MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made and entered into as of March 8, 2005
by and among RESOURCE CAPITAL CORP., a Maryland corporation (the "Company"),
RESOURCE CAPITAL MANAGER, INC., a Delaware corporation (together with its
permitted assignees, the "Manager") and Resource America, Inc., a Delaware
Corporation ("Resource America").
WHEREAS, the Company is a newly organized corporation that has elected
to be taxed as a real estate investment trust for federal income tax purposes;
WHEREAS, the Company desires to retain the Manager to provide
investment advisory services to the Company on the terms and conditions
hereinafter set forth, and the Manager wishes to be retained to provide such
services; and
WHEREAS, the Manager is an indirect wholly-owned subsidiary of Resource
America.
NOW THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. The following terms have the meanings assigned
them:
(a) "Affiliate" means a person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the person specified.
(b) "Agreement" means this Management Agreement, as amended from
time to time.
(c) "Base Management Fee" means the base management fee, calculated
and paid monthly in arrears, in an amount equal to (i) 1/12 of Equity multiplied
by (ii) 1.50%.
(d) "Board of Directors" means the Board of Directors of the
Company.
(e) "Change of Control" means the occurrence of any of the
following:
(i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the assets of the
Manager, taken as a whole, to any Person other than an indirect
wholly-owned subsidiary of Resource America; or
(ii) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act, or any successor provision), including any group acting for
the purpose of acquiring, holding or disposing of securities
(within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in
a single transaction or in a related series of transactions, by way
of merger, consolidation or other business combination or purchase
of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision) of 50% or more of the
total voting power of the voting capital interests of the Manager.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Common Share" means a share of capital stock of the Company
now or hereafter authorized as common voting stock of the Company.
(h) "Company Account" has the meaning set forth in Section 5
hereof.
(i) "Company Indemnified Party" has the meaning set forth in
Section 11(b) hereof.
(j) "Effective Termination Date" has the meaning set forth in
Section 13(a) hereof.
(k) "Equity" means, for purposes of calculating the Base Management
Fee, for any month the sum of the net proceeds from any issuance of the
Company's Common Shares, after deducting any underwriting discounts and
commissions and other expenses and costs relating to the issuance, plus (or
minus) the Company's retained earnings (or deficit) at the end of such month
(without taking into account any non-cash equity compensation expense incurred
in current or prior periods), which amount shall be reduced by any amount that
the Company pays for repurchases of Common Shares; provided, that the foregoing
calculation of Equity shall be adjusted to exclude one-time events pursuant to
changes in GAAP, as well as non-cash charges after discussion between the
Manager and the Independent Directors and approval by a majority of the
Independent Directors in the case of non-cash charges.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
(n) "GAAP" means generally accepted accounting principles, as
applied in the United States.
(o) "Governing Instruments" means, with regard to any entity, the
articles of incorporation and bylaws in the case of a corporation, certificate
of limited partnership (if applicable) and the partnership agreement in the case
of a general or limited partnership, the articles of formation and the operating
agreement in the case of a limited liability company, the trust instrument in
the case of a trust, or similar governing documents, in each case as amended
from time to time.
(p) "Guidelines" shall have the meaning set forth in Section
2(b)(i) hereof.
(q) "Incentive Compensation" means an incentive management fee
calculated and payable each fiscal quarter in an amount, not less than zero,
equal to the product of: (i) twenty-five percent (25%) of the dollar amount by
which (A) the Company's Net Income, (before Incentive Compensation but after the
Base Management Fee) for such quarter per Common Share (based on the weighted
average number of Common Shares outstanding for such quarter) exceeds (B) an
amount equal to (1) the weighted average of the price per share of the Common
Shares in the initial offering by the Company and the prices per share of the
Common Shares in any subsequent offerings by the Company, in each case at the
time of issuance thereof, multiplied by (2) the greater of (a) 2.00% and (b)
0.50% plus one-fourth of the Ten Year Treasury Rate for such quarter, multiplied
by (ii) the weighted average number of Common Shares outstanding during such
quarter; provided, that the foregoing calculation of Incentive Compensation
shall be adjusted to exclude one-time events pursuant to changes in GAAP, as
well as non-cash charges after discussion between the Manager and the
Independent Directors and approval by a majority of the Independent Directors in
the case of non-cash charges.
(r) "Indemnified Party" has the meaning set forth in Section 11(a)
hereof.
(s) "Independent Directors" means the members of the Board of
Directors who are not, and have not been within the last two years, officers or
employees of the Manager or any Person directly or indirectly controlling or
controlled by, or otherwise an Affiliate of, the Manager and who are otherwise
"independent" in accordance with the Company's Governing Instruments and, if
applicable, the rules of any national securities exchange on which the Common
Shares are listed.
