Document:

ex10-3.htm

    
      

      

    

    EXHIBIT 10.3

     

    SECURITY
AGREEMENT

    

    SECURITY AGREEMENT (this “Agreement”), dated as
of May 9, 2008 between MEXORO MINERALS LTD., a Colorado corporation, (“Borrower”), and
Paramount Gold and Silver Corp., a Delaware corporation, (“Lender”).  The
Lender and Borrower are concurrently entering into a Secured Convertible
Debenture, dated as of even date herewith, (as amended, modified or supplemented
from time to time in accordance with its terms, the (“Debenture”) pursuant
to which the Lender will make  a loan to the Borrower in
the  Principal Amount (as such term is defined in the
Debenture)  pursuant to, and subject to the terms and conditions
thereof.

    

    Execution and delivery of this
Agreement is a condition precedent to the making of the Loan.

    

    The obligation of the Lender to make
the Loan is conditioned, among other things, on the execution and delivery by
the Borrower of the Debenture and this Agreement to secure the Obligations (as
such term will be defined in the Debenture), such Obligations to include,
without limitation, the due and punctual payment and performance of (a) the
principal of and interest and fees due under the Debenture, when and as due,
whether at maturity, by acceleration, or otherwise, (b) all obligations of the
Borrower at any time and from time to time under this Agreement and (c) all
other obligations at any time and from time to time under the Debenture or this
Agreement.

    

    Accordingly, the Borrower and the
Lender hereby agree as follows:

    

    1.           Definitions of
Terms.  All capitalized terms used herein, but not defined
herein, shall have the meanings set forth in the Debenture.  As used
herein, the following terms shall have the following meanings:

    

    (a)           “Account” shall mean
all present and future rights of the Borrower to payment of a monetary
obligation, whether or not earned by performance, which is not evidenced by
chattel paper or an instrument, (i) for services rendered or to be rendered, or
(ii) for a secondary obligation incurred or to be incurred.

    

    (b) “Chattel Paper”,
“Documents” and
“Instruments”
shall have the meanings set forth in the Colorado Uniform Commercial
Code.

    

    (c) “Equipment” shall mean
all of the equipment of the Borrower, including, without limitation, all
machinery, data processing and computer equipment (whether owned or licensed and
including embedded software), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.  Without limitation to the generality of the foregoing, such
term shall also include all “Equipment” as defined in the Uniform Commercial
code.

    

    (d) General Intangibles”
shall mean all of any Borrower’s present and future general intangibles of every
kind and description, including, without limitation, mineral
concessions,  option properties, contract rights, payment intangibles,
trade names and trademarks and the goodwill of the business symbolized thereby,
deposit accounts, letters of credit, and federal, state and local tax refund
claims of all kinds.

    

    (e) “UCC” shall mean the
Uniform Commercial Code.

    

    (e) “Proceeds” shall mean
any consideration received from the sale, lease, exchange or other disposition
of any asset or property which constitutes Collateral, any other value received
as a consequence of the possession of any Collateral and any payment received
from any insurer or other person or entity as a result of the loss,
nonconformity, or interference with the use of, defects or infringements of
rights, or damage to any asset or property that constitutes
Collateral.

    

    (f) “Receivable” shall mean all of the following
property of the Borrower: (a) all Accounts; (b) all interest, fees, late
charges, penalties, collection fees and other amounts due or to become due or
otherwise payable in connection with any Account; (c) all payment intangibles;
(d) letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued and payable to the Borrower or otherwise in favor of or
delivered to the Borrower in connection with any Account; or (e) all other
accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to the Borrower, whether from
the rendition of services or otherwise associated with any Accounts, or general
intangibles of the Borrower (including, without limitation, choses in action,
causes of action, tax refunds, tax refund claims, any funds which may become
payable to the Borrower in connection with the termination of any Plan or other
employee benefit plan and any other amounts payable to the Borrower from any
Plan or other employee benefit plan, rights and claims against insurance
carriers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which the
Borrower is a beneficiary).

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g) “Records”  shall mean all of
the Borrower’s files, present and future books of account of every kind or
nature, invoices, ledger cards, statements, correspondence, memoranda, and other
data relating to the Collateral or any account debtor, together with the tapes,
disks, diskettes and other data and software storage media and devices, file
cabinets or containers in or on which the foregoing are stored (including any
rights of the Borrower with respect to the foregoing maintained with or by any
other person).

    

    (h) “Securities”  shall
mean all common or preferred equities owned by the Borrower in any subsidiary
company, affiliated company or any other entity wherever situated in the United
States of America or any other country including Mexico.

    

    2.           Grant and Perfection of
Security Interest. (a) As security for the payment or performance, as the
case may be, of the Obligations, the Borrower hereby creates and grants to the
Lender, its successors and its assigns, a continuing security interest in, lien
upon, and right of setoff against, and hereby assigns to the Lender, all
personal property and fixtures and interests of the Borrower, whether now owned
or hereafter acquired or existing and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by the Lender), collectively the “Collateral”,
including, without limitation, all of the Borrower’s right, title and interest
in the following:

    

    (i)           all
Receivables;

    

    (ii)           all
General Intangibles;

    

    (iii)           all
goods, including, without limitation, Equipment;

    

    (iv)           Chattel
Paper, including, without limitation, all tangible and electronic chattel
paper;

    

    (v)           all
Instruments, including, without limitation, all promissory notes;

    

    (vi)           all
Documents;

    

    (vii)           all
deposit accounts;

    

    (viii)                      all
letters of credit, banker’s acceptances and similar instruments and including
all letter-of-credit rights;

    

    (ix)           all
supporting obligations and all present and future liens, security interests,
rights, remedies, title and interest in, to and in respect of any Collateral,
including (A) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, and (B) deposits by and property of account debtors or other persons
securing the obligations of account debtors;

    

    (x)           all
(A) investment property (including but not limited to the securities of any
subsidiary now organized or hereinafter organized of the
Borrower,  whether certificated or uncertificated, securities
accounts, security entitlements, commodity contracts or commodity accounts) and
(B) monies, credit balances, deposits and other property of the Borrower now or
hereafter held or received from or for the account of the Borrower, whether for
safekeeping, pledge, custody, transmission, collection or
otherwise;

    

    (xi)           all
commercial tort claims;

    

    (xii)           all
Records; and

    

    (xiii)                      all
products and Proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.

    

    Attached
hereto and marked Schedule 1 is a list of the collateral.

