otherwise;
(f) any demand for possession of Collateral prior to
commencement of any suit; and
(g) all rights to claim or recover attorney's fees and costs
in the event that Borrower or any Guarantor is successful in any action to
remove, suspend or enforce a judgment entered by confession.
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12.2 Forbearance. Bank may release, compromise, forbear with respect
to, waive, suspend, extend or renew any of the terms of the Loan Documents,
without notice to Borrower or any Guarantor.
12.3 Limitation on Liability. Borrower and Guarantor shall be
responsible for and Bank is hereby released from any claim or liability in
connection with:
(a) Safekeeping any Collateral;
(b) Any loss or damage to any Collateral;
(c) Any diminution in value of the Collateral; or
(d) Any act or default of another Person.
Bank shall only be liable for any act or omission on its part
constituting wilful misconduct. In the event that Bank breaches its required
standard of conduct, Borrower and Guarantor agree that Bank's liability shall be
only for direct damages suffered and shall not extend to consequential or
incidental damages. In the event Borrower or any Guarantor brings suit against
Bank in connection with the transactions contemplated hereunder and Bank is
found not to be liable, Borrower and Guarantor each will indemnify and hold Bank
harmless from all costs and expenses, including attorney's fees, incurred by
Bank in connection with such suit. This Agreement is not intended to obligate
Bank to take any action with respect to the Collateral or to incur expenses or
perform any obligation or duty of Borrower or any Guarantor.
13. SUBMISSION TO JURISDICTION.
13.1 Submission to Jurisdiction. Borrower and Guarantor each hereby
consent to the exclusive jurisdiction of any state or federal court located
within the Commonwealth of Pennsylvania, and irrevocably agrees that, subject to
the Bank's election, all actions or proceedings relating to the Loan Documents
or the transactions contemplated hereunder shall be litigated in such courts,
and Borrower and Guarantor each waive any objection which they may have based on
lack of personal jurisdiction, improper venue or forum non conveniens to the
conduct of any proceeding in any such court and waives personal service of any
and all process upon it, and consents that all such service of process be made
by mail or messenger directed to it at the address set forth in Section 11.1.
Borrower and Guarantor each hereby irrevocably appoints any of its officers or
trustees as its agent for the purpose of accepting service of any process within
the Commonwealth of Pennsylvania. Nothing contained in this Section 13.1 shall
affect the right of Bank to serve legal process in any other manner permitted by
law or affect the right of Bank to bring any action or proceeding against
Borrower or any Guarantor or its property in the courts of any other
jurisdiction.
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14. MISCELLANEOUS.
14.1 Brokers. The transaction contemplated hereunder was brought about
and entered into by Bank, Borrower and Guarantor acting as principals and
without any brokers, agents or finders being the effective procuring cause
hereof. Borrower represents to Bank that Borrower has not committed Bank to the
payment of any brokerage fee or commission in connection with this transaction.
Whether any such claim is made against Bank by any broker, finder or agent or
any other Person, Borrower agrees to indemnify, defend and hold Bank harmless
against any such claim, at Borrower's own cost and expense, including Bank's
attorneys' fees. Borrower further agrees that until any such claim or demand is
adjudicated in Bank's favor, the amount claimed and/or demanded shall be deemed
part of the Bank Indebtedness secured by the Collateral.
14.2 No Joint Venture. Nothing contained herein is intended to permit
or authorize Borrower to make any contract on behalf of Bank, nor shall this
Agreement be construed as creating a partnership, joint venture or making Bank
an investor in Borrower.
14.3 Survival. All covenants, agreements, representations and
warranties made by Borrower and Guarantor in the Loan Documents or made by or on
its behalf in connection with the transactions contemplated here shall be true
at all times this Agreement is in effect and shall survive the execution and
delivery of the Loan Documents, any investigation at any time made by Bank or on
its behalf and the making by Bank of the loans or advances to Borrower. All
statements contained in any certificate, statement or other document delivered
by or on behalf of Borrower and Guarantor pursuant hereto or in connection with
the transactions contemplated hereunder shall be deemed representations and
warranties by Borrower or Guarantor as the case may be.
14.4 No Assignment by Borrower. Borrower may not assign any of its
rights hereunder without the prior written consent of Bank, and Bank shall not
be required to lend hereunder except to Borrower as it presently exists.
14.5 Assignment or Sale by Bank. Bank may sell, assign or participate
all or a portion of its interest in the Loan Documents and in connection
therewith may make available to any prospective purchaser, assignee or
participant any information relative to Borrower and Guarantor in its
possession.
14.6 Binding Effect. This Agreement and all rights and powers granted
hereby will bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
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14.7 Severability. The provisions of this Agreement and all other Loan
Documents are deemed to be 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.
14.8 No Third Party Beneficiaries. The rights and benefits of this
Agreement and the Loan Documents shall not inure to the benefit of any third
party.
