EXHIBIT 10.5
EXECUTION VERSION
GUARANTEE
GUARANTEE, dated as of January 14, 2003, made by CRIIMI MAE, INC., a
Maryland corporation (the "Guarantor"), in favor of BEAR, XXXXXXX INTERNATIONAL
LIMITED (the "Buyer"), party to the Repurchase Agreement dated January 14, 2003
by and among Buyer, CRIIMI Newco, LLC (a "Seller") and CBO REIT II, Inc. (a
"Seller") (the "Repurchase Agreement").
RECITALS
Reference is made to the Repurchase Agreement, pursuant to which the Buyer
agreed to enter into a Transaction with the Sellers upon the terms and subject
to the conditions set forth therein. It is a condition precedent to the
obligation of the Buyer to enter into the Transaction with the Sellers under the
Repurchase Agreement, that the Guarantor execute and deliver to the Buyer this
Guarantee.
NOW, THEREFORE, in consideration of the premises and to induce the Buyer to
enter into the Repurchase Agreement and to induce the Buyer to enter into the
Transaction with the Sellers under the Repurchase Agreement, the Guarantor
hereby agrees with the Buyer as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, terms defined in the Repurchase
Agreement and used herein shall have the meanings given to them in the
Repurchase Agreement, and the following terms used herein shall have the
meanings assigned to them below:
"ERISA" shall, with respect to any Person, mean the Employee Retirement
Income Security Act of 1974, as amended from time to time and any successor
thereto, and the regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" shall, with respect to any Person, mean any Person which
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which such Person is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which such Person
is a member.
"Event of ERISA Termination" shall, with respect to Guarantor or either
Seller, mean (i) with respect to any Plan, a reportable event, as defined in
Section 4043 of ERISA, as to which the PBGC has not by regulation waived the
reporting of the occurrence of such event, or (ii) the withdrawal of Guarantor,
such Seller or any ERISA Affiliate thereof from a Plan during a plan year in
which it is a substantial employer, as defined in Section 4001(a)(2) of ERISA,
or (iii) the failure by Guarantor, such Seller or any ERISA Affiliate thereof to
meet the minimum funding standard of Section 412 of the Code or Section 302 of
ERISA with respect to any Plan, including, without limitation, the failure to
make on or before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, or (iv) the distribution under
Section 4041 of ERISA of a notice of intent to terminate any Plan or any
action taken by Guarantor, such Seller or any ERISA Affiliate thereof to
terminate any Plan, or (v) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would result
in the loss of tax-exempt status of the trust of which such Plan is a part if
Guarantor, such Seller or any ERISA Affiliate thereof fails to timely provide
security to the Plan in accordance with the provisions of said Sections, or (vi)
the institution by the PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or
(vii) the receipt by Guarantor, such Seller or any ERISA Affiliate thereof of a
notice from a Multiemployer Plan that action of the type described in the
previous clause (vi) has been taken by the PBGC with respect to such
Multiemployer Plan, or (viii) any event or circumstance exists which may
reasonably be expected to constitute grounds for Guarantor, such Seller or any
ERISA Affiliate thereof to incur liability under Title IV of ERISA or under
Section 412(c)(11) of the Code with respect to any Plan.
"Multiemployer Plan" shall mean, with respect to Guarantor or either
Seller, a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA which
is or was at any time during the current year or the immediately preceding five
years contributed to (or required to be contributed to) by such Guarantor or
either Seller or any ERISA Affiliate thereof on behalf of its employees and
which is covered by Title IV of ERISA.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Plan" shall mean, with respect to Guarantor or either Seller, any employee
benefit or similar plan that is or was at any time during the current year or
immediately preceding five years established, maintained or contributed to by
such Seller or any ERISA Affiliate thereof and that is covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
"Single-Employer Plan" shall mean a single-employer plan as defined in
Section 4001(a)(15) of ERISA which is subject to the provisions of Title IV of
ERISA.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guarantee shall refer to this Guarantee as a whole and
not to any particular provision of this Guarantee, and section and paragraph
references are to this Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Guarantee.
