Exhibit 10.3

 

EXECUTION VERSION

GUARANTEE

 

GUARANTEE, dated as of March 29, 2006 (as amended, restated, supplemented or
otherwise modified and in effect from time to time, this “Guarantee”), made by
AMERICAN MORTGAGE ACCEPTANCE COMPANY (the “Guarantor”), in favor of BANK OF
AMERICA, N.A. and BANC OF AMERICA SECURITIES LLC (together with their respective
successors and assigns, the “Buyers”).

RECITALS

Pursuant to the Master Repurchase Agreement, dated as of March 29, 2006 (as
amended, restated, supplemented or otherwise modified and in effect from time to
time, the “Repurchase Agreement”), among AMAC CDO Funding I, as seller
(“Seller”), and the Buyers, the Buyers have agreed to purchase certain assets
(the “Purchased Assets”) from the Seller, subject to the Seller’s obligation to
repurchase such Purchased Assets in accordance with the terms and conditions of
the Repurchase Agreement. The Guarantor is the sole direct owner of all the
Capital Stock (as defined in the Repurchase Agreement) of the Seller, and it is
a condition precedent to the effectiveness of the Repurchase Agreement that the
Guarantor shall have executed and delivered this Guarantee to the Buyers.

NOW, THEREFORE, in consideration of the premises and to induce the Buyers to
enter into the Repurchase Agreement, the Guarantor hereby agrees with the
Buyers, 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.

(b)         As used herein, the following capitalized terms shall have the
respective meanings set forth below.

“Adjusted Net Income” for any period means the Consolidated Net Income of the
Guarantor and its Subsidiaries for such period without giving effect to
depreciation and amortization uniquely significant to real estate, gains or
losses which are classified as “extraordinary” in accordance with GAAP, capital
gains or losses on sales of real estate, capital gains or losses with respect to
the disposition of investments in marketable securities and any
provision/benefit for income taxes for such period.

“Consolidated Net Income” for any period means the amount of consolidated net
income (or loss) of the Guarantor and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.

 

 

 

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“Capital Lease Obligations” shall mean obligations in respect of any lease of
any property (whether real, personal or mixed) by the Guarantor as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of the Guarantor.

“Debt” shall mean without duplication: (a) obligations created, issued or
incurred by the Guarantor for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person), (b) obligations of the Guarantor to pay the deferred purchase
or acquisition price of property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within ninety (90) days after the date the respective goods are delivered or the
respective services are rendered, (c) Debt of others secured by a Lien on the
property of the Guarantor, whether or not the respective Debt so secured has
been assumed by the Guarantor, (d) obligations (contingent or otherwise) of the
Guarantor in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for account of the Guarantor,
(e) Capital Lease Obligations of the Guarantor, (f) obligations of the Guarantor
under repurchase agreements, sale/buy-back agreements or like arrangements, (g)
Debt of others Guaranteed by the Guarantor, (h) all obligations of the Guarantor
incurred in connection with the acquisition or carrying of fixed assets by the
Guarantor, (i) Debt of general partnerships of which the Guarantor is a general
partner (other than Non-Recourse Debt incurred in connection with any CDO
securitization transaction), (j) Hedging Agreements and (k) all Off-Balance
Sheet Obligations of the Guarantor (other than Non-Recourse Debt incurred in
connection with any CDO securitization transaction).

“Debt Service Coverage” means the ratio of Adjusted Net Income plus Interest
Expense on recourse Debt outstanding to Interest Expense on Recourse Debt
outstanding.

“Guaranty” shall mean any (a) any obligation, contingent or otherwise, of the
Guarantor guarantying or having the economic effect of guarantying any Debt or
other obligation payable or performable by another Person (the “Primary
Obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Primary Obligor, direct or indirect, (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Debt or other
obligation, (ii) to purchase or lease property, securities or services for the
purpose of assuring the obligee in respect of such Debt or other obligation of
the payment or performance of such Debt or other obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to enable
such Primary Obligor to pay such Debt or other obligation, or (iv) entered into
for the purpose of assuring in any other manner the obligee in respect of such
Debt or other obligation of the payment or performance thereof or to protect
such obligee against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of the Guarantor securing any Debt or other obligation of any
other Person, whether or not such Debt or other obligation is assumed by such
Person (or any right, contingent or otherwise, of any holder of such Debt to
obtain any such Lien). The amount of any Guaranty shall be deemed to be an
amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guaranty is made or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the Buyer in its sole discretion. The term
“Guaranteed” has a corresponding meaning.