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(t) "Initial Term" has the meaning set forth in Section 13(a)
hereof.
(u) "Investment Company Act" means the Investment Company Act of
1940, as amended.
(v) "Investments" means the investments of the Company.
(w) "Net Income" shall be determined by calculating the net income
available to owners of Common Shares before non-cash equity compensation
expense, in accordance with GAAP.
(x) "Notice of Proposal to Negotiate" has the meaning set forth in
Section 13(a) hereto.
(y) "Person" means any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
(z) "Purchase and Placement Agent Agreement" means the purchase and
placement agent agreement, dated as of March 2, 2005 between the Company, the
Manager, Resource America and Credit Suisse First Boston LLC, as initial
purchaser/placement agent.
(aa) "Registration Rights Agreement" means the registration rights
agreement, dated as of March 8, 2005 between the Company and Credit Suisse First
Boston LLC, as the Initial Purchaser (as defined therein), and for the benefit
of the Holders (as defined therein).
(bb) "REIT" means a "real estate investment trust" as defined under
the Code.
(cc) "Renewal Term" has the meaning as set forth in Section 13(a)
hereto.
(dd) "Subsidiary" means any subsidiary of the Company; any
partnership, the general partner of which is the Company or any subsidiary of
the Company; and any limited liability company, the managing member of which is
the Company or any subsidiary of the Company.
(ee) "Ten Year Treasury Rate" means the average of weekly average
yield to maturity for U.S. Treasury securities (adjusted to a constant maturity
of ten (10) years) as published weekly by the Federal Reserve Board in
publication H.15, or any successor publication, during a fiscal quarter, or if
such rate is not published by the Federal Reserve Board, any Federal Reserve
Bank or agency or department of the federal government selected by the Company.
If the Company determines in good faith that the Ten-Year U.S. Treasury Rate
cannot be calculated as provided above, then the rate shall be the arithmetic
average of the per annum average yields to maturities, based upon closing asked
prices on each business day during a quarter, for each actively-traded
marketable U.S. Treasury fixed interest rate security with a final maturity date
not less than eight no more than twelve years from the date of the closing asked
prices as chosen and quoted for each business day in each such quarter in New
York City by at least three recognized dealers in U.S. government securities
selected by the Company.
(ff) "Termination Fee" has the meaning set forth in Section 13(b)
hereof.
(gg) "Termination Notice" has the meaning set forth in Section
13(a) hereof.
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(hh) "Treasury Regulations" means the regulations promulgated under
the Code from time to time, as amended.
SECTION 2. APPOINTMENT AND DUTIES OF THE MANAGER.
(a) The Company hereby appoints the Manager to manage the assets of
the Company subject to the further terms and conditions set forth in this
Agreement and the Manager hereby agrees to use its commercially reasonable
efforts to perform each of the duties set forth herein. The appointment of the
Manager shall be exclusive to the Manager except to the extent that the Manager
otherwise agrees, in its sole and absolute discretion, and except to the extent
that the Manager elects, in accordance with the terms of this Agreement, to
cause the duties of the Manager hereunder to be provided by third parties.
(b) The Manager, in its capacity as manager of the assets and the
day-to-day operations of the Company, at all times will be subject to the
supervision of the Company's Board of Directors and will have only such
functions and authority as the Company may delegate to it including, without
limitation, the functions and authority identified herein and delegated to the
Manager hereby. The Manager will be responsible for the day-to-day operations of
the Company and will perform (or cause to be performed) such services and
activities relating to the assets and operations of the Company as may be
appropriate, including, without limitation:
(i) serving as the Company's consultant with respect to the
periodic review of the investment criteria and parameters for
Investments, borrowings and operations, any modifications to which
shall be approved by a majority of the Independent Directors (such
policy guidelines as initially approved, as the same may be
modified with such approval, the "Guidelines") and other policies
for approval by the Board of Directors;
(ii) investigation, analysis and selection of investment
opportunities;
(iii) with respect to any prospective investment by the
Company and any sale, exchange or other disposition of any
Investment by the Company, conducting negotiations on behalf of the
Company with sellers and purchasers and their respective agents,
representatives and investment bankers;
(iv) engaging and supervising, on behalf of the Company and at
the Company's expense, independent contractors which provide
investment banking, mortgage brokerage, securities brokerage and
other financial services and such other services as may be required
relating to the Investments;
(v) coordinating and managing operations of any joint venture
or co-investment interests held by the Company and conducting all
matters with the joint venture or co-investment partners;
(vi) providing executive and administrative personnel, office
space and office services required in rendering services to the
Company;
(vii) administering the day-to-day operations of the Company
and performing and supervising the performance of such other
administrative functions necessary in the management of the Company
as may be agreed upon by the Manager and the Board of Directors,
including, without limitation, the collection of revenues and the
payment of the Company's debts and obligations and maintenance of
appropriate computer services to perform such administrative
functions;
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(viii) communicating on behalf of the Company with the holders