(a) The Guarantor hereby, unconditionally and irrevocably, guarantees to
the Buyer and its successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Sellers when due (whether at the stated
maturity, by acceleration or
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otherwise) of the Obligations (which shall include, without limitation, the
obligation to make cash payments or pledge additional collateral in order to
cure a Margin Call under the Repurchase Agreement, to make scheduled payments of
Price Differential, to make required Amortization Payments and to pay fees and
expenses required to be paid under the Repurchase Agreement).
(b) The Guarantor further agrees to pay any and all expenses (including,
without limitation, all reasonable fees and disbursements of counsel) which may
be paid or incurred by the Buyer following an Event of Default in enforcing any
rights with respect to, or collecting, any or all of the Obligations or
enforcing any rights with respect to, or collecting against, the Guarantor under
this Guarantee. This Guarantee shall remain in full force and effect until the
Obligations are paid in full and the Transaction under the Repurchase Agreement
is terminated, notwithstanding that from time to time prior thereto the Sellers
may be free from any Obligations.
(c) No payment or payments made by the Sellers, the Guarantor, any other
guarantor or any other Person or received or collected by the Buyer from the
Sellers, the Guarantor, any other guarantor or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of the
Guarantor hereunder which shall, notwithstanding any such payment or payments
other than payments made by the Guarantor in respect of the Obligations or
payments received or collected from the Guarantor in respect of the Obligations,
remain liable for the Obligations until the Obligations are paid in full and the
Transaction is terminated.
(d) The Guarantor agrees that whenever, at any time, or from time to time,
it shall make any payment to the Buyer on account of its liability hereunder, it
will notify the Buyer in writing that such payment is made under this Guarantee
for such purpose.
(e) Any amounts paid hereunder will be applied by the Buyer to reduce the
Obligations under the Repurchase Agreement.
3. Right of Set-off. The Guarantor hereby irrevocably authorizes the Buyer
at any time and from time to time without notice to the Guarantor, any such
notice being expressly waived by the Guarantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Buyer to or for the
credit or the account of the Guarantor, or any part thereof in such amounts as
the Buyer may elect, against and on account of the Obligations and liabilities
of the Guarantor to the Buyer which are then due and payable hereunder and
claims of every nature and description of the Buyer against the Guarantor, in
any currency, whether arising hereunder, under the Repurchase Agreement, any
Repurchase Documents or otherwise, as the Buyer may elect, whether or not the
Buyer has made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. The Buyer agrees promptly (but in no
event later than five (5) Business Days following any set-off) to notify the
Guarantor after any such set-off and application made by the Buyer; provided
that the failure to give such notice shall not affect the validity of such
set-off
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and application. The rights of the Buyer under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which the Buyer may have.
4. No Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder or any set-off or application of funds of the Guarantor by
the Buyer, the Guarantor shall not be entitled to be subrogated to any of the
rights of the Buyer against the Sellers or any other guarantor or any security
or guarantee or right of offset held by the Buyer for the payment of the
Obligations, nor shall the Guarantor seek or be entitled to seek any
contribution or reimbursement from the Sellers or any other guarantor in respect
of payments made by the Guarantor hereunder, until all amounts owing to the
Buyer by the Sellers on account of the Obligations are paid in full. If any
amount shall be paid to the Guarantor on account of such subrogation rights at
any time when all of the Obligations shall not have been paid in full, such
amount shall be held by the Guarantor in trust for the Buyer, segregated from
other funds of the Guarantor, and shall, forthwith upon receipt by the
Guarantor, be turned over to the Buyer in the exact form received by the
Guarantor (duly indorsed by the Guarantor to the Buyer, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Buyer may determine.
5. Amendments, etc. with respect to the Obligations; Waiver of Rights. The
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Guarantor and without notice to or further
assent by the Guarantor, any demand for payment of any of the Obligations made
by the Buyer may be rescinded by such party and any of the Obligations
continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any security or other assets or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Buyer, and the Repurchase Agreement and the other
Repurchase Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Buyer may deem advisable from time to time, and any
Transaction Assets or other assets, guarantee or right of offset at any time
held by the Buyer for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released; provided, however, in the event that a Change
of Control has occurred with respect to either Seller, the Guarantor shall not
be responsible for any increased Obligations arising directly from any amendment
of any Repurchase Document entered into without the consent of the Guarantor.