 

 

 

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“Interest Expense” means for any period, total interest expense, both expensed
and capitalized, of the Guarantor and its Subsidiaries for such period with
respect to all outstanding Debt of the Guarantor and its Subsidiaries
(including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance financing
and net costs under interest rate protection agreements), determined on a
consolidated basis in accordance with GAAP.

“Liquidity” shall mean, with respect to the Guarantor at any time, an amount
equal to the sum of all unrestricted cash and unencumbered marketable securities
held by the Guarantor at such time together with any amounts readily available
to be drawn by the Guarantor at such time under any credit facility (including,
without limitation, amounts readily available to be drawn by the Seller at such
time under the Repurchase Agreement). For the avoidance of doubt, to the extent
that any such facility is asset-based or otherwise conditions the making of any
advances thereunder on the pledging or posting of any assets, amounts will only
be considered “readily available to be drawn” only to the extent that
specifically-identified assets which satisfy the relevant criteria are available
to be pledged or posted, as applicable.

“Off-Balance Sheet Obligation” shall mean any obligation in respect of a
transaction, agreement or other contractual arrangement to which an entity
unconsolidated with the Guarantor is a party, under which the Guarantor has:

(a)          any obligation under a guaranty contract that has any of the
characteristics identified in paragraph 3 of FASB Interpretation No. 45,
Guarantor’s Accounting and Disclosure Requirements for Guaranties, Including
Indirect Guaranties of Indebtedness of Others (November 2002) (“FIN 45”), as may
be modified or supplemented, and that is not excluded from the initial
recognition and measurement provisions of FIN 45 pursuant to paragraphs 6 or 7
of that Interpretation;

(b)         a retained or contingent interest in assets transferred to an
unconsolidated entity or similar arrangement that serves as credit, liquidity or
market risk support to such entity for such assets;

(c)          any obligation, including a contingent obligation, under a contract
that would be accounted for as a derivative instrument, except that it is both
indexed to the Guarantor’s own stock and classified in stockholders’ equity in
the Guarantor’s statement of financial position, and therefore excluded from the
scope of FASB Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities (June 1998), pursuant to
paragraph 11(a) of that Statement, as may be modified or supplemented; or

(d)         any obligation, including a contingent obligation, arising out of a
variable interest (as referenced in FASB Interpretation No. 46, Consolidation of
Variable Interest Entities (January 2003), as may be modified or supplemented)
in an unconsolidated entity that is held by, and material to, the Guarantor,
where such entity provides financing, liquidity, market risk or credit risk
support to, or engages in leasing, hedging or research and development services
with, the Guarantor.

 

 

 

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“Non-Recourse Debt” shall mean Debt for borrowed money in respect of which
recourse for payment (except for customary exceptions for fraud, misapplication
of funds, environmental indemnities, and other customary exceptions to
non-recourse provisions) is contractually limited to specific assets of the
Guarantor encumbered by a Lien securing such Debt.

“Preferred Securities” means financial instruments with characteristics of both
liabilities and equity which per FASB Statement of Financial Accounting
Standards No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity (May 2003), are recognized as
liability on the Guarantor’s balance sheet. 

“Recourse Debt” shall mean, for any period, the aggregate Debt (excepting any
Non-Recourse Debt and Preferred Securities) of the Guarantor during such period.

“Tangible Net Worth” shall mean, with respect to any Person, as of any date of
determination, the amounts which would be included under equity on a
consolidated balance sheet of such Person and its Subsidiaries at such date in
accordance with GAAP (excluding equity adjustments related to other
comprehensive income or loss), less the consolidated net book value of all
assets of such person and its Subsidiaries (to the extent reflected as an asset
in the balance sheet of such Person or any Subsidiary at such date) which will
be treated as intangibles under GAAP.