of any equity or debt securities of the Company as required to
satisfy the reporting and other requirements of any governmental
bodies or agencies or trading markets and to maintain effective
relations with such holders;
(ix) counseling the Company in connection with policy
decisions to be made by the Board of Directors;
(x) evaluating and recommending to the Board of Directors
hedging strategies and engaging in hedging activities on behalf of
the Company, consistent with such strategies, as so modified from
time to time, with the Company's status as a REIT, and with the
Guidelines;
(xi) counseling the Company regarding the maintenance of its
status as a REIT and monitoring compliance with the various REIT
qualification tests and other rules set out in the Code and
Treasury Regulations thereunder;
(xii) counseling the Company regarding the maintenance of its
exclusion from status as an investment company under the Investment
Company Act and monitoring compliance with the requirements for
maintaining such exclusion;
(xiii) assisting the Company in developing criteria for asset
purchase commitments that are specifically tailored to the
Company's investment objectives and making available to the Company
its knowledge and experience with respect to mortgage loans, real
estate, real estate securities, other real estate-related assets
and non-real estate related assets;
(xiv) furnishing reports and statistical and economic research
to the Company regarding the Company's activities and services
performed for the Company by the Manager or the Subsidiaries;
(xv) monitoring the operating performance of the Investments
and providing periodic reports with respect thereto to the Board of
Directors, including comparative information with respect to such
operating performance and budgeted or projected operating results;
(xvi) investing and re-investing any moneys and securities of
the Company (including investing in short-term Investments pending
investment in other Investments, payment of fees, costs and
expenses, or payments of dividends or distributions to stockholders
and partners of the Company) and advising the Company as to its
capital structure and capital raising;
(xvii) causing the Company to retain qualified accountants and
legal counsel, as applicable, to assist in developing appropriate
accounting procedures, compliance procedures and testing systems
with respect to financial reporting obligations and compliance with
the provisions of the Code applicable to REITs and non-taxable REIT
subsidiaries and to conduct quarterly compliance reviews with
respect thereto;
(xviii) causing the Company to qualify to do business in all
applicable jurisdictions and to obtain and maintain all appropriate
licenses;
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(xix) assisting the Company in complying with all regulatory
requirements applicable to the Company in respect of its business
activities, including preparing or causing to be prepared all
financial statements required under applicable regulations and
contractual undertakings and all reports and documents, if any,
required under the Exchange Act;
(xx) taking all necessary actions to enable the Company and
its Subsidiaries to make required tax filings and reports,
including soliciting stockholders for required information to the
extent provided by the provisions of the Code and Treasury
Regulations applicable to REITs;
(xxi) handling and resolving all claims, disputes or
controversies (including all litigation, arbitration, settlement or
other proceedings or negotiations) in which the Company may be
involved or to which the Company may be subject arising out of the
Company's day-to-day operations, subject to such limitations or
parameters as may be imposed from time to time by the Board of
Directors;
(xxii) using commercially reasonable efforts to cause expenses
incurred by or on behalf of the Company to be commercially
reasonable or commercially customary and within any budgeted
parameters or expense guidelines set by the Board of Directors from
time to time;
(xxiii) advising the Company with respect to obtaining
appropriate warehouse or other financings for its assets;
(xxiv) advising the Company with respect to and structuring
long-term financing vehicles for the Company's portfolio of assets,
and offering and selling securities publicly or privately in
connection with any such structured financing;
(xxv) performing such other services as may be required from
time to time for management and other activities relating to the
assets of the Company as the Board of Directors shall reasonably
request or the Manager shall deem appropriate under the particular
circumstances; and
(xxvi) using commercially reasonable efforts to cause the
Company to comply with all applicable laws.
Without limiting the foregoing, the Manager will perform portfolio
management services (the "Portfolio Management Services") on behalf of the
Company with respect to the Investments. Such services will include, but not be
limited to, consulting with the Company on the purchase and sale of, and other
investment opportunities in connection with, the Company's portfolio of assets;
the collection of information and the submission of reports pertaining to the
Company's assets, interest rates and general economic conditions; periodic
review and evaluation of the performance of the Company's portfolio of assets;
acting as liaison between the Company and banking, mortgage banking, investment
banking and other parties with respect to the purchase, financing and
disposition of assets; and other customary functions related to portfolio
management. Additionally, the Manager will perform monitoring services (the
"Monitoring Services") on behalf of the Company with respect to any loan
servicing activities provided by third parties. Such Monitoring Services will
include, to the extent applicable, negotiating servicing agreements; acting as a
liaison between the servicers of the assets and the Company; review of
servicers' delinquency, foreclosure and other reports on assets; supervising
claims filed under any insurance policies; and enforcing the obligation of any
servicer to repurchase assets.