The Buyer shall not have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Obligations or for this
Guarantee or any property subject thereto. When making any demand hereunder
against the Guarantor, the Buyer may, but shall be under no obligation to, make
a similar demand on the Sellers or any other guarantor, and any failure by the
Buyer to make any such demand or to collect any payments from the Sellers or any
such other guarantor or any release of the Sellers or such other guarantor shall
not relieve the Guarantor of its obligations or liabilities hereunder, and shall
not impair or affect the rights and remedies, express or implied, or as a matter
of law, of the Buyer against the Guarantor. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.
6. Guarantee Absolute and Unconditional. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Buyer upon this Guarantee or
acceptance of this Guarantee, the Obligations, and
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any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Sellers and the Guarantor, on the one
hand, and the Buyer, on the other hand, likewise shall be conclusively presumed
to have been had or consummated in reliance upon this Guarantee. The Guarantor
waives diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon the Sellers or the Guarantor with respect to the
Obligations. The Guarantor understands and agrees that this Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the
Repurchase Agreement or any other Repurchase Document, any of the Obligations or
any other security therefor or guarantee or right of offset with respect thereto
at any time or from time to time held by the Buyer, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Sellers against the Buyer, or (c) any
other circumstance whatsoever (with or without notice to or knowledge of the
Sellers or the Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Sellers for the Obligations,
or of the Guarantor under this Guarantee, in bankruptcy or in any other
instance. When pursuing its rights and remedies hereunder against the Guarantor,
the Buyer may, but shall be under no obligation to, pursue such rights and
remedies as it may have against the Sellers or any other Person or against any
security or guarantee for the Obligations or any right of setoff with respect
thereto, and any failure by the Buyer to pursue such other rights or remedies or
to collect any payments from the Sellers or any such other Person or to realize
upon any such security or guarantee or to exercise any such right of offset, or
any release of the Sellers or any such other Person or any such security,
guarantee or right of setoff, shall not relieve the Guarantor of any liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Buyer against the
Guarantor. This Guarantee shall remain in full force and effect and be binding
in accordance with and to the extent of its terms upon the Guarantor and the
successors and assigns thereof, and shall inure to the benefit of the Buyer, and
its successors, indorsees, transferees and assigns, until all the Obligations
have been satisfied or the obligations of the Guarantor under this Guarantee
shall have been satisfied by payment in full.
7. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Buyer upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Sellers or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Sellers or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
8. Payments. The Guarantor hereby guarantees that payments hereunder will
be paid to the Buyer without set-off or counterclaim in U.S. Dollars at the
account maintained by the Buyer specified in Section 9 of the Repurchase
Agreement.
