RESOURCE ASSET INVESTMENT TRUST
7,500,000 Shares of Beneficial Interest
UNDERWRITING AGREEMENT
_______, 1997
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
as Representative of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Resource Asset Investment Trust, a Maryland real estate investment
trust (the "Company"), confirms its agreement with Friedman, Billings, ▇▇▇▇▇▇ &
Co., Inc. and each of the other Underwriters listed on Schedule I hereto
(collectively, the "Underwriters"), for whom Friedman, Billings, ▇▇▇▇▇▇ & Co.,
Inc. is acting as representative (in such capacity, the "Representative"), with
respect to (i) the sale by the Company and the purchase by the Underwriters,
acting severally and not jointly, of the respective numbers of common shares of
beneficial interest of the Company, $.01 par value per share (the "Common
Shares"), set forth in Schedule I hereto and (ii) the grant by the Company to
the Underwriters, acting severally and not jointly, of the option described in
Section 1(b) hereof to purchase all or any part of 1,125,000 additional shares
of Common Shares to cover over-allotments, if any. The 7,500,000 Common Shares
to be purchased by the Underwriters (the "Initial Shares") and all or any part
of the 1,125,000 Common Shares subject to the option described in Section 1(b)
hereof (the "Option Shares") are hereinafter called, collectively, the "Shares".
The Company acknowledges that at its request, the Underwriters have reserved up
to 34,000 of the Initial Shares for sale to certain persons listed in Schedule
III hereto at the initial public offering price of the Shares.
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-11 (No. 333-35077) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been declared effective
under the Securities Act by the Commission. The registration statement as
amended at the time it became effective (including all information deemed to be
a part of the registration statement at the time it became effective pursuant to
Rule 430A(b) of the Securities Act Regulations) is hereinafter called the
"Registration Statement," except that, if the Company files a post-effective
amendment to such registration statement which becomes effective prior to the
Closing Time (as defined below), "Registration Statement" shall refer to such
registration statement as so amended. Any registration statement filed pursuant
to Rule 462(b) of the Securities Act Regulations is hereinafter called the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the 462(b) Registration Statement. Each prospectus
included in the registration statement, or amendments thereof or supplements
thereto, before it became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of the Underwriters
pursuant to Rule 424(a) of the Securities Act Regulations is hereinafter called
the "Preliminary Prospectus." The term "Prospectus" means the final prospectus,
as first filed with the Commission pursuant to paragraph (1) or (4) of Rule
424(b) of the Securities Act Regulations, and any amendments thereof or
supplements thereto. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus.
The Company also will issue and sell at the Closing Time (as
hereinafter defined) to the Representative for its own account warrants (the
"Warrants") to purchase at an exercise price of $ __ per share up to an
aggregate of 375,000 Common Shares (the "Warrant Shares"), which Warrant Shares
will be registered under the Securities Act pursuant to the Registration
Statement and which issuance will be consummated in accordance with the terms
and conditions of the Warrant Agreement in the form filed as an exhibit to the
Registration Statement (the "Warrant Agreement").
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter agrees, severally and not jointly, to purchase from the Company at
the purchase price per share of $__, the number of Initial Shares set forth in
Schedule I opposite such Underwriter's name, plus any additional number of
Initial Shares which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 8 hereof subject, in each case, to such adjustments
among the Underwriters as the Representative in its sole discretion shall make
to eliminate any sales or purchases of fractional shares.
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(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, severally and not jointly, to
purchase from the Company all or any part of the Option Shares at the purchase
price per share set forth in paragraph (a) above plus any additional number of
Option Shares which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 8 hereof. The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments, which may be made in
connection with the offering and distribution of the Initial Shares, upon notice
by the Representative to the Company setting forth the number of Option Shares
as to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Shares. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representative,
but shall not be later than three full business days (or earlier, without the
consent of the Company, than two full business days) after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Shares, each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Shares then being purchased which the
number of Initial Shares set forth in Schedule I opposite the name of such
Underwriter bears to the total number of Initial Shares, subject in each case to
such adjustments as the Representative in its sole discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Terms of Public Offering. The Company is advised by you that the
Shares are to be offered to the public initially at $__ per share (the "Public
Offering Price") and to certain dealers selected by you at a price that
represents a concession not in excess of $__ per share under the Public Offering
Price, and that any Underwriter may allow, and such dealers may reallow, a
concession, not in excess of $__ per share, to any Underwriter or to certain
other dealers. The Underwriters may from time to time increase or decrease the
Public Offering Price of the Shares after the initial public offering to such
extent as the Underwriters may determine.
(d) Warrants. Upon the basis of the warranties and representations and
other terms and conditions herein set forth, the Company also agrees to issue to
the Representative, in further consideration of the Representative's efforts in
connection with the sale and purchase of the Initial Shares and the Option
Shares, the Warrants to purchase at an exercise price of $__ per share up to an
aggregate of 375,000 Warrant Shares (431,250 Warrant Shares if the option
described in Section 1(b) is exercised).
2. Payment and Delivery:
(a) Initial Shares and Warrants. Payment of the purchase price for the
Initial Shares shall be made to the Company by wire transfer of immediately
available funds or certified or official bank check payable in federal
(same-day) funds at the offices of ___________________ located at
____________________ (unless another place shall be agreed upon by the
Representative and the Company) against delivery of the certificates for the
Initial Shares to the Representative for the respective accounts of the
Underwriters and the delivery of the Warrants, represented by one or more
certificates as the Representative may specify, to the Representative. Such
payment and delivery shall be made at 9:30 a.m., New York City time, on the
third (fourth, if pricing occurs after 4:30 p.m., New York City time) business
day after the date hereof (unless
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another time, not later than ten business days after such date, shall be agreed
to by the Representative and the Company). The time at which such payment and
delivery are actually made is hereinafter sometimes called the "Closing Time."
Certificates for the Initial Shares shall be delivered to the Representative in
definitive form registered in such names and in such denominations as the
Representative shall specify. For the purpose of expediting the checking of the
certificates for the Initial Shares by the Representative, the Company agrees to
make such certificates available to the Representative for such purpose at least
one full business day preceding the Closing Time.
(b) Option Shares. In addition, payment of the purchase price for the
Option Shares shall be made to the Company by wire transfer of immediately
available funds or certified or official bank check payable in federal
(same-day) funds at the offices of _____________________________ located at
________________________________ (unless another place shall be agreed upon by
the Representative and the Company), against delivery of the certificates for
the Option Shares to the Representative for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 9:30 a.m., New York
City time, on each Date of Delivery. Certificates for the Option Shares shall be
delivered to the Representative in definitive form registered in such names and
in such denominations as the Representative shall specify. For the purpose of
expediting the checking of the certificates for the Option Shares by the
Representative, the Company agrees to make such certificates available to the
Representative for such purpose at least one full business day preceding the
relevant Date of Delivery.