    

    (b) The
Borrower irrevocably and unconditionally authorizes the Lender (or its agent) to
file at any time and from time to time such financing statements with respect to
the Collateral naming the Lender as the secured party and the Borrower as
debtor, as the Lender may require, and including any other information with
respect to the Borrower or otherwise required by Article 9 of the Uniform
Commercial Code of such jurisdiction as the Lender may determine in good faith,
together with any amendment and continuations with respect thereto, which
authorization shall apply to all financing statements filed on, prior to or
after the date hereof.  The Lender hereby ratifies and approves all
financing statements naming the Lender as secured party and the Borrower as
debtor with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of the Lender prior to the date
hereof and ratifies and confirms the authorization of the Lender to file such
financing statements (and amendments, if any).  The Borrower hereby
authorizes the Lender to adopt on behalf of the Borrower any symbol required for
authenticating any electronic filing.  In the event that the
description of the collateral in any financing statement naming the Lender as
the secured party and the Borrower as debtor includes assets and properties of
the Borrower that do not at any time constitute Collateral, whether hereunder,
under any of the other Financing Agreements or otherwise, the filing of such
financing statement shall nonetheless be deemed authorized by the Borrower to
the extent of the Collateral included in such description and it shall not
render the financing statement ineffective as to any of the Collateral or
otherwise affect the financing statement as it applies to any of the Collateral,
provided, that,
in such event, upon the Borrower’s written request and at the Borrower’s
expense, the Lender shall file such amendments to its financing statements to
change the assets described therein so as to constitute the
Collateral.  In no event shall the Borrower at any time file, or
permit or cause to be filed, any correction statement or termination statement
with respect to any financing statement (or amendment or continuation with
respect thereto) naming the Lender as secured party and the Borrower as debtor
so long as this Agreement has not been terminated or all of the Obligations have
not been paid and satisfied in full in immediately available funds.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) In the
event that any goods, documents of title are at any time after the date hereof
in the custody, control or possession of another person, the Borrower shall
promptly notify the Lender thereof in writing.  Promptly upon the
Lender’s request, the Borrower shall promptly obtain an acknowledgment from such
other person, in form and substance satisfactory to the Lender, that such other
person, inter alia,
acknowledges the security interest of the Lender in such collateral, agrees to
waive any and all claims such other person may, at any time, have against such
collateral, and agrees to permit the Lender access to, and the right to remain
on, the premises of such other person so as to exercise the Lender’s rights and
remedies and otherwise deal with such collateral and in the case of any person
who at any time has custody, control or possession of any Collateral, holds such
collateral for the benefit of the Lender and shall agrees to act upon the
instructions of the Lender, without the further consent of the
Borrower.

    

    (d) The
Borrower agrees at all times to keep in all material respects accurate and
complete accounting records with respect to the Collateral, including, but not
limited to, a record of all payments and Proceeds received.

    

    3.           Further
Assurances.  The Borrower agrees to take any other actions
reasonably requested by the Lender to insure the attachment, perfection of, and
the ability of the Lender to enforce, the security interest of the Lender in any
and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, including Mexico to the
extent, if any, that the Borrower’s signature thereon is required therefor, (ii)
causing the Lender’s name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of the Lender to enforce, the security
interest of the Lender in such Collateral, (iii) complying with any provision of
any statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of the Lender to enforce, the security interest of the
Lender in such Collateral, (iv) obtaining the consents and approvals of any
governmental and other third party consents and approvals, including, without
limitation, any consent of any other person obligated on Collateral, (v) paying
any fees and taxes required in connection with the execution and delivery of
this Agreement or the granting of the security interest of the Borrower, and
(vi) taking all actions required by any earlier versions of the UCC or by other
law, as applicable in any relevant jurisdiction.

    

    4.           Inspection
and Verification.  The Lender and such persons
as the Lender may designate shall have the right, at any reasonable time or
times, and upon reasonable notice (which may be telephonic), to inspect the
Collateral owned by the Borrower, all records related thereto (and to make
extracts and copies from such records), and the premises upon which any such
Collateral is located, to discuss the Borrower’s affairs with the officers of
the Borrower and its independent accountants and to verify under reasonable
procedures the validity, amount, quality, quantity, value, and condition of or
any other matter relating to, such Collateral, including, in the case of
Receivables or Collateral in the possession of a third person, contacting
account debtors or a third person possessing such Collateral for the purpose of
making such a verification.  The provisions of this Section 4 shall
not be deemed to limit the Lender’s rights under the
Debenture.

    

    5.           Taxes;
Encumbrances.  At its option, the Lender may discharge past due
taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral, and may pay for the maintenance and preservation of
the Collateral to the extent the Borrower fails to do so and the Borrower agrees
to reimburse the Lender on demand for any payment made or any expense incurred
by it pursuant to the foregoing authorization; provided, however, that nothing
in this Section 5 shall be interpreted as excusing the Borrower from the
performance by it of any covenants or other promises as set forth herein or in
the Debenture.

    

    6.           Assignment of Security
Interest.  If at any time the Borrower shall take and perfect a
security interest in any property of an account debtor or any other person to
secure payment and performance of a Receivable, any contract right, or payment
intangible the Borrower shall promptly assign such security interest to the
Lender.  Such assignment need not be filed of public record unless
necessary to continue the perfected status of the security interest against
creditors of and transferees from the account debtor or other person granting
the security interest.

    

    7.           Records.  The
Borrower shall keep or cause to be kept records with respect to the Collateral,
which are complete and accurate in all material respects.  In
addition, the Borrower will provide the Lender with such further schedules
and/or information with respect thereto as the Lender may reasonably
require.

    

    8.           Priority.  The
Lender’s security interest in the Collateral is and shall remain a first
priority security interest.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.           Protection of
Security.  The Borrower shall, at its own cost and expense,
take any and all actions reasonably necessary to defend title to the Collateral
owned by it against all persons and to defend the security interest of the
Lender in such Collateral, and the priority thereof, against any Lien of any
nature whatsoever except for Liens which may be permitted by the
Debenture.

    

    10.           Continuing Obligations of
the Borrower.  The Borrower shall remain liable to observe and
perform all the conditions and obligations to be observed and performed by it
under each contract, agreement, interest or obligation relating to the
Collateral, all in accordance with the terms and conditions thereof, and shall
indemnify and hold harmless the Lender from any and all such
liabilities.

    

    11.           Remedies Upon
Default.  Upon the occurrence and during the continuance of an
Event of Default, it is agreed that the Lender shall have the right to take any
or all of the following actions at the same or different times:  with
or without legal process and with or without previous notice or demand for
performance, to take possession of the Collateral and without liability for
trespass (except for actual damage caused by the Lender’s gross negligence or
willful misconduct) to enter any premises where such Collateral may be located
for the purpose of taking possession of or removing such Collateral and,
generally, to exercise any and all rights afforded to a secured party under, and
subject to its obligations contained in, the Uniform Commercial Code as in
effect in any state or other applicable law. Without limiting the generality of
the foregoing, the Borrower agrees that the Lender shall have the right to sell
or otherwise dispose of all or any part of the Collateral, at public or private
sale.  Notwithstanding the foregoing, the parties agree that in the
event that Lender takes  title to any mining
concessions,  options or title to any securities,  the
agreed upon value of the mining concessions, options and securities shall be
equal to the outstanding principal balance due under the Debenture and that
Lender shall be under no obligation to sell any of the mining concessions,
options or securities to satisfy any of the outstanding
liability.  Lender reserves the right to take title to any mining
properties,  mineral concessions  for cash, upon credit or
for future delivery as the Lender shall deem appropriate.  Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of the Borrower, and the Borrower hereby waives (to
the extent permitted by law) all rights of redemption, stay and appraisal which
the Borrower now has or may at any time in the future have under any rule of law
or statute now existing or hereafter enacted.