9. Representations and Warranties. Except as set forth in that certain
letter agreement dated as of the date of this Guarantee and delivered by the
Guarantor to the Buyer, a copy of which is attached hereto as Exhibit A, the
Guarantor hereby represents and warrants that:
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(a) it is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the corporate or
partnership power and authority and the legal right to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged;
(b) it has the corporate power and authority and the legal right to execute
and deliver, and to perform its obligations under, this Guarantee and the other
Repurchase Documents to which is a party, and has taken all necessary corporate
action to authorize its execution, delivery and performance of this Guarantee
and the other Repurchase Documents to which is a party;
(c) this Guarantee and each of the other Repurchase Documents to which the
Guarantor is a party has been duly executed and delivered on behalf of the
Guarantor, and constitutes a legal, valid and binding obligation of the
Guarantor enforceable in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing;
(d) the execution, delivery and performance of this Guarantee and the other
Repurchase Documents to which the Guarantor is a party will not violate any
provision of any requirement of law or contractual obligation of the Guarantor
and will not result in or require the creation or imposition of any Lien on any
of the properties or revenues of the Guarantor pursuant to any requirement of
law or contractual obligation of the Guarantor;
(e) no consent or authorization of, filing with, notice to, or other act by
or in respect of, any Governmental Authority or any other Person (including,
without limitation, any stockholder or creditor of the Guarantor) is required in
connection with the execution, delivery, performance, validity or enforceability
of this Guarantee or the other Repurchase Documents to which the Guarantor is a
party;
(f) there are no actions, suits, arbitrations, investigations, (including,
without limitation, any of the foregoing which are pending, or to the Knowledge
of the Guarantor, threatened) or other legal or arbitrable proceedings affecting
the Guarantor or any of its consolidated Subsidiaries or any of the properties
of the Guarantor before any Governmental Authority which (i) questions or
challenges the validity or enforceability of the Repurchase Documents to which
it is a party or any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim or claims in an aggregate amount greater
than $1,000,000, (iii) individually or in the aggregate, if adversely
determined, would have a Material Adverse Effect, or (iv) requires filing with
the SEC in accordance with its regulations;
(g) it has timely filed or caused to be filed all tax returns which are
required to be filed by it and has timely paid all Taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any Tax, the amount or the
validity of which is currently being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves in conformity with GAAP have been provided on the books of the
Guarantor); no tax Lien has been
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filed, and, to the knowledge of the Guarantor, no claim is being asserted,
with respect to any such tax, fee or other charge;
(h) ERISA.
(i) No liability under Section 4062, 4063, 4064 or 4069 of ERISA has been
or is expected by the Guarantor to be incurred by the Guarantor or any ERISA
Affiliate thereof with respect to any Plan which is a Single-Employer Plan in an
amount that could reasonably be expected to have a Material Adverse Effect.
(ii) No Plan which is a Single-Employer Plan had an accumulated funding
deficiency, whether or not waived, as of the last day of the most recent fiscal
year of such Plan ended prior to the date hereof. Neither the Guarantor nor any
ERISA Affiliate thereof is (A) required to give security to any Plan which is a
Single-Employer Plan pursuant to Section 401(a) (29) of the Code or Section 307
of ERISA, or (B) subject to a Lien in favor of such a Plan under Section 412(n)
of the Code or Section 302(f) of ERISA.
(iii) Each Plan of the Guarantor, each of its Subsidiaries and each of its
ERISA Affiliates is in compliance with the applicable provisions of ERISA and
the Code, except where the failure to comply would not result in any Material
Adverse Effect.
(iv) Neither the Guarantor nor any of its Subsidiaries has incurred a tax
liability under Chapter 43 of the Code or a penalty under Section 502 of ERISA
which has not been paid in full, except where the incurrence of such tax or
penalty would not result in a Material Adverse Effect.
(v) Neither the Guarantor nor any of its Subsidiaries or any ERISA
Affiliate thereof has incurred or reasonably expects to incur any withdrawal
liability under Section 4201 of ERISA as a result of a complete or partial
withdrawal from a Multiemployer Plan in an amount that could reasonably be
expected to have a Material Adverse Effect.
(i) The Order Confirming Debtors' Third Amended Joint Plan of
Reorganization, entered November 22, 2000 in the United States Bankruptcy Court
for the District of Maryland, Greenbelt Division, as entered on the docket of
such court, has not been reversed, stayed, modified, or amended, and: (a) the
time to appeal, seek review or rehearing or petition for certiorari has expired
and no timely-filed appeal or petition for review, rehearing, remand or
certiorari is pending; or (b) any appeal taken or petition for certiorari filed
has been resolved by the highest court to which the order or judgment was
appealed or from which certiorari was sought.
The Guarantor agrees that the foregoing representations and warranties
shall be deemed to have been made by the Guarantor on the Purchase Date under
the Repurchase Agreement.