3. Representations and Warranties of the Company and the Partnership:
The Company and RAIT Partnership, L.P., a Delaware limited partnership (the
"Partnership"), represent and warrant to the Underwriters that:
(a) the Company and each Subsidiary of the Company set forth on
Schedule II hereto (each a "Subsidiary" and, collectively the "Subsidiaries")
(other than the Partnership) has been duly formed or incorporated, as the case
may be, and is validly existing and in good standing under the laws of its
respective jurisdiction of formation or incorporation with all requisite
corporate power and authority to own, lease and operate its respective
properties and to conduct its respective business as now conducted and as
proposed to be conducted as described in the Registration Statement and
Prospectus and, in the case of the Company, to authorize, execute and deliver
this Agreement, the Warrant Agreement and the other agreements described in the
Prospectus and listed on Schedule III attached hereto (the "Other Transaction
Documents") and to consummate the transactions described in each such agreement;
(b) the Company and the Subsidiaries are duly qualified or registered
to transact business in each jurisdiction in which they conduct their respective
businesses as now conducted and as proposed to be conducted as described in
the Registration Statement and the Prospectus and in which the failure,
individually or in the aggregate, to be so qualified or registered could
reasonably be expected to have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole, and the Company and the
Subsidiaries are in good standing in each jurisdiction in which they own or
lease real property or maintain an office or in which the nature or conduct of
their respective businesses as now conducted or proposed to be conducted as
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described in the Registration Statement and the Prospectus requires such
qualification, except where the failure to be in good standing could be
reasonably expected not to have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole;
(c) the Partnership has been duly formed and is validly existing as a
limited partnership under the laws of the jurisdiction of its organization, with
all requisite partnership power and authority to own, lease and operate its
properties and to conduct its business as now conducted and as proposed to be
conducted as described in the Registration Statement and the Prospectus. The
Partnership has been duly qualified or registered to do business as a foreign
partnership in each jurisdiction in which it conducts its business as now
conducted and as proposed to be conducted as described in the Registration
Statement and the Prospectus, and in which the failure, individually or in the
aggregate, to be so qualified or registered could be reasonably expected to have
a material adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and the Subsidiaries taken as
a whole;
(d) the Company and the Subsidiaries are in compliance in all material
respects with all applicable laws, rules, regulations, orders, decrees and
judgments;
(e) neither the Company nor any of the Subsidiaries is in breach of, or
in default under (nor has any event occurred which with notice, lapse of time,
or both would constitute a breach of, or default under), its respective
declaration of trust, charter, by-laws, certificate of limited partnership or
partnership agreement, as the case may be, or in the performance or observance
of any obligation, agreement, covenant or condition contained in any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or their respective properties is bound, except for such
breaches or defaults which could be reasonably expected not to have a material
adverse effect on the assets, operations, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries taken as a whole,
and the issuance, sale and delivery by the Company of the Shares, the execution,
delivery and performance of this Agreement and the Other Transaction Documents
(as such term is defined in Section 3(a) hereof), and consummation of the
transactions contemplated hereby and thereby will not conflict with, or result
in any breach of, or constitute a default under (nor constitute any event which
with notice, lapse of time, or both would constitute a breach of, or default
under), (i) any provision of the declaration of trust, charter, by-laws,
certificate of limited partnership or partnership agreement, as the case may be,
of the Company or any of the Subsidiaries, (ii) any provision of any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected, or
(iii) any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of the Subsidiaries,
except in the case of clause (ii) for such breaches or defaults which could be
reasonably expected not to have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole; or result in the creation or
imposition of any material lien, charge, claim or encumbrance upon any property
or asset of the Company or the Subsidiaries;
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(f) the Company has full legal right, power and authority to enter
into and perform this Agreement and to consummate the transactions contemplated
herein; this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and by general principles of equity, and except to the extent
that the indemnification and contribution provisions of Section 9 hereof may be
limited by federal or state securities laws and public policy considerations in
respect thereof;
(g) the Partnership has full legal right, power and authority to enter
into and perform this Agreement and to consummate the transactions contemplated
herein; this Agreement has been duly authorized, executed and delivered by the
Partnership and constitutes a valid and binding agreement of the Partnership
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general principles of equity, and except to
the extent the indemnification and contribution provisions set forth in Section
9 hereof may be limited by federal or state securities laws and the public
policy considerations in respect thereof underlying such laws;
(h) the Limited Partnership Agreement of the Partnership, including
any amendment thereto (the "Partnership Agreement") has been duly and validly
authorized, executed and delivered by or on behalf of the partners of the
Partnership and constitutes a valid and binding agreement of the parties
thereto, enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity;
(i) the issuance and sale of the Shares to the Underwriters hereunder
have been duly authorized by the Company; when issued and delivered against
payment therefor as provided in this Agreement, the Shares will be validly
issued, fully paid and non-assessable and the issuance of the Shares will not be
subject to any preemptive or similar rights; except as contemplated herein, no
person or entity holds a right to require or participate in the registration
under the Securities Act of the Shares pursuant to the Registration Statement;
no person or entity has a right of participation or first refusal with respect
to the sale of the Shares by the Company; except as set forth in the Prospectus,
there are no contracts, agreements or understandings between the Company and any
person or entity granting such person or entity the right to require the Company
to file a registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such securities
with the Shares registered pursuant to the Registration Statement; the form of
certificates evidencing the Shares complies with all applicable legal
requirements and, in all material respects, with all applicable requirements of
the declaration of trust and bylaws of the Company and the requirements of the
Nasdaq National Market;
(j) the issuance of the Warrants has been duly authorized; when issued
and delivered pursuant to the terms of the Warrant Agreement, the Warrants will
constitute legal, valid and binding obligations of the Company enforceable in
accordance with their terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
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creditors' rights generally, and by general principles of equity; the Warrant
Shares have been duly reserved for issuance upon exercise of the Warrants in
accordance with the terms of the Warrant Agreement; and the Warrants will
conform in all material respects to the description thereof in the Registration
Statement and the Prospectus;
(k) the Warrant Agreement and the Other Transaction Documents have
been duly authorized and will be, upon execution and delivery by the Company,
legal, valid and binding agreements of the Company enforceable in accordance
with their terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity;
(l) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the execution, delivery and
performance of this Agreement and the Other Transaction Documents, the
consummation of the transaction contemplated hereby and thereby, the sale and
delivery of the Shares, issuance of the Warrants or the Warrant Shares by the
Company as contemplated hereby or in the Warrant Agreement other than (i) such
as have been obtained, or will have been obtained at the Closing Time or the
relevant Date of Delivery, as the case may be, under the Securities Act or the
Securities Exchange Act of 1934, (ii) such approvals as have been obtained in
connection with the approval of the quotation of the Shares on the Nasdaq
National Market and (iii) any necessary qualification under the securities or
blue sky laws of the various jurisdictions in which the Shares are being offered
by the Underwriters;
(m) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state or local law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons required in order to conduct their respective businesses as described in
the Registration Statement and Prospectus, except to the extent that any failure
to have any such licenses, authorizations, consents or approvals, to make any
such filings or to obtain any such authorizations, consents or approvals could
reasonably be expected not to have, individually or in the aggregate, have a
material adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and the Subsidiaries taken as
a whole; neither the Company nor any of the Subsidiaries is in violation of, in
default under, or has received any notice regarding a possible violation,
default or revocation of any such license, authorization, consent or approval or
any federal, state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Company or any of the Subsidiaries, the
effect of which could reasonably be expected to be material and adverse to the
assets, operations, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries taken as a whole; and no such license,
authorization, consent or approval contains a materially burdensome restriction
that is not adequately disclosed in the Registration Statement and the
Prospectus;
(n) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
7
knowledge of the Company, are threatened by the Commission, and any request on
the part of the Commission for additional information has been complied with;
(o) the Company and the transactions contemplated by this Agreement
meet the requirements and conditions for using a registration statement on Form
S-11 under the Securities Act, set forth in the General Instructions to Form
S-11; the Preliminary Prospectus and the Registration Statement comply and the
Prospectus and any further amendments or supplements thereto will comply, when
they have become effective or are filed with the Commission, as the case may be,
in all material respects with the requirements of the Securities Act and the
Securities Act Regulations and, in each case, present, or will present, fairly
the information required to be shown; the Registration Statement did not, and
any amendment thereto will not, in each case as of the applicable effective
date, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and the Preliminary Prospectus does not, and the Prospectus or any
amendment or supplement thereto will not, as of the applicable filing date and
at the Closing Time and on each Date of Delivery (if any), contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no warranty or representation with respect to any
statement contained in the Registration Statement or the Prospectus in reliance
upon and in conformity with the information concerning the Underwriters and
furnished in writing by or on behalf of the Underwriters through the
Representative to the Company expressly for use in the Registration Statement or
the Prospectus (that information being limited to that described in the last
sentence of the first paragraph of Section 9(b) hereof);
(p) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("▇▇▇▇▇"), except to the extent permitted by Regulation S-T;
(q) all legal or governmental proceedings, contracts or documents
which are material and of a character required to be filed as exhibits to the
Registration Statement or to be summarized or described in the Prospectus have
been so filed, summarized or described as required;
(r) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the Company's knowledge, threatened against the
Company or any of the Subsidiaries or any of their respective officers and
directors or to which the properties, assets or rights of any such entity is
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbital panel or
agency which could reasonably be expected to result in a judgment, decree, award
or order having a material adverse effect on the assets, operations, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries taken as a whole, or which could adversely affect the consummation
of the transactions contemplated by this Agreement in any material respect;
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(s) the financial statements, including the notes thereto, included in
the Registration Statement and the Prospectus present fairly the financial
position of the Company and the Subsidiaries as of the dates indicated and the
results of operations and changes in financial position and cash flows of the
Company and the Subsidiaries for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
indicated in the notes thereto); the financial statement schedules included in