    

    Without limiting the foregoing, upon
the occurrence and during the continuance of an Event of Default, the Lender
may, in its discretion, enforce the rights of the Borrower against any account
debtor or other obligor in respect of any of the Receivables.  Without
limiting the generality of the foregoing, at any time or times that an Event of
Default exists or has occurred and is continuing, the Lender may, in its
discretion, at such time (i) notify any or all account debtors or other obligors
in respect thereof that the Receivables have been assigned to the Lender and
that the Lender has a security interest therein and the Lender may direct any or
all account debtors and other obligors to make payment of the Receivables
directly to the Lender, (ii) extend the time of payment of, compromise or
settle, and upon any terms or conditions, any and all Receivables and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivable or such other obligations,
but without any duty to do so, and the Lender shall not be liable to Borrower
(or any Affiliate of Borrower) for any failure to collect or enforce the payment
thereof nor for the negligence of its agents or attorneys with respect thereto
and (iv) take whatever other action the Lender may deem necessary or desirable
for the protection of its interests.  At any time that an Event of
Default exists or has occurred and is continuing, at the Lender’s request, any
notice or demand for payment sent to any account debtor shall state that the
Receivables and such other obligations have been assigned to the Lender and are
payable directly and only to the Lender and the Borrower shall deliver to the
Lender such originals of documents evidencing the sale and delivery of goods or
the performance of services giving rise to any Receivables as the Lender may
require.

    

    The Lender shall give the Borrower five
(5) days’ written notice (which the Borrower agrees is reasonable notice) of the
Lender’s intention to make any sale of Collateral. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case of a
sale at a broker’s board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Lender may fix and state in
the notice (if any) of such sale.  At any such sale, the Collateral,
or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Lender may (in its sole and absolute discretion,
exercised in a commercially reasonable manner) determine.  The Lender
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given.  The Lender may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned.  In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Lender until the sale price is paid by the purchaser or purchasers thereof,
but the Lender shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like
notice.  At any public sale made pursuant to this Section 11, the
Lender may bid for or purchase, free (to the extent permitted by law) from any
right of redemption, stay or appraisal on the part of the Borrower (all said
rights being also hereby waived and released to the extent permitted by law),
with respect to the Collateral or any part thereof offered for sale and the
Lender or any such Lender may make payment on account thereof by using any claim
then due and payable to the Lender from the Borrower as a credit against the
purchase price, and the Lender may, upon compliance with the terms of sale,
hold, retain and dispose of such property without further accountability to the
Borrower therefor.  For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof; the Lender shall be free to carry out such sale and purchase pursuant
to such agreement, and the Borrower shall not be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Lender shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Lender may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    12.           Application of
Proceeds.  The proceeds of any collection or sale of
Collateral, as well as any Collateral consisting of cash, shall be applied by
the Lender as follows:

    

    FIRST, to the payment of all reasonable
costs and expenses incurred by the Lender in connection with such collection or
sale or otherwise in connection with this Agreement or any of the Obligations,
including, but not limited to, all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances made by
the Lender hereunder on behalf of the Borrower and any other reasonable costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder;

    

    SECOND, to principal and then interest
on the Loan and all other fees, costs, charges and other Obligations arising
under the Debenture; and

    

    THIRD, to the Borrower, its successors
and assigns, or as a court of competent jurisdiction may otherwise
direct.

    

    Upon any
sale of the Collateral by the Lender (including, without limitation, pursuant to
a power of sale granted by statute or under a judicial proceeding), the receipt
of the Lender or of the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Lender or such officer or be answerable in any
way for the misapplication thereof.

    

    13.           Additional Covenants as to
the Collateral.

    

    (a)           The
Borrower shall keep the Collateral at their current locations  and the
Borrower will not remove the Collateral from such locations without providing at
least thirty (30) days’ prior written notice to the Lender, whose consent may be
withheld.

    

    (b)           Without
providing at least thirty (30) days’ prior written notice to the Lender, the
Borrower will not change (i) its type of organization, jurisdiction of
organization or other legal structure.

    

    (c)           The
Borrower shall cause its Equipment to be maintained in the same condition,
repair and working order as when new, ordinary wear and tear excepted, and shall
forthwith, or in the case of any loss or damage to any such Equipment as quickly
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith which are
necessary or desirable to such end.  The Borrower shall promptly
furnish to the Lender a statement respecting any loss or damage to any of its
Equipment.

    

    14.           Security Interest
Absolute.  All rights of the Lender hereunder, the security
interest created hereby, and all obligations of the Borrower hereunder, shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Debenture, any other agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or consent to any departure from the Debenture, or any other agreement or
instrument, (iii) any exchange, release or nonperfection of any other
Collateral, or any release or amendment or waiver of or consent to or departure
from any guarantee, for all or any of the Obligations, or (iv) any other
circumstance which might otherwise constitute a defense available to, or
discharge of, the Borrower or any other obligor in respect of the Obligations or
in respect of this Agreement.

    

    15.           No
Waiver.  No failure on the part of the Lender to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Lender preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.  All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Lender shall not be deemed to have waived any rights hereunder or under
any other agreement or instrument unless such waiver shall be in writing and
signed by such parties.

    

    16.           Lender
Appointed Attorney-in-Fact.  The Borrower hereby
appoints the Lender the attorney-in-fact of the Borrower solely for the purpose
of carrying out the provisions of this Agreement and taking any action and
executing any instrument which the Lender may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    17.           Fees and
Expenses.  The Borrower shall be obligated to, within ten (10)
days after demand, pay to the Lender the amount of any and all expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents which the Lender may incur in connection with (i) the administration of
this Agreement, including the cost and expenses of the Lender’s Collateral
examination as provided in the Debenture, (ii) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of the Lender
hereunder, or (iv) the failure by the Borrower to perform or observe any of the
provisions hereof. In addition, the Borrower indemnifies and holds the Lender
harmless from and against any and all liability incurred by the Lender hereunder
or in connection herewith, unless such liability shall be due to the gross
negligence or willful misconduct of the Lender, as the case may
be.  Any such amounts payable as provided hereunder or thereunder
shall be additional Obligations secured hereby and by the other Financing
Agreements.

    

    18.           Submission to
Jurisdiction.  (a) Any legal action or proceeding with respect
to this Agreement may be brought in either the province of Ontario or in Mexico
at the sole discretion of the Lender.  By execution and delivery of
this Agreement, the Borrower hereby accepts for itself and in respect of his
property, generally and unconditionally, the jurisdiction of the aforesaid
courts.

    

    (b)           The
Borrower hereby irrevocably waives, in connection with any such action or
proceeding, any objection, including, without limitation, any objection to the
laying of venue or based on the grounds of forum non conveniens, which it may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.

    

    (c)           The
Borrower hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it, as the case may
be, at its address set forth in the Debenture.

    

    (d)           Nothing
herein shall affect the right of the Lender to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Borrower in any other jurisdiction which the Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against the Borrower or its property.

    

    19.           Entire Agreement; Waiver of
Jury Trial, etc. (a) This Agreement and the Debenture constitute the
entire contract between the parties hereto relative to the subject matter
hereof.  Except as expressly provided herein,  nothing in
this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, any rights, remedies, obligations or liabilities
under or by reason of this Agreement the other Financing
Agreements.

    

    (b)           EXCEPT
AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND THE OTHER FINANCING
AGREEMENTS.