10. Covenants.
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(a) Preservation of Existence; Compliance with Law. The Guarantor shall:
(i) Preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises necessary for the operation of its
business;
(ii) Comply with the requirements of all applicable laws, rules,
regulations and orders, whether now in effect or hereafter enacted or
promulgated by any applicable Governmental Authority (including, without
limitation, all environmental laws) in all material respects;
(iii) Maintain all licenses, permits or other approvals necessary for
Guarantor to conduct its business and to perform its obligations under the
Repurchase Documents, and shall conduct its business strictly in accordance with
applicable law;
(iv) Keep adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied; and
(v) Permit representatives of the Buyer, upon reasonable notice (unless an
Event of Default shall have occurred and is continuing, in which case, no prior
notice shall be required), during normal business hours, to examine, copy and
make extracts from its books and records, to inspect any of its Properties, and
to discuss its business and affairs with its officers, all to the extent
reasonably requested by the Buyer, subject to the provisions set forth in
Section 16 of the Repurchase Agreement and applicable law.
(b) Taxes, Etc.
(i) The Guarantor shall timely pay and discharge or cause to be paid and
discharged, when due all Taxes imposed upon it and upon its income and profits
regarding income and profits of the Transaction Assets, and upon any of its or
their property, real, personal or mixed (including without limitation, the
Transaction Assets) or upon any part thereof, as well as any other lawful claims
which, if unpaid, might become a Lien upon such properties or any part thereof.
(ii) The Guarantor shall file on a timely basis all federal, state and
local tax and information returns, reports and any other information statements
or schedules required to be filed by or in respect of it and pay all Taxes,
except for any such Taxes as are appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves are provided.
(iii) The Guarantor shall remain a REIT.
(iv) Newco shall remain a disregarded entity treated as a part of the
Guarantor for federal income tax purposes.
(v) To the best of its knowledge, the Guarantor is fully eligible for, and
all payments under this Guarantee and the Repurchase Agreement will be entitled
to, the benefits of the "Other Income" provision of the income tax treaty
between the United States and the United Kingdom with respect to any payment
received or to be received by
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it in connection with this Guarantee or the Repurchase Agreement, and no
such payments are attributable to a trade or business carried on by it through a
permanent establishment in the United Kingdom.
(c) Notice of Proceedings or Adverse Change. The Guarantor shall give
notice to the Buyer immediately after a Responsible Officer of the Guarantor has
any knowledge of:
(i) the occurrence of any Default or Event of Default;
(ii) any litigation or proceeding that is pending or threatened against (a)
the Guarantor in which the amount involved exceeds $1,000,000 and is not covered
by insurance, in which injunctive or similar relief is sought, or which, would
reasonably be expected to have a Material Adverse Effect and (b) any litigation
or proceeding that is pending or threatened in connection with any of the
Transaction Assets, which, if adversely determined, would reasonably be expected
to have a Material Adverse Effect;
(iii) with thirty days advance notice of any change in the Guarantor's
name, principal office or place of business or jurisdiction; and
(iv) as soon as reasonably possible, notice of any material change in
accounting policies or financial reporting practices of the Guarantor.
(d) Illegal Activities. The Guarantor shall not engage in any conduct or
activity that could subject its assets to forfeiture or seizure.
(e) Transactions with Affiliates. The Guarantor shall not enter into any
transaction, including, without limitation, the purchase, sale, lease or
exchange of property or assets or the rendering or accepting of any service with
any Affiliate, unless such transaction is (a) not otherwise prohibited in this
Guarantee or any other Repurchase Document and (b) upon fair and reasonable
terms no less favorable to the Guarantor, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person which is not an
Affiliate.
(f) Investment Company. The Guarantor shall not take any action to be or
become, and shall use its best efforts to avoid being or becoming, at any time
prior to the payment in full of the Repurchase Price and any other amount
payable under this Guarantee or any other Repurchase Document, an open-end
investment company, unit investment trust, closed-end investment company or
face-amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act of 1940, as amended.
(g) Delivery of Information. The Guarantor shall provide all information
necessary to enable the Sellers to comply with its obligations under the
Repurchase Agreement, including, without limitation, financial statements of the
Guarantor. The Guarantor shall notify Buyer the same day that any reports are
filed with the SEC and deliver the same to the Buyer within two (2) Business
Days following the filing thereof.