the Registration Statement and the Prospectus under the captions fairly present
the information required to be shown therein; no other financial statements or
schedules are required by Form S-11 or otherwise to be included in the
Registration Statement or Prospectus; the unaudited pro forma financial
information, including the notes thereto, included in the Prospectus or any
Preliminary Prospectus complies as to form in all material respects to the
applicable accounting requirements of the Securities Act and the Securities Act
Regulations, and management of the Company believes that the assumptions
underlying the pro forma adjustments are reasonable; such pro forma adjustments
have been properly applied to the historical amounts in the compilation of the
information and such information fairly presents with respect to the Company and
the Subsidiaries, the financial position, results of operations and other
information purported to be shown therein at the respective dates and for the
respective periods specified;
(t) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, whose reports on the audited financial
statements of the Company and the Subsidiaries are included as part of the
Registration Statement and Prospectus, are and were during the periods covered
by their reports independent public accountants within the meaning of the
Securities Act and the Securities Act Regulations;
(u) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has not been
(i) any material adverse change in the assets, operations, business, prospects
or condition (financial or otherwise), present or prospective, of the Company
and the Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business, (ii) any transaction, which is material to the Company and
the Subsidiaries taken as a whole, planned or entered into by the Company or any
of the Subsidiaries, (iii) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any of the Subsidiaries, which is material
to the Company and the Subsidiaries taken as a whole or (iv) any dividend or
distribution of any kind declared, paid or made with respect to the capital
stock of the Company or with respect to the partnership interests of the
Partnership;
(v) there are no persons with registration or other similar rights to
have any equity securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act except as provided
in the Warrant Agreement;
(w) the authorized shares of beneficial interest of the Company
conform in all material respects to the description thereof contained in the
Prospectus; the Company has an authorized, issued and outstanding capitalization
as set forth in the Prospectus under the caption
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"Capitalization;" immediately after the Closing Time, _____ Common Shares will
be issued and outstanding (subject to the Underwriter's option described in
Section 1(b) hereof) and no shares of beneficial interest of any other class of
beneficial interest will be issued and outstanding. All of the issued and
outstanding shares of beneficial interest of the Company have been duly
authorized and are validly issued, fully paid and non-assessable, and have been
offered, sold and issued by the Company in compliance with all applicable laws
(including, without limitation, federal and state securities laws); none of the
issued shares of beneficial interest of the Company have been issued in
violation of any preemptive or similar rights granted by the Company; except as
disclosed in the Prospectus, there is no outstanding option, warrant or other
right calling for the issuance of, and no commitment, plan or arrangement to
issue, any shares of beneficial interest of the Company or any security
convertible into or exchangeable for shares of beneficial interest of the
Company;
(x) all of the issued and outstanding shares of capital stock of RAIT
General, Inc., a Maryland corporation ("RAIT General"), and RAIT Limited, Inc.,
a Maryland corporation ("RAIT Limited"), have been duly authorized and are
validly issued, fully paid and non-assessable, and are owned of record and
beneficially by the Company, and have been offered, sold and issued by RAIT
General and RAIT Limited in compliance with all applicable laws (including, but
not limited to, federal and state securities laws); none of the issued shares of
capital stock of RAIT General and RAIT Limited have been issued in violation of
any preemptive or similar rights; except as disclosed in the Prospectus, there
is no outstanding option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue, any shares of capital stock of
RAIT General or RAIT Limited or any security convertible into or exchangeable
for capital stock of RAIT General or RAIT Limited;
(y) when the Warrant Shares have been issued and duly delivered
against payment therefor as contemplated by the Warrant Agreement, the Warrant
Shares will be validly issued, fully paid and nonassessable, free and clear of
any pledge, lien, encumbrance, security interest, or other claim; the issuance
and sale of the Warrants and the Warrant Shares by the Company is not subject to
preemptive or other similar rights arising by operation of law, under the
declaration of trust or by-laws of the Company, under any agreement to which the
Company or any of its Subsidiaries is a party or by which they are bound;
(z) immediately after the Closing Time, all of the issued and
outstanding units of partnership interest in the Partnership ("Common Units")
will be validly issued, fully paid and non-assessable; none of the Common Units
has been or will be issued or is owned or held in violation of any preemptive
right; the Common Units have been or will be offered, sold and issued by the
Partnership in compliance with all applicable laws (including, without
limitation, federal and state securities laws);
(aa) each of the Company, the Subsidiaries, and each of their
respective officers, directors and controlling persons has not taken, and will
not take, directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
10
(bb) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Securities Exchange Act of 1934 or the rules and regulations thereunder, or (ii)
directly, or indirectly through one or more intermediaries, controls or has any
other association with (within the meaning of Article 1 of the By-laws of the
National Association of Securities Dealers, Inc. (the "NASD")) any member firm
of the NASD;
(cc) the Company has not relied upon the Representative or legal
counsel for the Representative for any legal, tax or accounting advice in
connection with the offering and sale of the Shares or the Warrant Shares;
(dd) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representative or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
(ee) the Company and the Subsidiaries have good and marketable title
in fee simple to all real property, if any, and good title to all personal
property owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Prospectus or the financial statements thereto or such as
do not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company and the Subsidiaries; and any real property and buildings held under
lease by the Company or any Subsidiary are held under valid, existing and
enforceable leases, with such exceptions, liens, security interests, pledges,
charges, encumbrances, mortgages and defects, as are disclosed in the Prospectus
or are not material and do not interfere with the use made or proposed to be
made of such property and buildings by the Company or such Subsidiary; the
Company or a Subsidiary has obtained an owner's title insurance policy, from a
title insurance company licensed to issue such policy, on any real property
owned by the Company or any Subsidiary, that insures the Company's or the
Subsidiary's fee or leasehold interest in such real property (other than the
leasehold interest of the Company with respect to its principal executive
offices as described in the Registration Statement), with coverage in an amount
at least equal to the fair market value of such fee or leasehold interest in the
real property, or a lender's title insurance policy insuring the lien of its
mortgage securing the real property with coverage equal to the maximum aggregate
principal amount of any indebtedness held by the Company or a Subsidiary and
secured by the real property;
(ff) [neither the purchase nor the origination, as the case may be, of
the Initial Purchased Loans and the Initial Direct Loans, as such terms are
defined in the Prospectus, (collectively, the "Initial Investments"), nor the
execution and delivery of, or performance by the borrowers thereunder of any
mortgage, deed of trust, deed, indenture, note, loan or credit agreement or any
other agreement or instrument in connection therewith, with the exception of the
Company or any of its Subsidiaries recording a deed-in-lieu of foreclosure with
respect to any Initial Investment, has resulted in or, with notice and an
opportunity to cure, would result in a breach of or default under any mortgage,
deed of trust, indenture, note, loan or credit agreement or any other agreement
or instrument relating to any mortgage or other loan that may have
11
priority over any such Initial Investment with respect to the assets of the
borrower thereunder and that is in existence at the time the Company or any of
the Subsidiaries purchases or originates any such Initial Investment;]
(gg) to the knowledge of the Company and the Partnership, there are no
statutes or regulations applicable to the Company or any of the Subsidiaries or
certificates, permits or other authorizations from governmental regulatory
officials or bodies required to be obtained or maintained by the Company or any
of the Subsidiaries of a character required to be disclosed in the Registration
Statement or the Prospectus which have not been so disclosed and properly
described therein; all agreements between the Company or any of the Subsidiaries
and third parties expressly referenced in the Prospectus are legal, valid and
binding obligations of the Company or one or more of the Subsidiaries,
enforceable in accordance with their respective terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
principles of equity;
(hh) no relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries on the one hand, and the directors, trustees,
officers, shareholders, customers or suppliers of the Company or any of the
Subsidiaries on the other hand, which is required by the Act to be described in
the Registration Statement and the Prospectus which is not so described;
(ii) the Company and each Subsidiary owns or possesses adequate
license or other rights to use all patents, trademarks, service marks, trade
names, copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how, if any, (collectively
"Intangibles") necessary to entitle the Company and each Subsidiary to conduct
its business as described in the Prospectus, and neither the Company, nor any
Subsidiary, has received notice of infringement of or conflict with (and knows
of no such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which could materially and adversely affect the
assets, operations, business, prospects or condition (financial or otherwise) of
the Company or any Subsidiary;
(jj) each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns, if any such returns were required to be filed, through the date hereof
and have paid all taxes shown as due thereon; and no tax deficiency has been
asserted against the Company or any of the Subsidiaries, nor does the Company or
any of the Subsidiaries know of any tax deficiency which is likely to be
asserted against any such entity which if determined adversely to any such
entity, could materially adversely affect the assets, operations, business,
prospects or condition (financial or otherwise) of any such entity,
respectively; all tax liabilities, if any, are adequately provided for on the
respective books of such entities;
(kk) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate, if any, for their respective businesses
and consistent with insurance coverage maintained by similar companies in
similar businesses, including, but not limited to, insurance
12
covering real and personal property owned or leased by the Company and the
Subsidiaries against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect;
(ll) except as otherwise disclosed in the Prospectus, neither the
Company, any of the Subsidiaries nor, to the best of their knowledge, any former
owner of any real property owned by the Company or the Subsidiaries has
authorized or conducted or has knowledge of the generation, transportation,
storage, presence, use, treatment, disposal, release, or other handling of any
hazardous substance, hazardous waste, hazardous material, hazardous constituent,
toxic substance, pollutant, contaminant, asbestos, radon, polychlorinated
biphenyls ("PCBs"), petroleum product or waste (including crude oil or any
fraction thereof), natural gas, liquefied gas, synthetic gas or other material
defined, regulated, controlled or potentially subject to any remediation
requirement under any environmental law (collectively, "Hazardous Materials"),
on, in, under or affecting any real property currently leased or owned or by any
means controlled by the Company or any of the Subsidiaries, including any real
property underlying any Financing, as such term is defined in the Registration
Statement, (collectively, the "Real Property"), except in material compliance
with applicable laws; to the knowledge of the Company and the Partnership, the
Real Property, and the Company's, the Subsidiaries' and the former owners of the
Real Property's operations with respect to the Real Property, are and were in
compliance with all federal, state and local laws, ordinances, rules,
regulations and other governmental requirements relating to pollution, control
of chemicals, management of waste, discharges of materials into the environment,
health, safety, natural resources, and the environment (collectively,
"Environmental Laws"), and the Company and the Subsidiaries are in compliance
with, all licenses, permits, registrations and government authorizations
necessary to operate under all applicable Environmental Laws; except as
otherwise disclosed in the Prospectus, neither the Company nor the Subsidiaries