“Total Assets” shall mean, with respect to any Person, as of any date of
determination, the amounts which would be included under assets on a
consolidated balance sheet of such Person and its Subsidiaries at such date in
accordance with GAAP (excluding the assets of variable interest entities
required to be consolidated under FIN46R).

“Total Liabilities” shall mean, with respect to any Person, as of any date of
determination, the amounts which would be included under liabilities on a
consolidated balance sheet of such Person and its Subsidiaries at such date in
accordance with GAAP (excluding the liabilities of variable interest entities
required to be consolidated under FIN46R).

(c)          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.

(d)         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, as guarantor of payment and performance and not
merely as surety or guarantor of collection, hereby, unconditionally and
irrevocably, guarantees to the Buyers and their respective successors,
indorsees, permitted transferees and permitted assigns, the prompt and complete
payment and performance by the Seller when due (whether at the stated maturity,
by acceleration or otherwise) of all obligations of the Seller under the
Repurchase Agreement and the related documents (the “Obligations”).

 

 

 

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(b)         Notwithstanding anything herein or in any other Transaction Document
to the contrary, the maximum liability of the Guarantor hereunder and under the
other Transaction Documents shall in no event exceed the amount which can be
guaranteed by the Guarantor under applicable federal and state laws relating to
the insolvency of debtors.

(c)          The Guarantor further agrees to pay any and all actual,
out-of-pocket expenses (including, without limitation, all fees and
disbursements of counsel) which may be paid or incurred by the Buyers in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/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 Repurchase Agreement is terminated, notwithstanding that from
time to time prior thereto the Seller may be free from any Obligations.

(d)         The Guarantor agrees that the Obligations may at any time and from
time to time exceed the amount of the liability of the Guarantor hereunder
without impairing this Guarantee or affecting the rights and remedies of the
Buyers hereunder.

(e)          The Buyers may apply any payments received hereunder against such
portion of the Obligations and in such priority and fashion as it may deem
appropriate in their sole and absolute discretion.

(f)          No payment or payments made by the Seller, the Guarantor, any other
guarantor or any other Person or received or collected by the Buyers from the
Seller, 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 up to the maximum liability of the Guarantor
hereunder until the Obligations are paid in full and the Repurchase Agreement is
terminated.

(g)          The Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to the Buyers on account of its liability
hereunder, it will notify the Buyers in writing that such payment is made under
this Guarantee for such purpose.

3.           Purchased Assets. The Guarantor hereby (a) consents to Seller’s
pledge of each Purchased Asset and any Collateral related thereto to each Buyer
under the Repurchase Agreement and (b) agrees that, if any transfer by the
Guarantor to Seller is deemed to be a loan by Seller to the Guarantor, the
Guarantor’s rights in respect of such Purchased Asset and any Collateral related
thereto shall be subject and subordinate to the rights of the Buyers under the
Repurchase Agreement.

4.           Right of Set-off. From and after the occurrence and during the
continuance of an Event of Default, the Guarantor hereby irrevocably authorizes
the Buyers at any time and from time to time without notice to the Guarantor,
any such notice being expressly waived by the

 

 

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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 Buyers to or for the credit or the account of the Guarantor, or any
part thereof in such amounts as the Buyers may elect, against and on account of
the obligations and liabilities of the Guarantor to the Buyers hereunder and
claims of every nature and description of the Buyers against the Guarantor, in
any currency, whether arising hereunder, under the Repurchase Agreement or
otherwise, as the Buyers may elect, whether or not the Buyers have made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Buyers shall notify the Guarantor promptly of any
such set-off and the application made thereby; provided, that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of the Buyers under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Buyers may have.

5.           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 Buyers, the Guarantor shall not be entitled to be subrogated to any of the
rights of the Buyers against the Seller or any other guarantor or any collateral
security or guarantee or right of offset held by the Buyers for the payment of
the Obligations, nor shall the Guarantor seek or be entitled to seek any
contribution or reimbursement from the Seller or any other guarantor in respect
of payments made by the Guarantor hereunder, until all amounts owing to the
Buyers by the Seller on account of the Obligations are paid in full and the
Repurchase Agreement is terminated. 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 Buyers, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Buyers in the
exact form received by the Guarantor (duly indorsed by the Guarantor to the
Buyers, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Buyers may determine.