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(c) The Manager may enter into agreements with other parties,
including its Affiliates, for the purpose of engaging one or more parties for
and on behalf, and at the sole cost and expense, of the Company to provide
property management, asset management, leasing, development and/or other
services to the Company (including, without limitation, Portfolio Management
Services and Monitoring Services) pursuant to agreement(s) with terms which are
then customary for agreements regarding the provision of services to companies
that have assets similar in type, quality and value to the assets of the
Company; provided, that (i) any such agreements entered into with Affiliates of
the Manager shall be (A) on terms no more favorable to such affiliate than would
be obtained from a third party on an arm's-length basis and (B) to the extent
the same do not fall within the provisions of the Guidelines, approved by a
majority of the Independent Directors, (ii) with respect to Portfolio Management
Services, (A) any such agreements shall be subject to the Company's prior
written approval (and approved by a majority of the Independent Directors) and
(B) the Manager shall remain liable for the performance of such Portfolio
Management Services, and (iii) with respect to Monitoring Services, any such
agreements shall be subject to the Company's prior written approval (and
approved by a majority of the Independent Directors).
(d) The Manager may retain, for and on behalf, and at the sole cost
and expense, of the Company, such services of accountants, legal counsel,
appraisers, insurers, brokers, transfer agents, registrars, developers,
investment banks, financial advisors, banks and other lenders and others as the
Manager deems necessary or advisable in connection with the management and
operations of the Company. Notwithstanding anything contained herein to the
contrary, the Manager shall have the right to cause any such services to be
rendered by its employees or Affiliates. The Company shall pay or reimburse the
Manager or its Affiliates performing such services for the cost thereof;
provided, that such costs and reimbursements are no greater than those which
would be payable to outside professionals or consultants engaged to perform such
services pursuant to agreements negotiated on an arm's-length basis.
(e) As frequently as the Manager may deem necessary or advisable,
or at the direction of the Board of Directors, the Manager shall, at the sole
cost and expense of the Company, prepare, or cause to be prepared, with respect
to any Investment, reports and other information with respect to such Investment
as may be reasonably requested by the Company.
(f) The Manager shall prepare, or cause to be prepared, at the sole
cost and expense of the Company, all reports, financial or otherwise, with
respect to the Company reasonably required by the Board of Directors in order
for the Company to comply with its Governing Instruments, or any other materials
required to be filed with any governmental body or agency, and shall prepare, or
cause to be prepared, all materials and data necessary to complete such reports
and other materials including, without limitation, an annual audit of the
Company's books of account by a nationally recognized independent accounting
firm.
(g) The Manager shall prepare, at the sole cost and expense of the
Company, regular reports for the Board of Directors to enable the Board of
Directors to review the Company's acquisitions, portfolio composition and
characteristics, credit quality, performance and compliance with the Guidelines
and policies approved by the Board of Directors.
(h) Notwithstanding anything contained in this Agreement to the
contrary, except to the extent that the payment of additional moneys is proven
by the Company to have been required as a direct result of the Manager's acts or
omissions which result in the right of the Company to terminate this Agreement
pursuant to Section 15 of this Agreement, the Manager shall not be required to
expend money ("Excess Funds") in connection with any expenses that are required
to be paid for or reimbursed by the Company pursuant to Section 9 in excess of
that contained in any applicable Company Account (as herein defined) or
otherwise made available by the Company to be expended by the Manager hereunder.
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Failure of the Manager to expend Excess Funds out-of-pocket shall not give rise
or be a contributing factor to the right of the Company under Section 13(a) of
this Agreement to terminate this Agreement due to the Manager's unsatisfactory
performance.
(i) In performing its duties under this Section 2, the Manager
shall be entitled to rely reasonably on qualified experts and professionals
(including, without limitation, accountants, legal counsel and other
professional service providers) hired by the Manager at the Company's sole cost
and expense.
SECTION 3. DEVOTION OF TIME; ADDITIONAL ACTIVITIES OF THE MANAGER.