or any former owner of any of the Real Property has received any written or oral
notice from any governmental entity or any other person and there is no pending
or threatened claim, litigation or any administrative agency proceeding that:
alleges a violation of any Environmental Laws by the Company or any of the
Subsidiaries; or that the Company or any of the Subsidiaries is a liable party
or a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., or
any state superfund law; has resulted in or could result in the attachment of an
environmental lien on any of the Real Property; or alleges that the Company or
any of the Subsidiaries is liable for any
13
contamination of the environment, contamination of the Real Property, damage to
natural resources, property damage, or personal injury based on their activities
or the activities of their predecessors or third parties (whether at the Real
Property or elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards; in the
ordinary course of its business as necessary and appropriate, the Company will
conduct a periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and the Subsidiaries, in the course of
which it identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures) required for
clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties;
(mm) there are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which could, singly
or in the aggregate, reasonably be deemed to have a material adverse effect on
the assets, operations, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole;
(nn) none of the entities which prepared appraisals of the Real
Property, nor the entities which prepared Phase I environmental assessment
reports with respect to the Real Property, was employed for such purpose on a
contingent basis or has any substantial interest in the Company or any of the
Subsidiaries, and none of their directors, officers or employees is connected
with the Company or any of the Subsidiaries as a promoter, selling agent, voting
trustee, officer, director or employee;
(oo) neither the Company nor any of the Subsidiaries nor, to the best
of the Company's knowledge, any officer, director or trustee purporting to act
on behalf of the Company or any of the Subsidiaries has at any time; (i) made
any contributions to any candidate for political office, or failed to disclose
fully any such contributions, in violation of law, (ii) made any payment to any
state, federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments required
or allowed by applicable law, (iii) made any payment outside the ordinary course
of business to any investment officer or loan broker or person charged with
similar duties of any entity to which the Company or any of the Subsidiaries
sells or from which the Company or any of the Subsidiaries buys loans or
servicing arrangements for the purpose of influencing such agent, officer,
broker or person to buy loans or servicing arrangements from or sell loans to
the Company or any of the Subsidiaries, or (iv) engaged in any transactions,
maintained any bank account or used any corporate funds except for transactions,
bank accounts and funds which have been and are reflected in the normally
maintained books and records of the Company and the Subsidiaries;
(pp) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of the Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of the Subsidiaries or any of the
members of the families of any of them;
14
(qq) neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any of the
Subsidiaries, has made any payment of funds of the Company or of any Subsidiary
or received or retained any funds in violation of any law, rule or regulation or
of a character required to be disclosed in the Prospectus;
(rr) the Company is organized in conformity with the requirements for
qualification as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the "Code"), and the Company's proposed method of operation
will enable it to meet the requirements for taxation as a real estate investment
trust under the Code; the Partnership will be treated as a partnership for
federal income tax purposes and not as a corporation or association taxable as a
corporation;
(ss) the Shares have been approved for listing, upon official notice of
issuance, on the Nasdaq National Market;
(tt) in connection with this offering, the Company has not offered and
will not offer its Common Shares or any other securities convertible into or
exchangeable or exercisable for Common Shares in a manner in violation of the
Securities Act or the Securities Act Regulations; the Company has not
distributed and will not distribute any Prospectus or other offering material in
connection with the offer and sale of the Shares, except as contemplated herein;
(uu) the Company has complied and will comply with all the provisions
of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida); neither
the Company nor any of the Subsidiaries or their respective affiliates does
business with the government of Cuba or with any person or affiliate located in
Cuba;
(vv) neither the Company nor any of the Subsidiaries is, or solely as
a result of transactions contemplated hereby and the application of the proceeds
from the sale of the Shares, will become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act"); and
(ww) the Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated.
4. Certain Covenants of the Company and the Partnership: The Company
and the Partnership hereby covenant with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such states as the Representative may designate and to maintain
such qualifications in effect as long as required for the distribution of the
Shares, provided that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares);
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of
15
the Shares may commence, the Company will endeavor to cause such post-effective
amendment to become effective as soon as possible and will advise the
Representative promptly and, if requested by the Representative, will confirm
such advice in writing, when such post-effective amendment has become effective;
(c) to prepare the Prospectus in a form approved by the Underwriters
and file such Prospectus with the Commission pursuant to Rule 424(b) within the
time period prescribed by law, on the day following the execution and delivery
of this Agreement and to furnish promptly (and with respect to the initial
delivery of such Prospectus, not later than 10:00 a.m. (New York City time) on
the day following the execution and delivery of this Agreement) to the
Underwriters as many copies of the Prospectus (or of the Prospectus as amended
or supplemented if the Company shall have made any amendments or supplements
thereto after the effective date of the Registration Statement) as the
Underwriters may reasonably request for the purposes contemplated by the
Securities Act Regulations, which Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the version created
to be transmitted to the Commission for filing via ▇▇▇▇▇, except to the extent
permitted by Regulation S-T;
(d) to advise the Representative promptly and (if requested by the
Representative) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(e) to advise the Representative immediately, confirming such advice
in writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representative promptly of any proposal
to amend or supplement the Registration Statement or Prospectus and to file no
such amendment or supplement to which the Representative shall reasonably object
in writing;
(f) before amending or supplementing the Registration Statement or the
Prospectus, or, during any period of time in which a Prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations, to
furnish to the Representative a copy of each such proposed amendment or
supplement before filing any such amendment or supplement with the Commission;
(g) to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of Common
Shares, (ii) as soon as practicable after the filing thereof, copies of all
reports filed by the Company with the Commission, the NASD or any
16
securities exchange and (iii) such other publicly available information as the
Underwriters may reasonably request regarding the Company and its Subsidiaries;
(h) to advise the Underwriters promptly during any period of time in
which a Prospectus relating to the Shares is required to be delivered under the
Securities Act Regulations (i) of any material change in the Company's assets,
operations, business, prospects or condition (financial or otherwise) or (ii) of
the happening of any event which would require the making of any change in the
Prospectus then being used so that the Prospectus would not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and, during such time,
to prepare and furnish, at the Company's expense, to the Underwriters promptly
such amendments or supplements to the Prospectus as may be necessary to reflect
any such change;
(i) to furnish promptly to the Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith) and
such number of conformed copies of the foregoing as the Underwriters may
reasonably request;
(j) to furnish to the Underwriters, not less than two business days
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (h) above, a copy of
any document proposed to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(k) to apply the net proceeds of the sale of the Shares substantially
in accordance with its statements under the caption "Use of Proceeds" in the
Prospectus;
(l) to make generally available to its security holders as soon as
practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the Registration
Statement, an earnings statement complying with the provisions of Section 11(a)
of the Securities Act (in form, at the option of the Company, complying with the
provisions of Rule 158 of the Securities Act Regulations) covering a period of
12 months beginning on the effective date of the Registration Statement;
(m) to use its best efforts to effect and maintain the inclusion of
the Shares on the Nasdaq National Market and to file with the Nasdaq National
Market all documents and notices required by the Nasdaq National Market of
companies that have securities that are included on the Nasdaq National Market;
(n) to refrain during a period of [180] days from the date of the
Prospectus, without the prior written consent of the Representative, from (i)
offering, pledging, selling, contracting to sell, selling any option or contract
to purchase, purchasing any option or contract to sell, granting any option for
the sale of, or otherwise disposing of or transferring, directly or indirectly,
any Common Shares or any securities convertible into or exercisable or
exchangeable for Common Shares, or filing any registration statement under the
Securities Act with respect to any of the
17
foregoing or (ii) entering into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Shares, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Shares or such other securities, in cash or otherwise; the foregoing
sentence shall not apply to (A) the Shares to be sold hereunder, (B) the
Warrants and Warrant Shares or (C) any Common Shares issued by the Company upon
the exercise of an option outstanding on the date hereof or upon the exercise of
option pursuant to any management option plan described in the prospectus
pursuant to a dividend reinvestment plan adopted hereafter and referred to in
the Prospectus;
(o) to comply with the terms of the Warrant Agreement;
(p) the Company shall not, and shall use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which could be reasonably likely to cause or result
in, or which could be reasonably likely to in the future reasonably be expected
to cause or result in, the stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of any of the Shares,
(ii) sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of the Shares or (iii) pay or agree to pay to any person any
compensation for soliciting any order to purchase any other securities of the
Company;
(q) the Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Shares;
(r) the Company will use its best efforts (i) to meet the requirements
to qualify as a real estate investment trust under the Code and (ii) to cause
the Partnership to be treated as a partnership for federal income tax purposes;
(s) the Company will comply with all of the provisions of any
undertakings in the Registration Statement;
(t) the Company and the Subsidiaries will conduct their affairs in such
a manner so as to ensure that neither the Company nor any Subsidiary will be an
"investment company" or an entity "controlled" by an investment company within
the meaning of the 1940 Act;
(u) if at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in the Representative's
reasonable opinion the market price of the Common Shares has been or is likely
to be materially affected (regardless of whether such rumor, publication or
event necessitates a supplement to or amendment of the Prospectus) and after
written notice from the Representative advising the Company to the effect set
forth above, to forthwith prepare, consult with the Representative concerning
the substance of, and disseminate a
18
press release or other public statement, reasonably satisfactory to the
Representative, responding to or commenting on such rumor, publication or event;
and
(v) to maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
5. Payment of Expenses; Right of First Refusal:
(a) The Company agrees to pay all costs and expenses incident to the
performance of the Company's obligations under this Agreement and the Warrant
Agreement, whether or not the transactions contemplated hereunder or thereunder
are consummated or this Agreement and the Warrant Agreement are terminated,
including, but not limited to, all fees and expenses of and filing with the
Commission and the NASD; all Blue Sky fees and expenses, including filing fees
and disbursements of the Representative's Blue Sky counsel, (but excluding the
fees of such counsel), fees and disbursements of counsel and accountants for the
Company, and printing costs, including costs of printing the prospectus, and any
amendments thereto; all underwriting documents, Blue Sky Memoranda, a reasonable
quantity of prospectuses requested by the Representative, and the Company's road
show costs and expenses.