    

    (c)           Except
as prohibited by law, each party hereto hereby waives any right it may have to
claim or recover in any litigation arising under the Financing Agreements, any
special, exemplary, punitive or consequential damages or any damages other than,
or in addition to, actual damages.

    

    (d)           Each
party hereto (i) certifies that no representative, Lender or attorney of the
Lender has represented, expressly or otherwise, that the Lender would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that it has been induced to enter into this Agreement or the other
Financing Agreements, as applicable, by, among other things, the mutual waivers
and certifications herein.

    

    20.           Binding Agreement;
Assignments.  This Agreement, and the terms, covenants and
conditions hereof, shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower
shall not be permitted to assign this Agreement or any interest herein or in the
Collateral, or any part thereof, or any cash or property held by the Lender as
Collateral under this Agreement, except as contemplated by this Agreement or the
Debenture.

    

    21.           Applicable
Law.  This Agreement shall be construed in accordance with and
governed by the law of the State of  Delaware  (other
than the conflicts of laws principles thereof) except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular collateral are governed by the laws of
Mexico with respect to any mining concessions.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    22.           Notices.  All
communications and notices hereunder shall be in writing and given as provided
in the Debenture.

    

    23.           Severability.  In
the event any one or more of the provisions contained in this Agreement should
be held invalid, ille­gal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

    

    24.           Section
Headings.  Section headings used herein are for convenience
only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

    

    25.           Counterparts; Facsimile
Signatures.  This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute but one contract, and shall become effective when copies hereof
which, when taken together, bear the signatures of each of the parties hereto
shall be delivered to the Lender.  Delivery of an executed counterpart
of a signature page to this Agreement by telecopier shall be effective as
delivery of a manually executed signature page hereto.

    

    26.           Termination.  This
Agreement shall terminate when (a) all the Obligations have been fully and
indefeasibly paid in immediately available funds and (b) the Debenture has been
terminated.

    

    27. Debenture.  The
Borrower acknowledges that this Agreement does not and shall not be construed as
requiring the Lender to enter into the Debenture or make the Loan.

    

    .

    

    

    

    [SIGNATURE
PAGE FOLLOWS]

    

    IN WITNESS WHEREOF, the parties hereto
have duly executed this Security Agreement as of the day and year first above
written.

    

    

    Paramount Gold and Silver
Corp.

    

    

    By:           ___________________________

    Name:

    Title:

    

    

    Mexoro Minerals Ltd.

    

    

    By:           ___________________________

    Name:

    Title:

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
I

    

    

    The
Collateralexh10_2.htm

     

    
      

      

    

     

    Exhibit 10.2

    
       

    

    

    

    AGREEMENT
OF PURCHASE AND SALE

    OF

    LIMITED
LIABILITY COMPANY MEMBERSHIP INTERESTS

     

    between

    

    RESOURCE AMERICA,
INC.,

    as

    Seller,

     

    and

     

    RSI
ASSOCIATES, LLC

    as

    Purchaser

    
 

    Dated as
of: February ____, 2008

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    AGREEMENT OF PURCHASE AND
SALE OF

    LIMITED LIABILITY COMPANY
MEMBERSHIP INTERESTS

    

               THIS
AGREEMENT OF PURCHASE AND SALE OF LIMITED LIABILITY COMPANY MEMBERSHIP INTERESTS
(“Agreement”)
is made and entered into this ______ day of February, 2008 by and between
RESOURCE AMERICA, INC., a Delaware corporation (“Seller”), and RSI
ASSOCIATES, LLC, a Delaware limited liability company (“Purchaser”).

     

    RECITALS

     

    A.           Seller
is the owner of 100% of the membership interests in Resource RSI Phase 1, LLC, a
Delaware limited liability company (“RSI I”)and Resource
RSI Phase II, LLC, a Delaware limited liability company (“RSI II” and together
with RSI I, the ”Companies”).

    

    B.           RSI
I owns that certain parcel of real property located at 102-10 East Bay Street,
Savannah, Georgia, as more particularly described on Exhibit A attached
hereto (the “Phase I
Property”) and RSI II holds a leasehold interest in the 3rd, 4th and
5th
floors of that certain real property which is adjacent and contiguous to the
Phase I Property and located at 115 East Bay Street, Savannah, Georgia as more
particularly described on Exhibit B attached
hereto (the “Phase II
Property” and together with the Phase I Property, the “Property”).

    

    C.           Purchaser
desires to purchase and assume from Seller and Seller desires to sell and assign
a Thirty percent (30.00%) membership interest in each of RSI I and RSI II
constituting thirty percent (30%) of the membership interest in the Companies
and all rights, privileges and obligations attendant thereto (the “Acquired Interests”)
subject to and upon the terms and conditions hereinafter set forth.

    

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants hereinafter set forth,
Seller hereby agrees to sell and assign, and Purchaser hereby agrees to purchase
and assume, all of Seller's right, title and interest in the Acquired Interests
upon the following terms and conditions:

    

    1.           Purchase
Price.    The purchase price for the Acquired
Interests shall be One Million Six Hundred Sixty Four Thousand One Hundred Sixty
Five and 49/100 Dollars ($1,664,165.49) (the “Purchase
Price”).

     

    2.           Payment of Purchase
Price.  The Purchase Price shall be payable as
follows:

     

    (a)           On
the Initial Closing Date (as hereinafter defined), Purchaser shall acquire a
Nineteen and 99/100 percent (19.99%) membership interest in each of the
Companies (the “Initial Acquired
Interests”) upon the payment to Seller of One Million One Hundred Sixty
Four Thousand One Hundred Sixty Five and 49/100 Dollars ($1,164,165.49)which
shall be paid to Seller by cash, certified or bank check delivered at 1845
Walnut Street, Philadelphia, PA, Attn: Alan Feldman or by wire transferred funds
to such account as Seller may designate; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)           On
the Second Closing Date (as hereinafter defined), Purchaser shall acquire an
additional Ten and 01/100 percent (10.01%) membership interest in each of the
Companies (the “Second
Acquired Interests”) upon the payment to Seller of Five Hundred Thousand
Dollars ($500,000) which shall be paid to Seller by cash, certified or bank
check delivered at 1845 Walnut Street, Philadelphia, PA, Attn: Alan Feldman or
by wire transferred funds to such account as Seller may designate.

     

    3.           Time and Place of
Closing.

     

    (a)           Closing
on the Initial Acquired Interests (the “Initial Closing”)
shall take place at 10:00 A.M. Philadelphia, Pennsylvania time on the first
business day which is ten (10) days after notice of the proposed transfer is
delivered (the “Initial Closing
Date”) to the current holder of that certain loan in the original
principal amount of $12,500,000 initially made by Greenwich Capital Financial
Products, Inc. (“Lender”) and secured
by the Property (the “Loan”); and

     

    (b)           Closing
on the Second Acquired Interests (the “Second Closing”)
shall take place at 10:00 A.M. Philadelphia, Pennsylvania time on a date
mutually agreed upon by Seller and Purchaser after receipt of approval from
Lender by to the Companies (the “Second Closing Date”
and together with the Initial Closing Date, the “Closing
Dates”).