(a) The Manager will provide the Company with a management team,
including a Chief Executive Officer, President and Chief Financial Officer,
along with appropriate support personnel, to provide the management services to
be provided by the Manager to the Company hereunder, the members of which team
shall devote such of their time to the management of the Company as may be
reasonably necessary and appropriate, commensurate with the level of activity of
the Company from time to time. Prior to the effective date of any registration
statement registering a class or series of the Company's securities under the
Securities Act of 1933, as amended, the Manager shall provide the Company with a
Chief Financial Officer who shall be exclusively dedicated to the operations of
the Company.
(b) The Manager agrees to offer the Company the right to
participate in all investment opportunities that the Manager determines are
appropriate for the Company in view of its investment objectives, policies and
strategies, and other relevant factors, subject to the exception that, in
accordance with the Manager's Conflict of Interests Policy (attached hereto as
Exhibit A and as may be amended from time to time in the sole discretion of the
Manager), the Company might not participate in each such opportunity but will on
an overall basis equitably participate with the Manager's other clients in all
such opportunities. Except as provided in the penultimate sentence of this
Section 3(b), nothing in this Agreement shall (i) prevent the Manager or any of
its Affiliates, officers, directors or employees, from engaging in other
businesses or from rendering services of any kind to any other Person,
including, without limitation, investing in, or rendering advisory services to
others investing in, any type of Conduit CMBS or other mortgage loans
(including, without limitation, investments that meet the principal investment
objectives of the Company), whether or not the investment objectives or policies
of any such other Person or entity are similar to those of the Company or (ii)
in any way bind or restrict the Manager or any of its Affiliates, officers,
directors or employees from buying, selling or trading any securities or
commodities for their own accounts or for the account of others for whom the
Manager or any of its Affiliates, officers, directors or employees may be
acting. While information and recommendations supplied to the Company shall, in
the Manager's reasonable and good faith judgment, be appropriate under the
circumstances and in light of the investment objectives and policies of the
Company, they may be different from the information and recommendations supplied
by the Manager or any Affiliate of the Manager to other investment companies,
funds and advisory accounts. The Company shall be entitled to equitable
treatment under the circumstances in receiving information, recommendations and
any other services, but the Company recognizes that it is not entitled to
receive preferential treatment as compared with the treatment given by the
Manager or any Affiliate of the Manager to any investment company, fund or
advisory account other than any fund or advisory account which contains only
funds invested by the Manager, its Affiliates (and not any funds of any of their
clients or customers) or their officers and directors. Notwithstanding anything
to the contrary in this Section 3(b), the Manager hereby agrees that, during the
term of this Agreement set forth in Section 13 hereof, neither the Manager nor
any entity controlled by the Manager shall raise, sponsor or advise any new REIT
that invests primarily in domestic mortgage backed securities in the United
States. The Company shall have the benefit of the Manager's best judgment and
effort in rendering services hereunder and, in furtherance of the foregoing, the
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Manager shall not undertake activities that, in its good faith judgment, will
adversely affect the performance of its obligations under this Agreement.
(c) Directors, officers, employees and agents of the Manager or
Affiliates of the Manager may serve as directors, officers, employees, agents,
nominees or signatories for the Company or any Subsidiary, to the extent
permitted by their Governing Instruments, as from time to time amended, or by
any resolutions duly adopted by the Board of Directors pursuant to the Company's
Governing Instruments. When executing documents or otherwise acting in such
capacities for the Company, such Persons shall use their respective titles in
the Company.
(d) The Manager is authorized, for and on behalf, and at the sole
cost and expense of the Company, to employ such securities dealers for the
purchase and sale of investment assets of the Company as may, in the good faith
judgment of the Manager, be necessary to obtain the best commercially available
net results for the Company taking into account such factors as the policies of
the Company, price, dealer spread, the size, type, timing and difficulty of the
transaction involved, the firm's general execution and operational facilities
and the firm's risk in positioning the securities involved. Consistent with this
policy, the Manager is authorized to direct the execution of the Company's
portfolio transactions to dealers and brokers furnishing statistical information
or research deemed by the Manager to be useful or valuable to the performance of
its investment advisory functions for the Company.
(e) The Company (including the Board of Directors) agrees to take
all actions reasonably required to permit and enable the Manager to carry out
its duties and obligations under this Agreement, including, without limitation,
all steps reasonably necessary to allow the Manager to file any registration
statement on behalf of the Company in a timely manner or to deliver any
financial statements or other reports with respect to the Company. If the
Manager is not able to provide a service, or in the reasonable judgment of the
Manager it is not prudent to provide a service, without the approval of the
Board of Directors or the Independent Directors, as applicable, then the Manager
shall be excused from providing such service (and shall not be in breach of this
Agreement) until the applicable approval has been obtained.