(b) The Company agrees to reimburse the Representative upon request for
its out-of-pocket expenses incurred in connection with its obligations under
this Agreement whether or not the Offering is consummated, including the fees
and disbursements (other than filing fees and related expenses) of the
Representative's legal counsel, Blue Sky counsel (which shall undertake all Blue
Sky matters), and road show costs and expenses. The foregoing expense
reimbursement shall not exceed $100,000.
(c) If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the transactions contemplated herein.
(d) For a period of two years from completion of the Offering, the
Company shall appoint the Representative to act as:
(i) exclusive financial advisor in connection with any sale by the
Company of all or substantially all of its assets or any merger, acquisition or
other transaction entered into or completed by the Company where the Company is
not the survivor or where the Company's shareholders obtain or retain, as the
case may be, equity interests representing less than 50% of the voting rights or
equity in the survivor;
(ii) lead underwriter or placement agent in connection with any public
or private offering of equity or debt securities or other capital markets
financing entered into or completed by the Company, excluding (A) any securities
offered or sold pursuant to any employee stock option plan, (B) any securities
offered or sold to RAI or its affiliates, and (C) any debt financing arranged by
the Company through a bank or other institutional lender or lenders in
situations where such bank or other institutional lender is acting solely as a
lender and not being compensated for services that traditionally would be deemed
those of an underwriter or placement agent;
(iii) lead underwriter in connection with any securitization or similar
transaction entered into or completed by the Company; and
(iv) exclusive agent in connection with the exercise of warrants or
options in the Company pursuant to a cashless exercise or other exercise
program.
6. Conditions of the Underwriters' Obligations: The obligations of the
Underwriters hereunder are subject to (i) the accuracy of the representations
and warranties on the part of the Company in all material respects on the date
hereof and at the Closing Time and on each Date of Delivery, (ii) the
performance by the Company of its obligations hereunder in all material
respects, and (iii) the following further conditions:
19
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, such
post-effective amendment shall have become effective not later than 5:30 p.m.,
New York City time, on the date hereof, or at such later date and time as shall
be consented to in writing by you.
(b) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of Ledgewood Law Firm, P.C., counsel for
the Company, addressed to the Underwriters and dated the Closing Time and each
Date of Delivery and in form satisfactory to Hunton & ▇▇▇▇▇▇▇▇, counsel for the
Underwriters, stating that:
(i) the authorized shares of beneficial interest of the
Company conform as to legal matters to the description thereof
contained in the Prospectus and meets the requirements of Form S-11
under the Securities Act; the Company has an authorized capitalization
as set forth in the Prospectus under the caption "Capitalization"; the
outstanding shares of beneficial interest or capital stock, as the case
may be, of the Company and the Subsidiaries (other than the
Partnership) have been duly and validly authorized and issued and are
fully paid and non-assessable; all of the authorized and validly issued
shares of capital stock of or interests in the Subsidiaries, as the
case may be, are directly or indirectly owned of record and
beneficially by the Company; except as disclosed in the Prospectus,
there are no authorized and validly issued (i) securities or
obligations of the Company or any of the Subsidiaries convertible into
or exchangeable for any shares of beneficial interest of the Company or
any capital stock or interests in any such Subsidiary or (ii) warrants,
rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such shares of beneficial interest, capital stock,
interests or any such convertible or exchangeable securities or
obligations; except as set forth in the Prospectus or contemplated by
this Agreement, there are no outstanding obligations of the Company or
any such Subsidiary to issue any shares of beneficial interest, capital
stock or interests, any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options;
(ii) the Company and the Subsidiaries (other than the
Partnership) each has been duly formed or incorporated, as the case may
be, and is validly existing and in good standing under the laws of its
respective jurisdiction of formation or incorporation with the
requisite power and authority to own its respective properties and to
conduct its respective business as described in the Registration
Statement and Prospectus and, in the case of the Company, to execute
and deliver this Agreement, the Warrant Agreement and the Other
Transaction Documents and to consummate the transactions described in
each such agreement;
(iii) the Company and the Subsidiaries (other than the
Partnership) are duly qualified in or registered by and are in good
standing in each jurisdiction specifically referred to in the
Registration Statement and Prospectus as jurisdictions in which
property securing loans proposed to be made or acquired by the Company
is
20
located and in which the failure, individually or in the aggregate, to
be so qualified could reasonably be expected to have a material
adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and the Subsidiaries
taken as a whole. Except as disclosed in the Prospectus, no Subsidiary
is prohibited or restricted by its charter, bylaws, certificate of
limited partnership or partnership agreement, as the case may be, or,
to the knowledge of such counsel, otherwise, directly or indirectly,
from paying dividends to the Company, or from making any other
distribution with respect to such Subsidiary's capital stock or
interests or from paying the Company or any other Subsidiary, any
loans or advances to such Subsidiary from the Company or such other
Subsidiary, or from transferring any such Subsidiary's property or
assets to the Company or to any other Subsidiary; to such counsel's
knowledge, other than as disclosed in the Prospectus, the Company does
not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association;
(iv) The Partnership has been duly formed and is validly
existing as a limited partnership under the laws of the jurisdiction of
its organization, with all requisite partnership power and authority to
own, lease and operate its properties and to conduct its business as
now conducted as described in the Registration Statement and the
Prospectus. The Partnership has been duly qualified or registered to do
business as a foreign partnership in those jurisdictions specifically
referred to in the Registration Statement and Prospectus as
jurisdictions in which property securing loans proposed to be made or
acquired by the Partnership is located and in which the failure,
individually or in the aggregate, to be so qualified or registered
would have a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole;
(v) to such Counsel's knowledge, the Company and the
Subsidiaries are in compliance in all material respects with all
applicable laws, rules, regulations and, orders;
(vi) to such counsel's knowledge, except as disclosed on the
Registration Statement and the Prospectus, neither the Company nor any
of its Subsidiaries is in material breach of, or in material default
under (nor has any event occurred which with notice, lapse of time, or
both would constitute a material breach of, or material default under)
its respective declaration of trust, charter, by-laws, certificate of
limited
21
partnership or partnership agreement, as the case may be, or in the
performance or observation of any obligation agreement, covenant, or
condition contained in any license, indenture, mortgage, deed of
trust, loan or credit agreement or any other agreement or instrument
to which the Company or any of the Subsidiaries is a party or by which
any of them or their respective properties may be bound or affected,
except such breaches or defaults which would not have a material
adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and the Subsidiaries
taken as a whole;
(vii) the execution, delivery and performance of this
Agreement, the Warrant Agreement and the Other Transaction Documents by
the Company and the consummation by the Company of the transactions
contemplated under this Agreement, the Warrant Agreement or the Other
Transaction Documents, as the case may be, do not and will not conflict
with, or result in any breach of, or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would
constitute a breach of or default under), (i) any provisions of the
declaration of trust, charter, by-laws, certificate of limited
partnership or partnership agreement, as the case may be, of the
Company or any Subsidiary, (ii) to such counsel's knowledge, any
provision of any license, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the Company
or any Subsidiary is a party or by which any of them or their
respective properties may be bound or affected, or (iii) to such
counsel's knowledge, any law or regulation or any decree, judgment or
order applicable to the Company or any Subsidiary, except in the case
of clauses (ii) and (iii) for such conflicts, breaches or defaults,
laws, regulations, decrees, judgments or orders, which individually or
in the aggregate could not be reasonably expected to have a material
adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and the Subsidiaries
taken as a whole; or, with the exception of the Other Transaction
Documents, result in the creation or imposition of any lien,
encumbrance, or to such counsel's knowledge, charge or claim upon any
property or assets of the Company or the Subsidiaries;
(viii) the Company has full trust right, power and authority
to enter into and perform this Agreement and to consummate the
transactions contemplated herein; this Agreement has been duly
authorized, executed and delivered by the Company and is a legal, valid
and binding agreement of the Company enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity, and except that
enforceability of the indemnification and contribution provisions set
forth in Section 9 hereof may be limited by the federal or state
securities laws of the United States or public policy underlying such
laws;
(ix) the Partnership has full partnership right, power and
authority to enter into and perform this Agreement and to consummate
the transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by the Partnership and constitutes a
valid and binding agreement of the Partnership enforceable in
accordance with its terms, except as may be limited by bankruptcy,
insolvency,
22
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity, and except that
enforceability of the indemnification and contribution provisions set
forth in Section 9 hereof may be limited by federal or state
securities laws of the United States or public policy underlying such
laws;
(x) the Warrant Agreement and the Other Transaction Documents
have been duly authorized, executed, and delivered by the Company and
are legal, valid and binding agreements of the Company enforceable in
accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general principles of equity; when
issued and delivered pursuant to the terms of the Warrant Agreement,
the Warrants will constitute legal, valid and binding obligations of
the Company enforceable in accordance with their terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general
principles of equity; the Warrant Shares have been duly reserved for
issuance upon exercise of the Warrants in accordance with the terms of
the Warrant Agreement; and the Warrants will conform to the description
thereof in the Registration Statement and the Prospectus;
(xi) no approval, authorization, consent or order of or
filing with any federal or state governmental or regulatory commission,
board, body, authority or agency is required in connection with the
execution, delivery and performance of this Agreement and the Other
Transaction Documents or the consummation of the transaction
contemplated hereby and thereby by the Company and the Partnership, the
sale and delivery of the Shares by the Company as contemplated hereby
other than such as have been obtained or made under the Securities Act
and except that such counsel need express no opinion as to any
necessary qualification under the state securities or blue sky laws of
the various jurisdictions in which the Shares are being offered by the
Underwriters or any approval of the underwriting terms and arrangements
by the National Association of Securities Dealers, Inc.;
(xii) to such counsel's knowledge, each of the Company and
the Subsidiaries has all necessary licenses, authorizations, consents
and approvals and has made all necessary filings required under any
federal, state or local law, regulation or rule, and has obtained all
necessary authorizations, consents and approvals from other persons,
required to conduct their respective businesses, as described in the
Registration Statement and the Prospectus, except to the extent that
any failure to have any such authorizations, consents or approvals
would not, individually or in the aggregate, have a material adverse
effect on the assets, operations, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as
a whole; to such counsel's knowledge, neither the Company nor any of
the Subsidiaries is in violation of, in default under, or has received
any notice regarding a possible violation, default or revocation of any
such license, authorization, consent or approval or any federal, state,
local or foreign law, regulation or decree, order or judgment
applicable to the Company or any of the Subsidiaries, the effect of
which could be material and adverse to the assets, operations,
business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole; and no such license,
authorization, consent or approval
23
contains a materially burdensome restriction that is not adequately
disclosed in the Registration Statement and the Prospectus;
(xiii) the Shares, the Warrants, and the Warrant Shares have
been duly authorized and, when the Shares and the Warrant Shares have
been issued and duly delivered against payment therefor as contemplated
by this Agreement or the Warrant Agreement, as the case may be, the
Shares and the Warrant Shares will be validly issued, fully paid and
nonassessable, and, except for any action that may have been taken by
the holder thereof, free and clear of any pledge, lien, encumbrance,
security interest, or other claim;
(xiv) immediately after the Closing Time, all of the issued
and outstanding units of partnership interest in the Partnership (the
"Common Units") will be validly issued, fully paid and non-assessable.