     

    (c)           Each
of the closings shall occur, at the Seller’s option, either (a) at the offices
of the Seller’s counsel or (b) through an escrow on terms acceptable to the
parties’ respective counsel, it being understood that if the Closing shall occur
through escrow, neither Purchaser, Seller nor their respective counsel need be
physically present at the Closing so long as (i) all documents that are required
to be delivered at Closing are fully executed, delivered in escrow and available
on the date of Closing, (ii) any authorized signatory of the affected party is
available either in person or by telephone and facsimile at Closing, and (iii)
the Purchase Price has been paid or wire transferred on or prior to
Closing.

     

    4.           Conditions to
Closing.

     

    (a)           Purchaser'
Conditions.  Purchaser's obligation to pay the Purchase Price
and to acquire the Acquired Interests shall be subject to compliance by Seller
on or before the applicable Closing Date:

     

    (i)           execution
by Seller of an Assignment and Assumption of Partnership Interests in the form
of Exhibit C
(“Assignments of
Interests”) for each of RSI I and RSI II and delivery of such documents
to Seller’s counsel to be held in escrow until payment of the Purchase
Price;

     

    (ii)           such
other documents as may be reasonably required to consummate the transaction
contemplated by this Agreement; and

     

    (iii)           delivery
of a copy of the consent of the Lender.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (b)           Seller's
Conditions.  Seller's obligation to sell the Acquired Interests
shall be subject to compliance by Purchaser with the following conditions
precedent on or by the applicable Closing Date:

     

    (i)           delivery
of the Purchase Price by Purchaser;

     

    (ii)           execution
by Purchaser of the Assignments of Interests and delivery of such documents to
Seller’s counsel to be held in escrow until payment of the Purchase Price;
and

     

    (iii)           such
other documents as may be reasonably required to consummate the transaction
contemplated by this Agreement.

     

    (c)           Conditions
Generally.  The foregoing conditions are for the benefit only
of the parties for whom they are specified to be conditions precedent and such
parties may, in their sole discretion, waive any or all of such conditions and
close title under this Agreement without any increase in, abatement of or credit
against the Purchase Price.

     

    5.           Seller's Representations and
Warranties:  Seller represents and warrants to Purchaser
that:

     

    (i)           Seller
is a corporation that has been duly
organized and is validly existing and in good standing under the laws of the
State of its organization.

     

    (ii)           Seller
has the full power, authority and legal right to enter into and perform this
Agreement subject to the terms of Section 21 below.  The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary legal action on the part of Seller.  The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby do not require any governmental or other consent and will not result in
the breach of any agreement, indenture or other instrument to which Seller is a
party or is otherwise bound.

     

    (iii)           Seller
has not filed any petition seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any law relating to bankruptcy or insolvency, nor has any such
petition been filed against Seller. Seller is not insolvent and the consummation
of the transactions contemplated by this Agreement shall not render Seller
insolvent. No general assignment of Seller’s property has been made for the
benefit of creditors, and no receiver, master, liquidator or trustee has been
appointed for Seller or any of its property.

     

    (iv)           Seller
owns and holds good, marketable and indefeasible title to the Acquired Interests
and now has, and will as of the Closing Date have, the authority to sell the
Acquired Interests free and clear of any liens, claims, charges or encumbrances
of any kind or character against such interests.  Seller has not
previously assigned the Acquired Interests or any interest therein or portion
thereof to any other party, nor pledged, mortgaged or otherwise hypothecated the
Acquired Interests in favor of any other party. Upon the consummation of the
transfer of the Acquired Interests, Purchaser will receive good and absolute
title thereto, free from all liens, charges, encumbrances, restrictive
agreements and assessments whatsoever.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (v)           Each
of RSI I and RSI II has been duly organized and is validly existing and
subsisting under the laws of the state of its formation, with requisite power
and authority, and all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to own its properties and to transact the
business in which it is now engaged.  Each of RSI I and RSI II is duly
qualified to do business and is in good standing in each jurisdiction where it
is required to be so qualified in connection with its properties, business and
operations.  Schedule 1 identifies
each document pursuant to which the Companies are organized or governed (“Organizational
Documents”).

     

    (vi)           The
execution and delivery of this Agreement and, upon receipt of the consent of the
Lender, the consummation of the transactions contemplated hereby will not result
in the breach of any agreement, indenture or other instrument to which the
Companies are a party or is otherwise bound upon receipt of the consent of the
Lender.

     

    (vii)           There
is no pending or, to the best of Seller’s knowledge, threatened litigation,
proceeding (including, without limitation, condemnation proceeding) or
investigation (by any person, governmental or quasi-governmental agency or
authority or otherwise) which might materially adversely affect the
Companies.

     

    (viii)                      That
certain $12,500,000 mortgage loan (the “Mortgage Loan”) made
pursuant to that certain Loan Agreement dated June 30, 2006 between Greenwich
Capital Financial Products, Inc. and the Companies (the “Loan Agreement”) and
the other loan documents related thereto constitutes a legal, valid and binding
obligation of the Companies enforceable against the Companies in accordance with
their respective terms, subject to applicable bankruptcy, insolvency and similar
laws affecting rights of creditors generally, and general principles of
equity.  To the best of Seller’s knowledge, the Companies are not in
default under the Mortgage Loan.  The outstanding balance of the
Mortgage Loan as of January 29, 2008 is $12,335,834.51.

    

    (ix)           All
of the representations and warranties in this Agreement shall survive Closing
and shall be deemed to have been relied upon by Purchaser.

     

    6.           Purchaser's Representations
and Warranties.   Purchaser represents and warrants to
Seller that:

     

    (i)           Purchaser
is a limited liability company that has been duly organized and is validly
existing under the laws of the state of its organization; Purchaser has full
power and right to enter into and perform its obligations under this Agreement
and the other closing documents contemplated herein to be executed and delivered
by it; and the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate acts and do not require any governmental or other
consent.

     

    (ii)           Purchaser
is fully aware that the Mortgage Loan is an obligation of the Companies and has
been provided with the Loan Agreement and all loan documents related
thereto.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (iii)           Except
as expressly set forth in this Agreement, Purchaser has not relied and will not
rely on, and neither Seller nor the Companies has made and is not liable for or
bound by, any express or implied warrants, guarantees, statements,
representations or information pertaining to the Property made or furnished by
Seller, the Companies, or any agent or third party representing or purporting to
represent Seller or the Companies, to whomever made or given, directly or
indirectly, orally or in writing.

     

    (iv)           Purchaser
is a knowledgeable, experienced and sophisticated purchaser of real estate and
that, except as expressly set forth in this Agreement, it is relying solely on
its own expertise in purchasing the Acquired Interests and shall make an
independent verification of the accuracy of any documents and information
provided by Seller or the Companies.  Purchaser will conduct such
inspections and investigations of the Property as Purchaser deems necessary and
shall rely upon same.

     

    (v)           All
of the representations and warranties in this Agreement shall survive Closing
and shall be deemed to have been relied upon by Seller.

     

    7.           Interim
Operations.  During the term of this Agreement, Seller shall or
shall cause the Companies, to the extent of its authority under the
Organizational Documents, to:

     

    (a)           not
create any lien or encumbrance upon or affecting title to the Acquired
Interests, and Seller shall not further mortgage, pledge, hypothecate or convey,
or perform any act which would result in an encumbrance of the Acquired
Interests, and

     

    (b)           not
solicit, accept or provide factual information or negotiate with respect to, any
offer to purchase the Acquired Interests from any person or entity other than
Purchaser or enter into any agreement, oral, written, contingent or otherwise
with any party (other than Purchaser) to sell the Acquired Interests or any
beneficial ownership interest therein.