(h) No Amendment. The Guarantor shall not amend, modify, or terminate, or
otherwise permit to be amended, modified or terminated, any Repurchase Document
or any Brascan Loan
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Document in contravention of the Intercreditor Agreement without the prior
written consent of the Buyer.
(i) ERISA Matters.
(i) Promptly upon becoming aware of the occurrence of any Event of ERISA
Termination which together with all other Events of ERISA Termination occurring
within the prior 12 months involve a payment of money by or a potential
aggregate liability of the Guarantor or any ERISA Affiliate thereof or any
combination of such entities in excess of $1,000,000 the Guarantor shall give
the Buyer a written notice specifying the nature thereof, what action the
Guarantor or any ERISA Affiliate thereof has taken and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto;
(ii) Promptly upon receipt thereof, the Guarantor shall furnish to the
Buyer copies of (i) all notices received by the Guarantor or any ERISA Affiliate
thereof of the PBGC's intent to terminate any Plan or to have a trustee
appointed to administer any Plan; (ii) all notices received by the Guarantor or
any ERISA Affiliate thereof from the sponsor of a Multiemployer Plan pursuant to
Section 4202 of ERISA involving withdrawal liability in excess of $1,000,000;
and (iii) all funding waiver requests filed by the Guarantor or any ERISA
Affiliate thereof with the Internal Revenue Service with respect to any Plan,
the accrued benefits of which exceed the present value of the plan assets as of
the date the waiver request is filed, and all communications received by the
Guarantor or any ERISA Affiliate thereof from the Internal Revenue Service with
respect to any such funding waiver request.
(iii) The Guarantor represents and covenants that as of the date hereof and
for so long as it is a party to this Agreement or any Transaction hereunder, it
is not, and it is not using the assets of, an employee benefit plan subject to
Section 406 of ERISA, a plan subject to Section 4975 of the Code, a plan subject
to another law, regulation or restriction materially similar to Section 406 of
ERISA or Section 4975 of the Code, or an entity the assets of which constitute
assets of any such plans by reason of investment by such plans in the entity
(including for this purpose, the general account of a life insurance company),
because no class of equity interest in such Seller is held to the extent of 25 %
or more (as measured by value) by one or more so-called "benefit plan
investors", after disregarding the interests in the Guarantor held by certain
controlling persons, or because of another exception set forth in U. S.
Department of Labor Regulation Section 2510.3-101 (the "Plan Assets
Regulation"). The parties hereto agree that the foregoing representation and
covenant and the terms used therein shall be interpreted in a manner consistent
with the Plan Assets Regulation.
(j) Interest Rate Protection Agreement. The Guarantor shall either (a)
purchase an interest rate cap from the Buyer or another entity with a minimum
rating of at least A- by S&P and A3 by Xxxxx'x in a notional amount equal to at
least 50% of the outstanding Purchase Price at a 4.5% one-month LIBOR or lower
strike price (an "Interest Rate Protection Agreement") containing such other
terms and conditions satisfactory to Buyer in its sole discretion or (b) execute
an interest rate swap agreement or such other derivative acceptable to Buyer or
(c)
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maintain its current interest rate cap with Royal Bank of Canada (the
"Current Interest Rate Cap"); provided however, in the event that the Guarantor
utilizes the Current Interest Rate Cap, the Guarantor shall enter into an
extension thereof at least three (3) months prior to the current termination
date, which extension shall terminate no less than one year from the current
expiration date or on such earlier date as agreed to by the Buyer, after taking
into account the anticipated closing date of the CDO.
(k) Insurance. The Guarantor shall continue to maintain insurance coverage
with respect to employee dishonesty, forgery or alteration, theft, disappearance
and destruction, robbery and safe burglary, property (other than money and
securities) and computer fraud in an aggregate amount at least equal to
$5,000,000. The Guarantor shall maintain a fidelity bond in respect of its
officers, employees and agents, with respect to any claims made in connection
with all or any portion of the Transaction Assets. The Guarantor shall notify
the Buyer as soon as reasonably possible of any material change in the terms of
any such fidelity bond or any other insurance policy, with a copy of evidence of
same attached.