None of the Common Units has been or will be issued or is owned or held
in violation of any preemptive right. The outstanding Common Units have
been offered, sold and issued by the Partnership in compliance with all
federal and state securities laws;
(xv) the issuance and sale of the Shares, the Warrants, and
the Warrant Shares and the Common Units by the Company is not subject
to preemptive or other similar rights arising by operation of law,
under the declaration of trust or by-laws of the Company or the
certificate of limited partnership or Partnership Agreement of the
Partnership, under any agreement known to such counsel to which the
Company or any of the Subsidiaries is a party or, to such counsel's
knowledge, otherwise;
(xvi) neither the purchase nor the origination, as the case
may be, of the Initial Purchased Loans and the Initial Direct Loans
(collectively, the "Initial Investments"), nor the execution and
delivery of, or performance by the borrowers thereunder of any
mortgage, deed of trust, deed, indenture, note, loan or credit
agreement or any other agreement or instrument in connection therewith,
has resulted in or, with notice and an opportunity to cure, would
result in a breach of or default under any mortgage, deed of trust,
indenture, note, loan or credit agreement or any other agreement or
instrument relating to any mortgage or other loan (collectively, the
"Senior Indebtedness") that may have priority over any such Initial
Investment with respect to the assets of the borrower thereunder and
that is in existence at the time the Company or any of the Subsidiaries
purchases or originates any such Initial Investment;
(xvii) no party to any mortgage, deed of trust, indenture,
note, loan or credit agreement or any other agreement or instrument
relating to any Senior Indebtedness of which such counsel has knowledge
has the right to limit, hinder, delay or otherwise interfere with the
exercise of any remedies that the Company or any of the Subsidiaries
may have under any mortgage, deed of trust, indenture, note, loan or
credit agreement or any other agreement or instrument relating to any
of the Initial Investments, including, without limitation, the
possession of a deed-in-lieu of foreclosure and a power of attorney
granting the right to record any such deed-in-lieu of foreclosure by
the Company or any of the Subsidiaries pursuant to any documents
evidencing the Initial Investments
24
(xviii) to counsel's knowledge, there are no persons with
registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the
Company under the Securities Act, except pursuant to the Warrant
Agreement;
(xix) the form of certificate used to evidence the Common
Shares complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the declaration of
trust and bylaws of the Company and the requirements of the Nasdaq
National Market;
(xx) the Registration Statement has become effective under
the Securities Act and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration Statement
has been issued and, to such counsel's knowledge, no proceedings with
respect thereto have been commenced or threatened;
(xxi) as of the effective date of the Registration Statement,
the Registration Statement and the Prospectus (except as to the
financial statements and other financial and statistical data contained
therein, as to which such counsel need express no opinion) complied as
to form in all material respects with the requirements of the
Securities Act and the Securities Act Regulations;
(xxii) the statements under the captions "Capitalization,"
"Risk Factors," "Distribution Policy," "Prospectus Summary - Tax Status
of the Company," "Certain Provisions of Maryland Law and of the
Company's Declaration of Trust and Bylaws," "Description of Shares of
Beneficial Interest," "Common Shares Available for Future Sale,"
"Federal Income Tax Considerations," "ERISA Considerations " and
"Certain Legal Aspects of Mortgage Loans and Real Property
Investments," in the Registration Statement and the Prospectus, insofar
as such statements constitute a summary of the legal matters referred
to therein, constitute accurate summaries thereof in all material
respects;
(xxiii) the Shares have been approved for inclusion on the
Nasdaq National Market;
(xxiv) to such counsel's knowledge, there are no actions,
suits or proceedings, inquiries, or investigations pending or
threatened against the Company or any of the Subsidiaries or any of
their respective officers and directors or to which the properties,
assets or rights of any such entity are subject, at law or in equity,
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority, arbital panel or agency
that are required to be described in the Prospectus but are not so
described;
25
(xxv) to such counsel's knowledge, there are no contracts or
documents of a character that are required to be filed as exhibits to
the Registration Statement or to be described or summarized in the
Prospectus which have not been so filed, summarized or described; to
such counsel's knowledge, all agreements between the Company or any of
the Subsidiaries, respectively, and third parties expressly referenced
in the Prospectus (other than agreements relating to the Initial
Investments which are specifically addressed in Section 6(d)(iv)) are
legal, valid and binding obligations of the Company or the
Subsidiaries, as the case may be, enforceable in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and by general principles of equity;
(xxvi) the Company is organized in conformity with the
requirements for qualification as a real estate investment trust
pursuant to Sections 856 through 860 of the Code, and the Company's
proposed method of operation will enable it to meet the requirements
for qualification and taxation as a real estate investment trust under
the Code; the Partnership will be treated as a partnership for federal
income tax purposes and not as a corporation or an association taxable
as a corporation;
(xxvii) neither the Company nor any of the Subsidiaries is,
or solely as a result of transactions contemplated hereby and the
application of the proceeds from the sale of the Shares as described in
the Registration Statement and the Prospectus under the caption "Use of
Proceeds," will become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"); and
(xxviii) to such counsel's knowledge, each of the Company and
the Subsidiaries has filed on a timely basis all necessary federal,
state, local and foreign income and franchise tax returns through the
date hereof, if any such returns are required to be filed, and have
paid all taxes shown as due thereon; and no tax deficiency has been
asserted against any such entity, nor does any such entity know of any
tax deficiency which is likely to be asserted against any such entity
which, if determined adversely to any such entity, could have a
material adverse effect on the assets, operations, business, prospects
or condition (financial or otherwise) of any such entity, respectively.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company and Underwriters at which the contents of the
Registration Statement and Prospectus were discussed and, although such counsel
is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus (except as and to the extent stated in subparagraphs
(xix) and (xx) above), nothing has caused them to believe that the Registration
Statement, the Preliminary Prospectus or the Prospectus, as of their respective
effective or issue dates and as of the date of such counsel's opinion, contained
or contains any untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that, in each case, such counsel need
express no view with respect to the
26
financial statements and other financial and statistical data included in the
Registration Statement, Preliminary Prospectus or Prospectus).