     

    8.           Adjustments.   Seller
and Purchaser agree to split any and all costs incurred in connection with
obtaining any required consents.   For each closing after the
Initial Closing, the sole adjustment to the Purchase Price shall be that
Purchaser shall reimburse Seller for a portion of any reduction in the principal
balance of the Loan attributable to monthly payments computed by multiplying the
reduction in the principal balance of the loan by the percentage of interests of
each of the Companies acquired by Purchaser at such Closing (the “Amortization
Reimbursement”).  By way of example, for the Second Closing the
Amortization Reimbursement shall be calculated by multiplying any reduction in
the principal balance by .1001.  In the event that one party advances
the funds for the closing costs, the other will reimburse its share of such
costs.

     

    9.           Indemnification.  Seller
and Purchaser each represent to the other that it did not deal with any broker
in connection with this transaction.  Seller and Purchaser each
covenant and agree to indemnify and hold harmless the other party from and
against any and all costs, expenses, liabilities, claims, demands, suits,
judgments and interest, including, but not limited to, reasonable attorneys'
fees and disbursements, arising out of or in connection with any claim against
such party by any other broker or agent with respect to this Agreement, the
negotiation of this
Agreement or the transactions contemplated herein based upon the acts of the
indemnifying party.  The provisions of this Section 9 shall
survive the Closing.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    10.           Remedies.

     

    (a)  Seller's
Default.  If Seller shall materially breach any covenant or
obligation or materially breach any representation or warranty set forth herein
(which default is not waived in writing by Purchaser), then Purchaser shall have
the right to (i) terminate this Agreement by giving Seller timely written notice
prior to Closing or (ii) enforce specific performance or (iii) waive said
failure or breach and proceed to Closing.

     

    (b)           Purchaser's
Default.  If Purchaser breaches any covenant or obligation
herein or shall fail to close the transaction contemplated hereby without legal
excuse, then Seller’s sole remedy prior to the Initial Closing Date shall be to
declare this Agreement terminated by written notice to Purchaser and after the
Initial Closing Date Seller’s sole remedy shall be to terminate Purchaser’s
right to purchase the Second Acquired Interests.

     

    11.           Notices. All notices,
demands or other communications given hereunder shall be in writing and shall be
deemed to have been duly delivered (i) upon the delivery (or refusal to accept
delivery) by messenger or overnight express delivery service (or, if such date
is not on a business day, on the business day next following such date), or (ii)
on the second (2nd) Business Day next following the date of its mailing by
certified mail, postage prepaid, at a post office maintained by the United
States Postal Service, or (iii) upon the receipt by facsimile transmission as
evidenced by a receipt transmission report (followed by delivery by one of the
other means identified in (i)-(ii)), addressed as follows:

     

    
      	
              If to
      Seller:

            	
              Resource
      RSI Phase 1, LLC

              Resource
      RSI Phase II, LLC

              1845
      Walnut Street, 10th Floor

              Philadelphia,
      PA 19103

              Attn:  Alan
      Feldman

              Facsimile:  (215)
      640-6333

               

            
	
              with
      a copy to:

            	
              Resource
      Real Estate, Inc.

              1845
      Walnut Street, 10th
      Floor

              Philadelphia,
      PA 19103

              Attn:  Shelle
      Weisbaum, Esq.

              Facsimile:  (215)
      761-0452

               

            
	
              If to
      Purchaser:

            	
              RSI
      Associates, LLC

              110
      S. Poplar Street

              Suite
      101

              Wilmington,
      DE 18901

              Attention:  Adam
      Kauffman

              Facsimile:  (215)
      557-8585

               

            
	
              with
      a copy to:

            	
              Brandywine
      Construction & Management, Inc.

              1521
      Locust Street, Suite 400

              Philadelphia,
      PA 19102

              Attention:
      Brad Begelman, Esquire

              Facsimile:  (215)
      557-8585

               

            

    

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Either party may, by notice given as
aforesaid, change the address or addresses, or designate an additional address
or additional addresses, for its notices, provided, however, that no notice of a
change of address shall be effective until actual receipt of such
notice.  Either party may have it attorneys deliver notices to the
other party with the same force and effect as if given by the party represented
by such attorneys.  

     

    12.           Choice of
Law.  The interpretation, enforcement and performance of this
Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.

     

    13.           Miscellaneous.

     

    (a)  This Agreement
constitutes the entire agreement of the parties hereto and may not be modified
or canceled except pursuant to the terms hereof or an instrument in writing
signed by the parties hereto.  The Schedules and Exhibits annexed
hereto are hereby incorporated herein by reference as fully as though set forth
herein.

     

    (b)           In
the event any dispute between the parties hereto results in litigation, the
prevailing party shall be reimbursed for all reasonable costs, including, but
not limited to, reasonable attorneys' fees.

     

    (c)           The
headings of the various Sections of this Agreement have been inserted only for
the purposes of convenience, are not part of this Agreement and shall not be
deemed in any manner to modify, explain, qualify or restrict any of the
provisions of this Agreement.

     

    (d)           This
Agreement may be executed in any number of counterparts with the same effect as
if all parties hereto had executed the same document.  All such
counterparts shall be construed together and shall constitute one
instrument.

     

    (e)           This
Agreement shall bind and inure to the benefit of the respective heirs,
executors, administrators, personal representatives, successors and assigns of
the parties hereto; provided, however, that neither
party hereto shall assign this Agreement without the prior written consent of
the other party; and, provided, further, however, that Purchaser shall be
entitled, without the prior written consent of Seller, to assign this Agreement
to any affiliate of Purchaser and, upon any such assignment and the assumption
of this Agreement by a permitted assignee, Purchaser shall be released and
relieved from any and all obligations and liabilities hereunder.  Any
assignment not permitted hereunder and undertaken without such prior written
consent shall be deemed null and void.

     

    (f)           Seller
and Purchaser agree that neither this Agreement nor any memorandum thereof shall
be recorded in any public records.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (g)           Each
of Seller and Purchaser shall provide to the other such further assurances as
may reasonably be required hereunder to effectuate the purposes of this
Agreement and, without limiting the foregoing, shall execute and deliver such
affidavits, certificates and other instruments as may be so required hereunder
so long as the same shall not in any manner increase the liability of the party
so executing and delivering said instrument.

     

    (h)           This
Agreement may not be changed or terminated orally by either party; it may be
amended only by a writing which is executed by Purchaser and
Seller.  No course of conduct or course of dealing by the parties, or
failure by any of the parties hereto to insist upon or enforce any rights
herein, shall be construed to constitute a waiver, modification, or amendment of
any provision of this Agreement in the absence of a writing by each
party.  No waiver of any breach hereunder shall be deemed to be a
waiver of any other or subsequent breach.

     

    (i)           All
references to a “Business Day” shall
mean any day which shall not be a Saturday, Sunday, legal holiday or day on
which banking institutions in the City of Philadelphia are authorized by law or
executive order to close.  In the event the date on which a party is
required to take any action under the terms of this Agreement is not a Business
Day, the action shall be taken on the next succeeding Business Day
thereafter.