SECTION 4. AGENCY. The Manager shall act as agent of the Company in
making, acquiring, financing and disposing of Investments, disbursing and
collecting the Company's funds, paying the debts and fulfilling the obligations
of the Company, supervising the performance of professionals engaged by or on
behalf of the Company and handling, prosecuting and settling any claims of or
against the Company, the Board of Directors, holders of the Company's securities
or the Company's representatives or properties.
SECTION 5. BANK ACCOUNTS. At the direction of the Board of Directors,
the Manager may establish and maintain one or more bank accounts in the name of
the Company or any Subsidiary (any such account, a "Company Account"), and may
collect and deposit funds into any such Company Account or Company Accounts, and
disburse funds from any such Company Account or Company Accounts, under such
terms and conditions as the Board of Directors may approve; and the Manager
shall from time to time render appropriate accountings of such collections and
payments to the Board of Directors and, upon request, to the auditors of the
Company or any Subsidiary.
SECTION 6. RECORDS; CONFIDENTIALITY. The Manager shall maintain
appropriate books of accounts and records relating to services performed under
this Agreement, and such books of account and records shall be accessible for
inspection by representatives of the Company or any Subsidiary at any time
during normal business hours upon one (1) business day's advance written notice.
The Manager shall keep confidential any and all information obtained in
connection with the services rendered under this Agreement and shall not
disclose any such information (or use the same except in furtherance of its
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duties under this Agreement) to nonaffiliated third parties except (i) with the
prior written consent of the Board of Directors, (ii) to legal counsel,
accountants and other professional advisors; (iii) to appraisers, financing
sources and others in the ordinary course of the Company's business; (iv) to
governmental officials having jurisdiction over the Company; (v) in connection
with any governmental or regulatory filings of the Company or disclosure or
presentations to Company investors; or (vi) as required by law or legal process
to which the Manager or any Person to whom disclosure is permitted hereunder is
a party. The foregoing shall not apply to information which has previously
become publicly available through the actions of a Person other than the Manager
not resulting from the Manager's violation of this Section 6. The provisions of
this Section 6 shall survive the expiration or earlier termination of this
Agreement for a period of one year.
SECTION 7. OBLIGATIONS OF MANAGER; RESTRICTIONS.
(a) The Manager shall require each seller or transferor of
investment assets to the Company to make such representations and warranties
regarding such assets as may, in the reasonable judgment of the Manager, be
necessary and appropriate or as advised by the Board of Directors and consistent
with standard industry practice. In addition, the Manager shall take such other
action as it deems necessary or appropriate or as advised by the Board of
Directors and consistent with standard industry practice with regard to the
protection of the Investments.
(b) The Manager shall refrain from any action that, in its sole
judgment made in good faith, (i) is not in compliance with the Guidelines, (ii)
would adversely affect the status of the Company as a REIT under the Code or the
Company's status as an entity excluded from investment company status under the
Investment Company Act or (iii) would violate any law, rule or regulation of any
governmental body or agency having jurisdiction over the Company or any
Subsidiary or that would otherwise not be permitted by the Company's Governing
Instruments. If the Manager is ordered to take any such action by the Board of
Directors, the Manager shall promptly notify the Board of Directors of the
Manager's judgment that such action would adversely affect such status or
violate any such law, rule or regulation or the Governing Instruments.
Notwithstanding the foregoing, the Manager, its directors, officers,
stockholders and employees shall not be liable to the Company or any Subsidiary,
the Board of Directors, or the Company's or any Subsidiary's stockholders or
partners, for any act or omission by the Manager, its directors, officers,
stockholders or employees except as provided in Section 11 of this Agreement.
(c) The Company shall not invest in joint ventures with the Manager
or any affiliate thereof, unless (i) such Investment is made in accordance with
the Guidelines and (ii) such Investment is approved in advance by a majority of
the Independent Directors.
(d) The Manager shall not (i) consummate any transaction which
would involve the acquisition by the Company of an asset in which the Manager or
any Affiliate thereof has an ownership interest or the sale by the Company of an
asset to the Manager or any Affiliate thereof, or (ii) under circumstances where
the Manager is subject to an actual or potential conflict of interest, in the
reasonable judgment of the Manager or the Board of Directors, because it manages
both the Company and another Person (not an Affiliate of the Company) with which
the Company has a contractual relationship, take any action constituting the
granting to such Person of a waiver, forbearance or other relief, or the
enforcement against such Person of remedies, under or with respect to the
applicable contract, unless such transaction or action, as the case may be and
in each case, is approved by a majority of the Independent Directors.