(l) Taxes. The Guarantor agrees to be bound by the provisions of Section 7
of the Repurchase Agreement with respect to any amounts paid by the Guarantor
thereunder.
(m) Subordination.
(i) The Guarantor will cause each instrument evidencing any of the
Subordinated Obligations (as defined in the Intercreditor Agreement) to be
endorsed with the following legend:
"THE OBLIGATIONS EVIDENCED BY THIS INSTRUMENT ARE SUBORDINATED TO THE PRIOR
PAYMENT IN FULL IN CASH AND IN IMMEDIATELY AVAILABLE FUNDS OF ALL OF THE SENIOR
OBLIGATIONS (AS DEFINED IN THE INTERCREDITOR AGREEMENT HEREINAFTER REFERRED TO)
AND THE TERMINATION OF THE TRANSACTION THEREUNDER PURSUANT TO, AND TO THE EXTENT
PROVIDED IN, THE INTERCREDITOR AND SUBORDINATION AGREEMENT DATED AS OF JANUARY
14, 2003 BY AND AMONG THE PAYEE NAMED HEREIN AND THE SENIOR TRANSACTION PARTY
REFERRED TO THEREIN, AS SUCH MAY BE AMENDED FROM TIME TO TIME."
(ii) The Guarantor will further xxxx its books of account in such a manner
as shall be effective to give proper notice of the effect of the Intercreditor
Agreement and will, in the case of any of the Subordinated Obligations which are
not evidenced by any instrument, upon the request of the Buyer, promptly cause
such Subordinated Obligations to be evidenced by an appropriate instrument or
instruments endorsed with the legend set forth above. The Guarantor will, at its
sole expense and at any time and from time to time, promptly execute and deliver
all further assignments, instruments and other documents, and take all further
action, that may be necessary or desirable and that the Buyer may reasonably
request, in order to protect any right or interest granted or purported to be
granted under the Intercreditor Agreement or to enable the Buyer to exercise and
enforce its rights and remedies hereunder (including, without limitation, any
and all claims with respect to the Transaction Assets or any other collateral,
and any liens
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and security interests securing payment of the Subordinated Obligations
owing thereto or held thereby).
(iii) The Guarantor hereby acknowledges and agrees to the provisions set
forth in Section 3 of the Intercreditor Agreement.
11. Events of Default. Each of the following shall constitute an "Event of
Default" for all purposes hereunder and under the Repurchase Documents:
(a) Representation and Warranty Breach. Any representation, warranty, or
certification made or deemed made herein or in any other Repurchase Document by
the Guarantor or any certificate furnished to the Buyer pursuant to the
provisions hereof or thereof or any information with respect to the Transaction
Assets furnished in writing by or on behalf of the Guarantor shall prove to have
been untrue or misleading in any material respect as of the time made or
furnished;
(b) Immediate Covenant Default. The failure of the Guarantor to perform,
comply with or observe any term, covenant or agreement applicable to the
Guarantor contained in any of Sections 10(a)(i) and (ii), (d), (f) or (i).
(c) Additional Covenant Defaults. The Guarantor shall fail to observe,
comply with or perform any other term, covenant or agreement contained in this
Guarantee (and not identified in Section 11(c) above) or any other Repurchase
Document, and if such default shall be capable of being remedied, such failure
to observe or perform shall continue unremedied for a period of ten (10)
Business Days after (i) the Guarantor has actual knowledge of such default or
(ii) the Buyer has notified the Guarantor of such default; or
(d) ERISA. (i) the Guarantor shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of Guarantor or any
ERISA Affiliate, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the reasonable
opinion of the Buyer, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Plan shall terminate for purposes of
Title IV of ERISA, (v) Guarantor or any ERISA Affiliate shall, or in the
reasonable opinion of the Buyer is likely to, incur any liability in connection
with a withdrawal from, or the insolvency or reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect.