     

    (j)           Seller
and Purchaser each agree that only the Federal Courts of the United States
sitting in the Eastern District of Pennsylvania shall have exclusive
jurisdiction in respect of any legal action or proceeding brought against Seller
or Purchaser and arising out of or relating to this Agreement (“Proceedings”).  In
connection with any such Proceeding, Seller and Purchaser each irrevocably
submits to the jurisdiction of the Federal Courts of the United States in the
Eastern District of Pennsylvania and waives any right of objection to the laying
of venue in any such court, including, without limitation, any objection on the
basis of inconvenient forum.  Seller and Purchaser each irrevocably
agree to be bound by any final judgment rendered thereby in connection with this
Agreement from which no appeal has been taken or is available.

     

    (k)           THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT
EITHER PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE PROPERTY, THE CLOSING
DOCUMENTS OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH, OR IN RESPECT
OF ANY COURSE OF CONDUCT, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF
EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES TO
ENTER INTO THE TRANSACTIONS DESCRIBED HEREIN.

     

    14.           Publicity.  Seller
and Purchaser shall, prior to the Closing, maintain the confidentiality of this
transaction and shall not, except as required by law, court order or direction
of any governmental authority, disclose the terms of this Agreement or of such
sale and purchase to any third parties other than to Lender and their respective
employees, accountants, attorneys and agents, and such other persons whose
assistance is required in carrying out the terms of this Agreement, including,
without limitation, attorneys, appraisers, accountants, engineers, architects,
agents, consultants, contractors, and advisors. If Seller or Purchaser are
required by law, court order or any governmental authority to issue such a press
release or other public
communication concerning this Agreement prior to the Closing, Seller or
Purchaser, as applicable, shall deliver a copy of the proposed press release or
other public communication to the other parties for their review at least one
(1) Business Day prior to its issuance.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    15.           Purchase
Option.  In consideration for Ten Dollars ($10.00) and other
good and valuable consideration, Purchaser shall have the right to purchase (the
“Purchase
Option”) the remainder of Seller’s interests in the Companies as
follows:

    

    (a)           Option.  Purchaser
shall have the right to purchase the remainder of the membership interests owned
by Seller , provided
that:

    

    (i)           Purchaser
must purchase the same percentage of membership interests in each of RSI I and
RSI II;

    

    (ii)           Purchaser
notifies Seller of its exercise of the Purchase Option in writing no later than
July 31, 2011;

    

    (iii)           Seller
has received any and all required consents under the loan documents governing
the Mortgage Loan for such transfer;

    

    (iv)           Callen
(as defined below) has failed to exercise its right of ROFR in the event that
Purchaser is purchasing a membership interest in an amount which would increase
its aggregate membership interest in the Companies to more than
49%;

    

    (v)           Seller
and Purchaser shall cooperate in good faith to obtain the necessary consents;
and

    

    (vi)           Seller
is released from liability under any guarantees given to the mortgage holder in
connection with the Mortgage Loan.

    

    (b)           Callen;
Definitions.   RSI I hereby advises Purchaser that its
ownership interest in the Phase I Property is subject to a right of first
refusal (the “ROFR”) in favor of
the Callen Trust (“Callen”) pursuant to
the terms of that certain Agreement dated March ___, 1999.  Under the
ROFR, if RSI I desires to sell the Phase I Property or any ownership interest in
RSI I which results in RSI I no longer holding majority ownership interest and
voting control, then Callen has the right of first refusal for 45 days to
purchase the subject interests at the same terms.

    

    (c)           Purchase
Price.  The purchase price for the membership interests subject
to the Purchase Option shall be $50,000 per 1.0% purchased (the “Option Purchase
Price”) and such sales shall be subject to the applicable terms provided
in Section 4 above.  Seller and Purchaser agree to split any and all
costs incurred in connection with obtaining any required
consents.   The sole adjustment to the Option Purchase Price
shall be Purchaser reimbursing Seller an amount equivalent attributable to the
Amortization Reimbursement for the membership interests being
purchased.  Seller and Purchaser shall be responsible for its own
legal fees.

     

    (d)          Other
Sales.  During the term of this Purchase Option, Seller shall
not offer for sale or sell its membership interests in the Companies to anyone
other than Purchaser, a Permitted Transferee or Callen pursuant to its ROFR
unless Purchaser has delivered a written waiver and consent to Seller.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
 

    16.           Right of First
Offer.  In the event that Purchaser has not purchased 100% of
the membership interests owned by Seller in the Companies, then from and after
August 1,  2011 Purchaser shall have a right of first offer (the
“ROFO”) to
purchase the balance of membership interests owned by Seller as
follows:

    

    (a)                 If
Seller desires to transfer all or any portion of its membership interest in the
Companies, other than to a Permitted Transferee, then Seller shall be subject to
and required to comply with a right of first offer on the following terms and
conditions:

    

    (i)           Seller
shall notify Purchaser of such interest and include in the notice, the purchase
price and any other terms (the “ROFO
Terms”);

    

    (ii)           Purchaser
shall have the right and option to purchase the membership interests designated
in the notice by advising Seller in writing within 30 days after receipt of such
notice (which notice shall include all documentation concerning the prospective
transaction and is hereinafter referred to as the “ROFO Notice”);

    

    (iii)           If
Purchaser elects to purchase the membership interests, then the closing shall
occur on a date designated by Purchaser upon 10 days notice to Seller but not
later than 60 days after the date of Seller’s initial notice (unless the ROFO
Terms specify a later closing date) and shall such Closing shall be pursuant to
the ROFO Terms or as otherwise agreed upon by the parties;

    

    (iv)           If
Purchaser does not elect to purchase the membership interests or does not notify
Seller within the applicable time period in Section 16(a)(ii) above, the Seller
shall have the right to transfer the membership interests identified in the
notice free and clear of the ROFO right for one hundred and eighty (180) days
after Purchaser’s receipt of the ROFO Notice upon the ROFO Terms.  If
Seller does not close such transaction within such one hundred and eighty (180)
day period or desires to sell any membership interests in the Companies on
materially different terms, Seller shall once again make a right of first offer
to Purchaser pursuant to the terms of this Section 16.  Any membership
interests in the Companies not sold as provided above, shall be subject to this
right of first offer.

    

    (b)                 For
purposes of Section 16 and 17 of this Agreement, “Permitted Transferees” include
any entity owned or controlled by Seller.

    

    (c)                 Any
purchase pursuant to the ROFO shall comply with the following:

    

    

    (i)           Purchaser
must purchase the same percentage of membership interests in each of RSI I and
RSI II;

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    (ii)           Seller
has received any and all required consents under the loan documents governing
the Mortgage Loan for such transfer;

    

    (iii)           Callen
has failed to exercise its right of ROFR in the event that Purchaser is
purchasing a membership interest in an amount which would increase its aggregate
membership interest in the Companies to more than 49%;

    

    (iv)           Seller
and Purchaser shall cooperate in good faith to obtain the necessary consents;
and

    

    (v)           Seller
is released from liability under any guarantees given to the mortgage holder in
connection with the Mortgage Loan.