(e) The Board of Directors periodically reviews the Guidelines and
the Company's portfolio of Investments but will not review each proposed
investment, except as otherwise provided herein. If a majority of the
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Independent Directors determines in the periodic review of transactions by the
Independent Directors, that a particular transaction does not comply with the
Guidelines (including as a result of violation of the provisions of Section 7(d)
above), then a majority of the Independent Directors will consider what
corrective action, if any, can be taken. The Manager shall be permitted to rely
upon the direction of the Secretary of the Company to evidence the approval of
the Board of Directors or the Independent Directors with respect to a proposed
investment.
(f) The Manager shall at all times during the term of this
Agreement (including the Initial Term and any Renewal Term) maintain a tangible
net worth equal to or greater than $1,000,000. The Manager shall at all times
during the term of this Agreement maintain "errors and omissions" insurance
coverage and other insurance coverage which is customarily carried by property,
asset and investment managers performing functions similar to those of the
Manager under this Agreement with respect to assets similar to the assets of the
Company, in an amount which is comparable to that customarily maintained by
other managers or servicers of similar assets.
SECTION 8. COMPENSATION.
(a) During the Initial Term of this Agreement, as the same may be
extended from time to time, the Company shall pay the Manager the Base
Management Fee monthly in arrears commencing with the month in which this
Agreement was executed (with such initial payment pro-rated based on the number
of days during such month that this Agreement was in effect).
(b) The Manager shall compute each installment of the Base
Management Fee within fifteen (15) business days after the end of the calendar
month with respect to which such installment is payable. A copy of the
computations made by the Manager to calculate such installment shall thereafter,
for informational purposes only and subject in any event to Section 13(a) of
this Agreement, promptly be delivered to the Board of Directors and, upon such
delivery, payment of such installment of the Base Management Fee shown therein
shall be due and payable no later than the date which is twenty (20) business
days after the end of the calendar month with respect to which such installment
is payable.
(c) The Base Management Fee is subject to adjustment pursuant to
and in accordance with the provisions of Sections 8(j) and 13(a) of this
Agreement.
(d) In addition to the Base Management Fee otherwise payable
hereunder, the Company shall pay the Manager quarterly Incentive Compensation.
The Incentive Compensation calculation and payment shall be made for each fiscal
quarter in arrears.
(e) Subject to Section 8(j) below, the Manager shall compute each
installment of the Incentive Compensation within 30 days after the end of each
fiscal quarter with respect to which such installment is payable. A copy of the
computations made by the Manager to calculate such installment shall thereafter,
for informational purposes only and subject in any event to Section 13(a) of
this Agreement, promptly be delivered to the Board of Directors and, upon such
delivery, payment of such installment of the Incentive Compensation shown
therein shall be due and payable no later than the date which is five (5)
business days after the date of delivery to the Board of Directors of such
computations.
(f) Twenty-five percent (25%) of the Incentive Compensation shall
(subject to the remaining provisions of this Section 8(f) and the provisions of
Sections 8(g), 8(h) and 8(i)) be payable to the Manager in Common Shares, and
the remainder thereof shall be paid in cash; provided, the Manager may (subject
to the remaining provisions of this Section 8(f) and the provisions of Sections
8(g), 8(h) and 8(i)) elect, by so indicating in the installment calculation
delivered to the Board of Directors, to receive more than twenty-five percent
(25%) of the Incentive Compensation in the form of Common Shares; provided,
11
however, the Manager may not receive payment of any portion of the Incentive
Compensation in the form of Common Shares, either automatically or by election,
if such payment would result in the Manager directly or indirectly through one
or more subsidiaries owning in the aggregate more than 9.8% of the outstanding
Common Shares. For purposes of this computation, Common Shares include shares
issued and outstanding (whether vested or unvested or forfeitable or
non-forfeitable) and shares to be issued upon exercise of outstanding stock
options (whether such options are exercisable or nonexercisable). The Manager's
receipt of Common Shares in accordance herewith shall be subject to all
applicable securities exchange rules and securities laws (including, without
limitation, prohibitions on xxxxxxx xxxxxxx). All Common Shares paid to the
Manager as Incentive Compensation will be fully vested upon issuance, provided
that the Manager hereby agrees not to sell such shares prior to the date that is
one year after the date such shares are due and payable. Notwithstanding such
restriction and subject to compliance with all applicable securities laws
(including, without limitation, prohibitions on xxxxxxx xxxxxxx), the Manager
shall have the right to allocate such shares in its sole and absolute discretion
to its officers, employees and other individuals who provide services to it at
any time. In addition, the foregoing restriction regarding the sale of such
shares shall terminate upon termination of this Agreement.