6.           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 Buyers 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 collateral security 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 Buyers, and the Repurchase Agreement and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Buyers may
deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Buyers for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. The Buyers
shall not have any obligation to protect, secure, perfect or insure any Lien at
any time held by them as security for the Obligations or for this Guarantee or
any property subject thereto. When making any demand hereunder against the
Guarantor, the Buyers may, but shall be under no obligation to, make a similar
demand on the Seller or any other guarantor, and any failure by the Buyers to
make any such demand or to collect any

 

 

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payments from the Seller or any such other guarantor or any release of the
Seller 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 Buyers against
the Guarantor. For the purposes hereof “demand” shall include the commencement
and continuance of any legal proceedings.

7.           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 Buyers upon this Guarantee
or acceptance of this Guarantee, the Obligations, and 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 Seller and the Guarantor, on the one hand, and the Buyers, 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 Seller 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 collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the Buyers, (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 Seller
against the Buyers, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Seller or the Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the Seller
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 Buyers may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Seller or any other Person or
against any collateral security or guarantee for the Obligations or any right of
offset with respect thereto, and any failure by the Buyers to pursue such other
rights or remedies or to collect any payments from the Seller or any such other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Seller or any such
other Person or any such collateral security, guarantee or right of offset,
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 Buyers 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 be benefit of the Buyers, and their respective successors, indorsees,
transferees and assigns, until all the Obligations and the obligations of the
Guarantor under this Guarantee shall have been satisfied by payment in full and
the Repurchase Agreement shall be terminated, notwithstanding that from time to
time prior thereto the Seller may be free from any Obligations.

8.           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 Buyers upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Seller or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar

 

 

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officer for, the Seller or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.

9.           Not Affected by Bankruptcy. Notwithstanding any modification,
discharge or extension of the Obligations or any amendment, modification, stay
or cure of any Buyer’s rights which may occur in any bankruptcy or
reorganization case or proceeding against the Seller, whether permanent or
temporary, and whether or not assented to by the Buyers, the Guarantor hereby
agrees that the Guarantor shall be obligated hereunder to pay and perform the
Obligations and discharge its other obligations in accordance with the terms of
the Obligations and the terms of this Guarantee. The Guarantor understands and
acknowledges that, by virtue of this Guarantee, it has specifically assumed any
and all risks of a bankruptcy or reorganization case or proceeding with respect
to the Seller. Without in any way limiting the generality of the foregoing, any
subsequent modification of the Obligations in any reorganization case concerning
the Seller shall not affect the obligation of the Guarantor to pay and perform
the Obligations in accordance with the original terms thereof.

10.         Payments. The Guarantor hereby guarantees that payments hereunder
will be paid to the Buyers without set-off or counterclaim in U.S. Dollars at
the office specified in the Repurchase Agreement.

11.         Representations and Warranties. The Guarantor hereby represents and
warrants that:

(a)          it is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the 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 power and authority and the legal right to execute and
deliver, and to perform its obligations under, this Guarantee, and has taken all
necessary action to authorize its execution, delivery and performance of this
Guarantee;

(c)          this Guarantee 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 on 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 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 (other than Liens granted in favor of the Buyers under the Transaction
Documents) 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

 

 

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stockholder or creditor of the Guarantor) is required in connection with the
execution, delivery, performance, validity or enforceability of this Guarantee;

(f)          no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Guarantor, threatened by or against the Guarantor or against any of its
properties or revenues (i) with respect to this Guarantee or any of the
transactions contemplated hereby, or (ii) which could have a material adverse
effect on the business, operations, property or financial or other condition of
the Guarantor;

(g)          it is familiar with, has independent knowledge of, and has reviewed
the books and records regarding, the Seller’s financial condition and affairs
and the value of the Purchased Assets and represents and agrees that it will
keep so informed while this Guarantee remains in effect; provided, however, that
the Guarantor acknowledges and agrees that it is not relying on such financial
condition or collateral as an inducement to enter into this Guarantee;