    

    17.           Tag Along
Rights.  If Seller desires to sell its membership interests in
the Companies to a third party other than Purchaser or a Permitted Transferee
after July 31, 2011, Purchaser shall have the right to sell a pro rata amount of
its membership interests to the third party purchaser pursuant to the same terms
and conditions that Seller is selling its membership interests.

    

    18.           Rehabilitation of River
Street Inn.  The parties acknowledge that the Property is in
the midst of being refurbished pursuant the budget attached hereto has Exhibit
D.  The parties agree that $453,388.00 of the budget has not
been expended.  Seller agrees to fund to the Companies without
contribution from the Purchaser such unexpended funds for repairs, improvements
and betterments to the hotel and Property as mutually agreed upon by Purchaser
and Seller.

    

    19.           Indemnity.  Seller
agrees to indemnify Purchaser for Purchaser’s pro rata share of any liability
(such pro rata share being equal to the membership interests being purchased) of
the Companies accruing prior to the date of the respective Closing.

    

    20.           Operating
Agreements.   The parties agree that the Companies’
Operating Agreements shall be amended concurrent with the Initial Closing to
provide as follows:

     

    
      (a)                 For
so long as either party owns a minimum of nineteen and 99/100 percent (19.99%)
of the membership interests of the Companies, the Companies shall
not:

    

    

    (i)           borrow
money except in the ordinary course of business at commercially reasonable
terms;

    

    (ii)          defease
any debt and/or incur any prepayment penalty unless: (A) the term of the loan to
be paid off ends within one hundred and eighty (180) days after the payment
date; or (B) the party owning more than fifty percent (50%) of the membership
interests in the Companies (the “Majority Owner”) pays any such defeasance costs
and/or prepayment penalty;

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    (iii)           lend
money;

    

    (iv)          
sell or transfer the Phase I or Phase II Property unless at any closing prior to
July 31, 2011 Purchaser shall receive sales proceeds equal at least to (A) any
capital contributions made by Purchaser to the Companies: and (B) the Purchase
Price and as applicable the Option Purchase Price paid by Purchaser for any
membership interests in the Companies;

    (v)    enter into or
amend any agreement or lease that would have a material adverse effect on the
Companies' business or property;

     

    (vi)           make
capital expenditures in excess of  Ten Thousand Dollars
($10,000.00);

    

    (vii)           terminate
or amend the BCMI  Management and Leasing Agreement (except for cause
pursuant to such agreement or as required by the Lender under the Loan
documents); and/or

    

    (viii)          initiate
(provided that if Seller and Purchaser are not able to reach an agreement on a
new manager after good faith efforts, the Majority Owner may make such decision
and cause the Companies to enter into the Agreement), terminate or amend any new
management agreement (except for cause pursuant to such agreement or as required
by the Lender under the Loan documents);

    

    without
the consent of Seller and Purchaser.

    

    (b)                 The
Companies shall distribute all available cash flow after retaining an annual
reserve of Fifty Thousand Dollars ($50,000.00).

    

    20.           Approval.  This
Agreement is subject to the approval of Seller’s Board of Directors and Seller
agrees to attempt to obtain such approval within fourteen (14)
days.

    

    21.           Survival.  The
provisions of Section 5, 6, 15, 16, 17, 18, 19, and 21 hereof shall survive the
closing of the purchase of the Acquired Interests hereunder.

    

    

     

     [Remainder
of Page Intentionally Left Blank]

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as
of the day and year first above written.

     

    
      	
               
      

            	
              SELLER:

            	
              RESOURCE
      AMERICA, INC.,

            

    

    
      	
               
      

            	
              a
      Delaware corporation

            

    

     

    By:  ________________________                                                    

    Name:

    Title:

    

    

    

    
      	
               
      

            	
              PURCHASER:

            	
              RSI ASSOCIATES, LLC, a
      Delaware limited liability company

            

    

    

    

    By:  ________________________

           Adam
Kauffman, Manager

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    Legal
Description of the Phase I Property

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
B

    

    Legal
Description of the Phase II Property

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C

    

    Assignment
of Acquired Interests

    

    ASSIGNMENT AND ASSUMPTION
OF

    LIMITED LIABILITY COMPANY
MEMBERSHIP INTEREST

     

    THIS
ASSIGNMENT AND ASSUMPTION OF LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST (this
“Assignment”)
is made this ____ day of ______________, 2008, by and between RESOURCE AMERICA,
INC. a Delaware corporation, as assignor (“Assignor”), and RSI
ASSOCIATES, LLC,  a Delaware limited liability company (“Assignee”), as
assignee.

     

    RECITALS

     

    A.           Assignor,
as seller, and Assignee, as buyer, have entered into that certain Agreement of
Purchase and Sale of Limited Liability Company Membership Interests (the “Agreement of Sale”)
dated February ____, 2008 to purchase and sell a ______ percent (____%)
membership interest (the “Membership Interest”)
in Resource RSI Phase ___, LLC, a Delaware limited liability company (the “Company”), as more
particularly described in the Agreement of Sale.

     

     

    B.           Assignor
desires to assign and set over to Assignee all of its right, title and interest
in and to the Membership Interest and any other rights of Assignor with respect
thereto, in its capacity as a member of the Company, under that certain Limited
Liability Company Agreement dated June 30, 2006 ( “LLC
Agreement”).

     

     

    C.           Assignee
desires to assume and be responsible for all of Assignor’s obligations with
respect to the Membership Interest and any other obligations of Assignor, in its
capacity as a member of the Company, under the LLC Agreement.

     

    

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Assignor and Assignee agree as
follows:

    

    1.           Assignor
assigns, sets over and transfers to Assignee all of its right, title and
interest in and to the Membership Interest and any and all rights as a member in
connection therewith under the LLC Agreement.

    

    2.           Assignee
hereby assumes all of Assignor’s right, title and interest to the Membership
Interest and agrees to be responsible for all of the obligations of
Assignor, in its
capacity as a member of the Company in connection therewith, and to be legally
bound by and subject to all of the terms the LLC Agreement.

     

    3.           This
Assignment shall be binding on the parties hereto and their successors and
assigns.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, intending to be legally bound, Assignor and Assignee have
caused this Assignment to be executed by their duly authorized officers on the
day and year first above written.

     

    ASSIGNOR:

     

    RESOURCE
AMERICA, INC., a Delaware corporation

     

    By:     _____________________________                                                  

                                    Name:

    Title:

     

    

     

    ASSIGNEE:

     

    

    RSI
ASSOCIATES, LLC

    

    By     ____________________________                                                           

            
Adam Kauffman, Manager

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
D

    

    Budget

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
1

     

    Organizational
Documents

     

    Resource RSI Phase I,
LLC.

     

    
      	
               
      

            	
              1.

            	
              Certificate
      of Limited Partnership filed with the Pennsylvania Department of State on
      June 27, 2006

            

    

     

    
      	
               
      

            	
              2.

            	
              Limited
      Liability Company Agreement dated June 30,
2006

            

    

     

    

     

    Resource RSI Phase II,
LLC.

    
       

      
        	
                 
      

              	
                1.

              	
                      
                  Certificate
      of Limited Partnership filed with the Pennsylvania Department of State on
      June 27, 2006

                

              

      

       

    

     

    
      	
               
      

            	
              2.

            	
              Limited
      Liability Company Agreement dated June 30,
2006

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