(c) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel for
the Company, addressed to the Underwriters and dated the Closing Time and each
Date of Delivery and in form satisfactory to Hunton & ▇▇▇▇▇▇▇▇, counsel for the
Underwriters, stating that as a matter of Maryland law:
(i) the statements under the captions "Capitalization,"
"Certain Provisions of Maryland Law and of the Company's Declaration of
Trust and Bylaws," and "Description of Shares of Beneficial Interest,"
in the Registration Statement and the Prospectus, insofar as such
statements constitute summaries of Maryland corporate law, constitute
accurate summaries thereof in all material respects;
(ii) the Company has an authorized capitalization as set
forth in the Prospectus under the caption "Capitalization"; the
outstanding shares of beneficial interest or capital stock, as the case
may be, of the Company and the Subsidiaries (other than the
Partnership) have been duly and validly authorized and issued and are
fully paid and non-assessable; all of the outstanding shares of capital
stock of or interests in the Subsidiaries, as the case may be, are
directly or indirectly owned of record and beneficially by the Company;
(iii) the Company and the Subsidiaries (other than the
Partnership) each has been duly formed or incorporated, as the case may
be, and is validly existing and in good standing under the laws of the
state of Maryland with the requisite power and authority to own its
respective properties and to conduct its respective business as
described in the Registration Statement and Prospectus and, in the case
of the Company, to execute and deliver this Agreement, the Warrant
Agreement and the Other Transaction Documents and to consummate the
transactions described in each such agreement;
(iv) except as disclosed in the Prospectus, no Subsidiary is
prohibited or restricted, as a matter of Maryland law, directly or
indirectly, from paying dividends to the Company, or from making any
other distribution with respect to such Subsidiary's capital stock or
interests or from paying the Company or any other Subsidiary, any loans
or advances to such Subsidiary from the Company or such other
Subsidiary, or from transferring any such Subsidiary's property or
assets to the Company or to any other Subsidiary;
(v) the Company has full corporate right, power and authority
to enter into and perform this Agreement and to consummate the
transactions contemplated herein; this Agreement has been duly
authorized, executed and delivered by the Company and is a legal, valid
and binding agreement of the Company enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity, and except that
enforceability of the indemnification and contribution provisions set
forth in
27
Section 9 hereof may be limited by the federal or state securities
laws of the United States or public policy underlying such laws;
(vi) the Warrant Agreement and the Other Transaction
Documents have been duly authorized, executed, and delivered by the
Company and are legal, valid and binding agreements of the Company
enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general principles of
equity; when issued and delivered pursuant to the terms of the Warrant
Agreement, the Warrants will constitute legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, and
by general principles of equity; the Warrant Shares have been duly
reserved for issuance upon exercise of the Warrants in accordance with
the terms of the Warrant Agreement;
(d) With respect to any loans purchased from Resource America, Inc. or
its subsidiaries identified on Schedule V ("RAI Subsidiaries"), RAI shall
furnish to the Company and the Underwriters at the Closing Time and on each Date
of Delivery an opinion of [counsel to RAI], addressed to the Company and the
Underwriters and dated the Closing Time and each Date of Delivery and in form
satisfactory to Hunton & ▇▇▇▇▇▇▇▇, stating that:
(i) RAI and the RAI Subsidiaries each has been duly formed or
incorporated, as the case may be, and is validly existing and in good
standing under the laws of its respective jurisdiction of formation or
incorporation with all requisite power and authority to own its
respective properties and to conduct its respective business and to
execute and deliver the Other Transaction Documents to which it is a
party and to consummate the transactions described in each such
agreement;
(ii) RAI and the RAI Subsidiaries are duly qualified or
registered to transact business in each jurisdiction in which they
conduct their respective businesses as now conducted and as proposed to
be conducted;
(iii) RAI and the RAI Subsidiaries each has full legal right,
power and authority to enter into and perform the Other Transaction
Documents to which it is a party and to consummate the transactions
contemplated therein; the Other Transaction Documents have been duly
authorized, executed and delivered by RAI and the RAI Subsidiaries as
applicable, and are legal, valid and binding agreements of RAI and the
RAI Subsidiaries, as applicable, enforceable in accordance with their
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity; and
(iv) assuming due authorization, execution and delivery by
all parties thereto other than RAI and the RAI Subsidiaries, all
documents evidencing and securing the Initial Investments are the
legal, valid and binding agreements of the parties thereto, enforceable
in accordance with their terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditor's rights
28
generally, and general principles of equity; provided, that with
respect to any Initial Investments which were acquired by RAI or a RAI
Subsidiary from third party lenders and not modified, novated or
reexecuted in favor of or for the benefit of RAI or a RAI Subsidiary,
such opinion may be the form of opinion addressing these items
delivered by counsel for and on behalf of the borrower in the Initial
Investment (the "Borrower's Opinion") and accompanied by the opinion
of counsel to RAI that it does not have any reason to believe such
Borrower's Opinion is not true and complete.
(e) All Initial Purchased Loans shall be acquired pursuant to purchase
agreements in form satisfactory to Hunton & ▇▇▇▇▇▇▇▇ and containing
representations and warranties and purchaser's rights acceptable to Hunton &
▇▇▇▇▇▇▇▇.
(f) The Representative shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
letters dated, respectively, as of the date of this Agreement, the Closing Time
and each Date of Delivery, as the case may be, addressed to the Representative
as representative of the Underwriters and in form and substance satisfactory to
the Representative.
(g) The Underwriters shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of Hunton & ▇▇▇▇▇▇▇▇, dated the
Closing Time or such Date of Delivery, addressed to the Representative and in
form and substance satisfactory to the Representative.
(h) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
(i) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued by the Commission, and no suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes, has occurred; and (ii)
the Registration Statement and the Prospectus shall not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(j) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery (i) no material and unfavorable change in
the assets, results of operations, business, or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole shall occur or
become known (whether or not arising in the ordinary course of business) or that
makes it, in the judgment of the Representative, impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, or (ii) no
transaction which is material and unfavorable to the Company shall have been
entered into by the Company or any of the Subsidiaries.
(k) At the Closing Time, the Warrant Agreement and the Other
Transaction Documents shall have been entered into and delivered by all required
parties.
29
(l) At the Closing Time, the Shares shall have been approved for
inclusion in the Nasdaq National Market.
(m) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(n) The Representative shall have received letters from each
[stockholder] of the Company, in form and substance satisfactory to the
Representative, confirming that for a period of 180 days after the Closing Time,
such persons will not directly or indirectly (i) offer, pledge to secure any
obligation due on or within 180 days after the Closing Time, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option for the sale of, or otherwise dispose of or transfer
(other than a disposition or transfer pursuant to which the acquiror or
transferee is subject to the restrictions on disposition and transfer set forth
in this Section 6(n) to the same extent as such stockholder delivering a
letter hereunder), directly or indirectly, any Common Shares (other than by
participating as selling stockholders in a registered offering of Common Shares
offered by the Company with the consent of the Representative) or any securities
convertible into or exercisable or exchangeable for Common Shares or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Shares, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Shares or such other
securities, in cash or otherwise, without the prior written consent of the
Representative, which consent may be withheld at the sole discretion of the
Representative.
(o) The Company will, at the Closing Time and on each Date of
Delivery, deliver to the Underwriters a certificate of two principal executive
officers to the effect that, to each of such officer's knowledge, the
representations and warranties of the Company set forth in this Agreement and
the conditions set forth in paragraphs (f), (g), (h) and (i) have been met and
are true and correct as of such date.
(p) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus, the representations,
warranties and statement of the Company contained herein and in the Warrant
Agreement, and the performance by the Company of its covenants contained herein
and therein, and the fulfillment of any conditions contained herein or therein,
as of the Closing Time or any Date of Delivery as the Underwriters may
reasonably request.
(q) All filings with the Commission required by Rule 424 under the
Securities Act shall have been made within the applicable time period prescribed
for such filing by such Rule.
(r) The Company shall perform such of its obligations under this
Agreement and the Warrant Agreement as are to be performed by the terms hereof
and thereof at or before the Closing Time or the relevant Date of Delivery.
30
The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to the delivery to the Representative on the Date if
Delivery of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the Option
Shares and other matters related to the issuance of the Optional Shares.
7. Termination: The obligations of the several Underwriters hereunder
shall be subject to termination in the absolute discretion of the
Representative, at any time prior to the Closing Time or any Date of Delivery,
(i) if any of the conditions specified in Section 6 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, or (ii) if
there has been since the respective dates as of which information is given in
the Registration Statement, any material adverse change, or any development
involving a prospective material adverse change, in or affecting the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company, whether or not arising in the ordinary course of business, or (iii) if
there has occurred outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic, political or other
conditions the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representative, impracticable to
market or deliver the Shares or enforce contracts for the sale of the Shares, or
(iv) if trading in any securities of the Company has been suspended by the
Commission or by Nasdaq or if trading generally on the New York Stock Exchange
or in the Nasdaq over-the-counter market has been suspended (including automatic
halt in trading pursuant to market-decline triggers other than those in which
solely program trading is temporarily halted), or limitations on prices for
trading (other than limitations on hours or numbers of days of trading) have
been fixed, or maximum ranges for prices for securities have been required, by
such exchange or the NASD or Nasdaq or by order of the Commission or any other
governmental authority, or (v) if there has been any downgrading in the rating
of any of the Company's debt securities or preferred stock by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Securities Act), or (vi) any federal or state statute,
regulation, rule or order of any court or other governmental authority has been
enacted, published, decreed or otherwise promulgated which in the reasonable
opinion of the Representative has a material adverse affect or will have a
material adverse affect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company, or (viii) any action has been
taken by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the reasonable opinion of the Representative
has a material adverse effect on the securities markets in the United States, or
(ix) in the case of any of the events specified in clauses (i) through (viii),
such event, singly or together with any other such events, makes it, in the
judgment of the Representative, impracticable to market or deliver the Shares on
the terms and in the manner contemplated in the Prospectus.
If the Representative elects to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any
31
of the terms of this Agreement, the Company shall not be under any obligation or
liability under this Agreement (except to the extent provided in Sections 5 and
9 hereof) and the Underwriters shall be under no obligation or liability to the
Company under this Agreement (except to the extent provided in Section 9 hereof)
or to one another hereunder.
