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:
(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;
-2-
(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.
-3-
(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
-4-
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,
-5-
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.
-6-
(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.
-7-
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.
-8-
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
-9-
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.
-10-
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
-11-