12. Notices. Except as otherwise expressly permitted by this Guarantee, all
notices, requests and other communications provided for herein (including
without limitation any modifications of, or waivers, requests or consents under,
this Guarantee) shall be given or made in writing (including without limitation
by telecopy) delivered to the intended recipient at the
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address set forth below); or, as to any party, at such other address as
shall be designated by such party in a written notice to each other party.
Except as otherwise provided in this Guarantee, all such communications shall be
deemed to have been duly given when transmitted by telecopy or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
Bear, Xxxxxxx International Limited
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
Fax: 000-000-0000
With a copy to:
Bear, Xxxxxxx International Limited
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Senior Managing Director
Fax: 000-000-0000
CRIIMI MAE, Inc.
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Chief Financial Officer
Telecopier No.: (000) 000-0000
Telephone No: (000) 000-0000
13. Severability. Any provision of this Guarantee which is 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.
14. Integration. This Guarantee represents the agreement of the Guarantor
with respect to the subject matter hereof and there are no promises or
representations by the Buyer or the Guarantor relative to the subject matter
hereof not reflected herein.
15. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Guarantee may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Guarantor and the Buyer; provided, that any provision of this
Guarantee may be waived by the Buyer in a letter or agreement executed by the
Buyer or by facsimile transmission from the Buyer.
(b) The Buyer shall not by any act (except by a written instrument pursuant
to Section 15(a) hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on
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the part of the Buyer, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Buyer of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Buyer would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
16. Section Headings. The section headings used in this Guarantee are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
17. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of the
Buyer and its successors and assigns.
18. Governing Law; Jurisdiction, Waiver of Jury Trial: Waiver of Damages.
(a) This Guarantee shall be governed by and interpreted under the laws of
the State of New York without regard to the conflict-of-laws principles thereof
(other than section 5-1401 of the General Obligations Law of the State of New
York).
(b) The Guarantor hereby submits to the exclusive jurisdiction of the
courts of the State of New York located in the Borough of Manhattan and the
United States District Court for the Southern District of New York, New York.
The Guarantor waives in all disputes any objection that it may have to the
location of such court considering the dispute including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
conveniens. Any proceeding commenced by the Guarantor in connection with the
transactions contemplated by this Guarantee shall be brought in one of the
courts of the State of New York located in the Borough of Manhattan, or in the
United States District Court for the Southern District of New York, and the
Guarantor waives any and all rights that it may have to commence any proceeding
in any other court.
(c) The Guarantor hereby waives any right to have a jury participate in
resolving any dispute, whether sounding in contract, tort, or otherwise arising
out of, connected with, related to or incidental to any relationship established
in connection with this agreement. Instead, any disputes resolved in court will
be resolved in a bench trial without a jury.
(d) Nothing herein shall affect the right of the Buyer to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Guarantor in any other jurisdiction.
(e) The Guarantor waives the posting of any bond otherwise required of the
Buyer in connection with any judicial process or proceeding to enforce any
judgment or other court order entered in favor of Buyer, or to enforce by
specific performance, temporary restraining order or preliminary or permanent
injunction this Guarantee or any of the other Repurchase Documents.
19. Acknowledgments. Each of the Buyer and the Guarantor hereby acknowledge
that:
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(a) Guarantor and Buyer have each been advised by counsel in the
negotiation, execution and delivery of this Guarantee and the other Repurchase
Documents to which it is a party;
(b) the Buyer and Guarantor have no fiduciary relationship with or duty to
one another arising out of or in connection with this Guarantee or any of the
other Repurchase Documents to which it is a party, and the relationship between
the Guarantor and the Sellers, on one hand, and the Buyer, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Repurchase Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Guarantor, the Sellers and the Buyer.
20. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTEE OR ANY OTHER REPURCHASE DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.
CRIIMI MAE, INC.
/s/Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President
Agreed and acknowledged:
BEAR, XXXXXXX INTERNATIONAL LIMITED
/s/Xxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Managing Director
EXHIBIT A
GUARANTOR'S LETTER
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