8. Increase in Underwriters' Commitments: If any Underwriter shall
default at the Closing Time or on a Date of Delivery in its obligation to take
up and pay for the Shares to be purchased by it under this Agreement on such
date, the Representative shall have the right, within 36 hours after such
default, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Shares which such Underwriter shall have agreed but failed to take up and
pay for (the "Defaulted Shares"). Absent the completion of such arrangements
within such 36 hour period, (i) if the total number of Defaulted Shares does not
exceed 10% of the total number of Shares to be purchased on such date, each
non-defaulting Underwriter shall take up and pay for (in addition to the number
of Shares which it is otherwise obligated to purchase on such date pursuant to
this Agreement) the portion of the total number of Shares agreed to be purchased
by the defaulting Underwriter on such date in the proportion that its
underwriting obligations hereunder bears to the underwriting obligations of all
non-defaulting Underwriters; and (ii) if the total number of Defaulted Shares
exceeds 10% of such total, the Representative may terminate this Agreement by
notice to the Company, without liability to any non-defaulting Underwriter.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representative with the approval of the
Company or selected by the Company with the approval of the Representative).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the like effect as
if such substituted Underwriter had originally been named in this Agreement.
9. Indemnity and Contribution by the Company, the Partnership and the
Underwriters:
(a) The Company and the Partnership, jointly and severally agree to
indemnify, defend and hold harmless each Underwriter and any person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any loss, expense, liability,
damage or claim (including the reasonable cost of investigation) which, jointly
or severally, any such Underwriter or controlling person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss, expense,
liability,
32
damage or claim arises out of or is based upon (i) any breach of any
representation, warranty or covenant of the Company or the Partnership contained
herein or (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration Statement
as amended by any post-effective amendment thereof by the Company) or in a
Prospectus (the term Prospectus for the purpose of this Section 9 being deemed
to include any Preliminary Prospectus, the Prospectus and the Prospectus as
amended or supplemented by the Company), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be stated in
either such Registration Statement or Prospectus or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except insofar as any such loss, expense, liability,
damage or claim arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
and in conformity with information furnished in writing by the Underwriters
through the Representative to the Company or the Partnership expressly for use
in such Registration Statement or such Prospectus, provided, however, that the
indemnity agreement contained in this subsection (a) with respect to the
Preliminary Prospectus or the Prospectus shall not inure to the benefit of an
Underwriter (or to the benefit of any person controlling such Underwriter) with
respect to any person asserting any such loss, expense, liability, damage or
claim which is the subject thereof if the Prospectus or any supplement thereto
prepared with the consent of the Representative and furnished to the
Underwriters prior to the Closing Time corrected any such alleged untrue
statement or omission and if such Underwriter failed to send or give a copy of
the Prospectus or supplement thereto to such person at or prior to the written
confirmation of the sale of Shares to such person, unless such failure resulted
from noncompliance by the Company or the Partnership with Section 4(a) of this
Agreement.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company or the
Partnership pursuant to the preceding paragraph, such Underwriter shall promptly
notify the Company and the Partnership in writing of the institution of such
action and the Company and the Partnership shall assume the defense of such
action, including the employment of counsel and payment of expenses, provided,
however, that any failure or delay to so notify the Company or the Partnership
will not relieve the Company or the Partnership of any obligation hereunder,
except to the extent that its ability to defend is actually impaired by such
failure or delay. Such Underwriter or controlling person shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or such controlling
person unless the employment of such counsel shall have been authorized in
writing by the Company and the Partnership in connection with the defense of
such action or the Company and the Partnership shall not have employed counsel
to have charge of the defense of such action within a reasonable time or such
indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Company or the
Partnership and which counsel to the Underwriter believes may present a conflict
for counsel representing the Company or the Partnership and the Underwriter (in
which case the Company and the Partnership shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the Company and the
Partnership and paid as incurred (it being understood, however, that the Company
and the Partnership shall not be liable for the
33
expenses of more than one separate firm of attorneys for the Underwriters or
controlling persons in any one action or series of related actions in the same
jurisdiction representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, neither the
Company nor the Partnership shall be liable for any settlement of any such claim
or action effected without the its written consent.
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Partnership, the Company, the Subsidiaries, their
trustees and directors, the officers that signed the Registration Statement and
any person who controls the Partnership, the Company or any Subsidiary within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any loss, expense, liability, damage or claim (including
the reasonable cost of investigation) which, jointly or severally, the Company,
the Partnership or any such person may incur under the Securities Act, the
Exchange Act or otherwise, insofar as such loss, expense, liability, damage or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by such Underwriter through the Representative to the
Company or the Partnership expressly for use in the Registration Statement (or
in the Registration Statement as amended by any post-effective amendment thereof
by the Company) or in a Prospectus, or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated either in the Registration Statement or
Prospectus or necessary to make such information, in the light of the
circumstances under which made, not misleading. The statements set forth in the
last paragraph on the cover page and under the caption "Underwriting", the
information regarding "Stabilizing" and "Passive Market Making" in the
Preliminary Prospectus and the Prospectus (to the extent such statements relate
to the Underwriters) constitute the only information furnished by or on behalf
of any Underwriter through the Representative to the Company for purposes of
Section 3(o) and this Section 9.
If any action is brought against the Company, the Partnership or any
such person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Company, the Partnership or such person
shall promptly notify the Representative in writing of the institution of such
action and the Representative, on behalf of the Underwriters, shall assume the
defense of such action, including the employment of counsel and payment of
expenses. The Company, the Partnership or such person shall have the right to
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Company, the Partnership or such person
unless the employment of such counsel shall have been authorized in writing by
the Representative in connection with the defense of such action or the
Representative shall not have employed counsel to have charge of the defense of
such action within a reasonable time or such indemnified party or parties shall
have reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional to those
available to the Underwriters (in which case the Representative shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by such Underwriter and paid as incurred (it being understood, however, that the
Underwriters shall not be liable for the expenses of more than one separate firm
of attorneys in any one action or series of related actions in the same
jurisdiction representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
34
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representative.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, expenses, liabilities, damages or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, expenses,
liabilities, damages or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Partnership on the
one hand and the Underwriters on the other hand from the offering of the Shares
or (ii) if (but only if) the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Partnership on the one hand and of the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, expenses, liabilities, damages or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Partnership on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the offering (net
of underwriting discounts and commissions but before deducting expenses)
received by the Company and the Partnership bear to the underwriting discounts
and commissions received by the Underwriters. The relative fault of the Company
and the Partnership on the one hand and of the Underwriters on the other shall
be determined by reference to, among other things, whether the untrue statement
or alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company or the Partnership or by the
Underwriters and the parties', relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any claim or action.
(d) The Company and the Partnership, on the one hand, and the
Underwriters, on the other, agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in subsection (c)(i) and, if applicable (ii), above.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
10. Survival: The indemnity and contribution agreements contained in
Section 9 and the covenants, warranties and representations of the Company, the
Partnership and the Subsidiaries contained in Sections 3, 4 and 5 of this
Agreement shall remain in full force and
35
effect regardless of any investigation made by or on behalf of any Underwriter,
or any person who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, the Partnership, the Subsidiaries, their trustees or directors and
officers or any person who controls the Company, any Subsidiary or the
Partnership within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, and shall survive any termination of this Agreement or the
sale and delivery of the Shares. The Company, the Partnership and each
Underwriter agree promptly to notify the others of the commencement of any
litigation or proceeding against it and, in the case of the Company, against any
of the Company's officers and directors, in connection with the sale and
delivery of the Shares, or in connection with the Registration Statement or
Prospectus.
11. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered to Friedman,
Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Syndicate Department; if to the Company, shall be sufficient in all
respects if delivered to the Company at the offices of the Company at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and, if to the
Partnership, shall be sufficient in all respects if delivered to the Partnership
at the offices of the Partnership at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
12. Governing Law; Consent to Jurisdiction; Headings: THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE [STATE
OF NEW YORK], WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The parties hereto
agree to be subject to, and hereby irrevocably submit to, the nonexclusive
jurisdiction of any United States federal or Virginia state court sitting in
Alexandria, Virginia, in respect of any suit, action or proceeding arising out
of or relating to this Agreement or the transactions contemplated herein, and
irrevocably agree that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such court. Each of the parties
hereto irrevocably waives, to the fullest extent permitted by applicable law,
any objection to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
has been brought in an inconvenient forum. The section headings in this
Agreement have been inserted as a matter of convenience of reference and are not
a part of this Agreement.
13. Parties in Interest: The Agreement herein set forth has been and
is made solely for the benefit of the Underwriters, the Company, the Partnership
and the controlling persons, directors and officers referred to in Sections 9
and 10 hereof, and their respective successors, assigns, executors and
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
14. Counterparts: This Agreement may be signed by the parties in
counterparts which together shall constitute one and the same agreement among
the parties.
36
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this Agreement shall constitute a binding agreement among
the Company, the Partnership and the Underwriters.
Very truly yours,
RESOURCE ASSET INVESTMENT TRUST
__________________________________
By:
Its:
RAIT PARTNERSHIP, L.P.
By: RAIT General, Inc.
Its: General Partner
__________________________________
By:
Its:
37
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ &
CO., INC.
____________________________________
By:
Its:
For themselves and as Representative
of the other Underwriters named on
Schedule I hereto.
38
Schedule I
Underwriter Number of InitialShares to be
Purchased
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
Total X,XXX,XXX
Schedule II
Subsidiaries of the Company
RAIT General, Inc.
RAIT Limited, Inc.
RAIT Partnership, L.P.
Schedule III
Other Transaction Documents
Schedule IV
Persons For Whom Shares Have Been Reserved
Schedule V
RAI Subsidiaries