(h)          the financial statements and other financial information of the
Guarantor delivered to the Buyers prior to the date hereof are true and correct
and fairly represent in all material respects the financial condition of the
Guarantor on the date of delivery of such information and that there has not
been any material adverse change in such financial condition since such date of
delivery;

(i)          (i) it is able to pay, and is paying, its debts as they come due
and (ii) the transactions contemplated by this Guarantee (A) will not leave it
with an unreasonably small amount of capital to conduct its business and (B)
will not cause it to have incurred debts (or to have intended to incur debts)
beyond its ability to pay such debts as they mature; and

(j)          it has filed or caused to be filed all tax returns which, to its
knowledge, are required to be filed and has 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 the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Guarantor); no tax lien has been filed, and, to the knowledge of
the Guarantor, no claim is being asserted, with respect to any such tax, fee or
other charge.

The Guarantor agrees that the foregoing representations and warranties shall be
deemed to have been made by the Guarantor on the date of each purchase under the
Repurchase Agreement on and as of such date of purchase as though made hereunder
on and as of such date.

 

12.

Covenants.

(a)          The Guarantor shall provide the Buyers with the following financial
and reporting information as soon as possible and in any event:

(i)          within 45 days after the last day of each calendar quarter in any
fiscal year, the quarterly unaudited financial statements of the Guarantor for
such quarter together with an officer’s certificate from the Guarantor addressed
to the Buyers

 

 

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certifying that (x) all information contained in such financial statement is
true and correct, (y) as of such calendar quarter, the Guarantor is in
compliance with all of the terms, conditions and requirements of this Agreement
(and demonstrating compliance with the provisions of Section 12(b) below), and
(z) no Event of Default exists;

(ii)         within 90 days after the last day of each calendar year, the
audited annual financial statements of the Guarantor; and

(iii)        if reasonably requested by the Buyer, within 30 days after filing,
the annual Federal Income Tax returns of the Guarantor.

(b)         From and after the date hereof, until the Obligations are paid in
full and the Repurchase Agreement is terminated, the Guarantor shall not,
without the prior written consent of the Buyers, permit any of the following:

 

(i)

the Guarantor’s Liquidity at any time to be less than $10,000,000;

(ii)         the Guarantor’s Tangible Net Worth at any time to be less than
$100,000,000 plus an amount equal to seventy-five percent (75%) of all equity
issuances by, and equity contributions to, the Guarantor after the date hereof;

 

(iii)

the Guarantor’s Debt Service Coverage to be less than 1.50X; or

(iv)        the Guarantor’s Recourse Debt to Tangible Net Worth to be equal to
or greater than 2.50X.

(c)          The Guarantor shall not modify or terminate any of the
organizational documents of the Guarantor in a manner that would have a material
adverse effect on the Guarantor’s ability to perform its obligations under this
Guarantee or on the rights of any Buyer hereunder.

(d)         The Guarantor shall not, without the prior written consent of the
Buyers, enter into any transaction of merger or consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up
or dissolution), sell all or substantially all of its assets; provided that the
Guarantor may enter into a transaction of merger or consolidation or
amalgamation if the Guarantor is the surviving and controlling party in such
transaction.

(e)          The Guarantor shall not change its fiscal year or method of
accounting, unless the Guarantor shall give the Buyers at least fifteen (15)
days prior written notice of such requested change, which notice shall include a
detailed explanation of the changes intended to be made and pro forma financial
statements demonstrating the impact thereof (including, without limitation, on
the financial covenants set forth in Section 12(b) of this Guarantee).

(f)          Upon prior written notice from the Buyers or their respective
designated representatives, at such times and with such frequency as determined
by the Buyers, the Guarantor shall permit the Buyers (which, prior to a Default,
shall be at Buyer’s sole cost and expense) or their respective designated
representatives to inspect all books, records and financial statements
(including all supporting data and other records) of the Guarantor, and the
Guarantor shall make all such books of account and records available for such
examination, at the office

 

 

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where the same are regularly maintained. The Buyers or their respective
designated representatives (which, prior to a Default, shall be at Buyer’s sole
cost and expense), shall have the right to copy, duplicate and make abstracts
from such books and records as the Buyers may require.