14.9 Modifications. No modification of this Agreement or any of the
Loan Documents shall be binding or enforceable unless in writing and signed by
or on behalf of the party against whom enforcement is sought.
14.10 Holidays. If the day provided herein for the payment of any
amount or the taking of any action falls on a Saturday, Sunday or public holiday
at the place for payment or action, then the due date for such payment or action
will be the next succeeding Business Day.
14.11 Law Governing. This Agreement has been made, executed and
delivered in the Commonwealth of Pennsylvania and will be construed in
accordance with and governed by the laws of such Commonwealth.
14.12 Integration. The Loan Documents shall be construed as integrated
and complementary of each other, and as augmenting and not restricting Bank's
rights, powers, remedies and security. The Loan Documents contain the entire
understanding of the parties thereto with respect to the matters contained
therein and supercede all prior agreements and understandings between the
parties with respect to the subject matter thereof and do not require parol or
extrinsic evidence in order to reflect the intent of the parties. In the event
of any inconsistency between the terms of this Agreement and the terms of the
other Loan Documents, the terms of this Agreement shall prevail.
14.13 Exhibits and Schedules. All exhibits and schedules attached
hereto are hereby made a part of this Agreement.
14.14 Headings. The headings of the Articles, Sections, paragraphs and
clauses of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
14.15 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
14.16 Waiver of Right to Trial by Jury. BORROWER, GUARANTOR AND BANK
WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(a) ARISING UNDER ANY OF THE LOAN
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DOCUMENTS OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF BORROWER, GUARANTOR OR BANK WITH RESPECT TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWER, GUARANTOR AND BANK AGREE
AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF BORROWER, GUARANTOR AND BANK TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY. BORROWER AND GUARANTOR ACKNOWLEDGE THAT THEY HAVE HAD
THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY
UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND
KNOWINGLY AGREE TO THE TERMS OF THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
RESOURCE AMERICA, INC.
By: /s/ Scott F. Schaeffer
-----------------------
Name: Scott F. Schaeffer
Title: Vice Chairman
SOVEREIGN BANK
By: /s/ Richard Narkiewicz
---------------------------
Name: /s/ Richard Narkiewicz
Title: Vice President
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ACKNOWLEDGMENT AND CONSENT
Each of the undersigned, guarantor and surety for all obligations of
Borrower to Bank pursuant to its Guaranty and Suretyship Agreement of even date
herewith, hereby acknowledges and consents to the foregoing Agreement and agrees
that all representations and warranties contained therein with respect to it are
true and correct as if set forth at length herein. Each of the undersigned
hereby further agrees, with the intent to be legally bound, that all agreements,
acknowledgments and waivers set forth in the foregoing Agreement applicable to
it shall be binding on the undersigned as if the undersigned were a signatory to
such Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Acknowledgment
and Agreement this 27th day of July, 1999.
RESOURCE PROPERTIES, INC.
By: /s/ Scott F. Schaeffer
-----------------------
Name: Scott F. Schaeffer
Title: President
RESOURCE PROPERTIES 53, INC.
By: /s/ Scott F. Schaeffer
-----------------------
Name: Scott F. Schaeffer
Title: President
RESOURCE PROPERTIES XXIV, INC.
By: /s/ Scott F. Schaeffer
-----------------------
Name: Scott F. Schaeffer
Title: President
RESOURCE PROPERTIES XL, INC.
By: /s/ Scott F. Schaeffer
-----------------------
Name: Scott F. Schaeffer
Title: President
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SCHEDULES
---------
Schedule 5.5 Pending or Threatened Litigation or Proceedings Against
or Affecting Borrower
Schedule 5.15 Liens and Encumbrances
Schedule 6.10 Permitted Loans to Affiliates, Shareholders, Officers
or Directors
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Schedule 5.5
------------
Pending Litigation Matters involving Resource America, Inc:
1. Birnbaum v. Resource America, Inc. et al. (in re Resource America
Securites Litigation), U.S. District Court for the Eastern
District of Pennsylvania, No. 98-CV5446
2. GHMC. Inc. v. Brandywine Construction & Management. Inc. et al,
District Court of Douglas County, Nebraska, No. 98-98CV487
No pending litigation matters involving any subsidiaries of Resource
America, Inc. asr not included in this Schedule.
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Schedule 5.15
-------------
NONE
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Schedule 6.10
-------------
Loans to Resource America, Inc.:
1. $5,088.351 from Resource Energy, Inc.
2. $456,724 from Bryn Mawr Resources, Inc.
Loans from Resource America, Inc.:
1. $130,575,171 to Resource Properties, Inc.
2. $63,448,757 to Resource Leasing, Inc.
3. $8,440,653 to Fidelity Mortgage Funding, Inc.
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