(g)          So long as any Default (of which the Guarantor or Seller has
received notice or has knowledge), Event of Default or Margin Deficit shall be
continuing, the Guarantor shall not make any distribution, payment on account
of, or set apart assets for, a sinking or other analogous fund for the purchase,
redemption, defeasance, retirement or other acquisition of any equity or
ownership interest of Seller, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of the Guarantor; provided, that (i) the
restriction in this Section 12(g) shall not prohibit the Guarantor from taking
any of the foregoing actions set forth in this Section 12(g) (to the extent that
such actions are permitted by it organizational documents) so long as any
Default, Event of Default or Margin Deficit is not continuing) and (ii)
irrespective of whether any Default, Event of Default or Margin Deficit shall
have occurred and be continuing, the Guarantor may make such payments to the
extent necessary to maintain its status as a REIT.

13.         Notices. All notices, requests and demands to or upon the Buyers or
the Guarantor to be effective shall be in writing (or by telex, fax or similar
electronic transfer confirmed in writing) and shall be deemed to have been duly
given or made (1) when delivered by hand or (2) if sent by expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, upon the first attempted delivery on a Business Day, or
(3) if by telex, fax or similar electronic transfer, when sent and receipt has
been confirmed, addressed as follows:

(a)          if to a Buyer, at its address or transmission number for notices
provided in the Repurchase Agreement; and

(b)         if to the Guarantor, at its address or transmission number for
notices set forth under its signature below.

Any of the Buyers and the Guarantor may change its address and transmission
numbers for notices by notice in the manner provided in this Section.

14.         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.

15.         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 Buyers relative to the subject matter hereof not
reflected herein.

 

16.

Amendments in Writing; No Waiver; Cumulative Remedies.

 

 

 

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(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 Buyers, provided that any provision of this
Guarantee may be waived by the Buyers in a letter or agreement executed by the
Buyers or by telex or facsimile transmission from the Buyers.

(b)         The Buyers shall not by any act (except by a written instrument
pursuant to section 14(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 the part of the
Buyers, 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 Buyers of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Buyers would otherwise have on any future occasion.

(c)          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.

17.         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.

18.         Successors and Assigns. This Guarantee may not be assigned or
otherwise transferred, and the Guarantor’s agreements, duties, obligations and
covenants hereunder may not be delegated, in whole or in part, by the Guarantor
(and any attempted assignment, transfer or delegation by the Guarantor shall be
null and void). This Guarantee shall inure to the benefit of the Buyers and
their respective successors and assigns.

19.         GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO CONFLICT OF LAW PROVISIONS).

20.         Submission To Jurisdiction; Waivers. The Guarantor hereby
irrevocably and unconditionally:

(a)          SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS GUARANTEE AND THE OTHER TRANSACTION DOCUMENTS TO
WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

(b)         CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH ACTION OR PROCEEDING IN

 

 

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ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(c)          AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY
BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE GUARANTOR AT ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH
THE BUYERS SHALL HAVE BEEN NOTIFIED PURSUANT HERETO;

(d)         AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE
IN ANY OTHER JURISDICTION; AND

(e)          WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN
THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

 

21.

Acknowledgments. The Guarantor hereby acknowledges that:

(a)          it has been advised by counsel in the negotiation, execution and
delivery of this Guarantee and the other Transaction Documents to which it is a
party;

(b)         no Buyer has any fiduciary relationship with or duty to the
Guarantor arising out of or in connection with this Guarantee or the Repurchase
Agreement; and

(c)          no joint venture is created hereby or by the Repurchase Agreement
or otherwise exists by virtue of the transactions contemplated hereby among the
Guarantor, the Seller and the Buyers.

22.         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 LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

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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.

 

AMERICAN MORTGAGE ACCEPTANCE COMPANY

 

 

By:

/s/ Robert L. Levy                                               

Name: Robert L. Levy

Title: Senior Vice President

 

Address for Notices:

625 Madison Avenue

New York, New York 10022

Attention: Robert L. Levy

Senior Vice President

Facsimile: (212) 751-3550

 

With a copy to:

Paul, Hastings, Janofsky & Walker LLP

75 E. 55th Street

New York, New York 10022

Attention: Robert J. Grados, Esq.

Facsimile: (212) 230-7830