(g) Common Shares payable as Incentive Compensation shall be valued
as follows:
(i) if such shares are traded on a securities exchange, the
value shall be deemed to be the average of the closing prices of
the shares on such exchange over the thirty (30) day period ending
three (3) days prior to the issuance of such shares;
(ii) if such shares are actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sales
price as applicable over the thirty (30) day period ending three
(3) days prior to the issuance of such shares; and
(iii) if there is no active public market for such shares, the
value shall be the fair market value thereof, as reasonably
determined in good faith by the Board of Directors of the Company.
(h) If at any time the Manager shall, in connection with a
determination of fair market value made by the Board of Directors, (i) dispute
such determination in good faith by more than five percent (5%), and (ii) such
dispute cannot be resolved between the Independent Directors and the Manager
within ten (10) business days after the Manager provides written notice to the
Company of such dispute (the "Valuation Notice"), then the matter shall be
resolved by an independent appraiser of recognized standing selected jointly by
the Independent Directors and the Manager within not more than twenty (20) days
after the Valuation Notice. In the event the Independent Directors and the
Manager cannot agree with respect to such selection within the aforesaid twenty
(20) day time-frame, the Independent Directors shall select one such independent
appraiser and the Manager shall select one independent appraiser within five (5)
business days after the expiration of the twenty (20) day period, with one
additional such appraiser (the "Last Appraiser") to be selected by the
appraisers so designated within five (5) business days after their selection.
Any valuation decision made by the appraisers shall be deemed final and binding
upon the Board of Directors and the Manager and shall be delivered to the
Manager and the Company within not more than fifteen (15) days after the
selection of the Last Appraiser. The expenses of the appraisal shall be paid by
the party with the estimate which deviated the furthest from the final valuation
decision made by the appraisers.
(i) The Company agrees to register the issuance and resale of the
stock portion of the Incentive Compensation in accordance with the provisions of
Exhibit B.
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(j) In the event that a registration statement is not filed with
the United States Securities and Exchange Commission on or before December 3,
2005, the day that is 270 days after the date of the Registration Rights
Agreement, pursuant to Section 2(a) of the Registration Rights Agreement, the
Manager shall forfeit the Base Management Fee in respect of the period from and
after that date until the initial registration statement is filed with the
Securities and Exchange Commission. In addition, all payments of Incentive
Compensation in respect of such period shall be deferred until such initial
registration statement is filed.
(k) In addition to the Base Management Fee and Incentive
Compensation, the Manager shall be granted (i) options to purchase 651,666
Common Shares, with an exercise price equal to $15.00 per share and (ii) 345,000
restricted Common Shares, in each case pursuant to the terms and conditions set
forth in the Company's 2005 Stock Incentive Plan. Such awards shall be subject
to upward adjustment on a pro rata basis if Credit Suisse First Boston LLC, as
the initial purchaser/placement agent, elects to exercise its over-allotment
option pursuant to Section 1(b) of the Purchase and Placement Agent Agreement.
Subject to compliance with all applicable securities laws (including, without
limitation, prohibitions on xxxxxxx xxxxxxx), the Manager shall have the right
to allocate the awards granted to it pursuant to this Section 8(k) at its sole
and absolute discretion to its officers, employees and other individuals who
provide services to it at any time. To the extent that such awards (or the
Common Shares relating thereto) are not eligible to be registered for sale
pursuant to a Registration Statement on Form S-8 relating to the 2005 Stock
Incentive Plan, at the request of the Manager the Company agrees to file with
the Securities and Exchange Commission as soon as reasonably practicable a shelf
registration statement providing for the sale of such awards (or the Common
Shares relating thereto) and to use its commercially reasonably efforts to cause
such registration statement to be declared effective as promptly as practicable
following such filing.
SECTION 9. EXPENSES OF THE COMPANY. The Company shall pay all of its
expenses and shall reimburse the Manager and its Affiliates for documented
expenses of the Manager and its Affiliates incurred on its behalf (collectively,
the "Expenses"). Expenses include all costs and expenses which are expressly
designated elsewhere in this Agreement as the Company's, together with the
following:
(a) expenses in connection with the issuance and transaction costs
incident to the acquisition, disposition and financing of Investments;
(b) costs of legal, tax, accounting, consulting, auditing,
administrative and other similar services rendered for the Company by providers
retained by the Manager or, if provided by the employees of the Manager or its
Affiliates, in amounts which are no greater than those which would be payable to
outside professionals or consultants engaged to perform such services pursuant
to agreements negotiated on an arm's-length basis;
(c) the compensation and expenses of the Company's directors and
the cost of liability insurance to indemnify the Company's directors and
officers;
(d) costs associated with the establishment and maintenance of any
credit facilities and other indebtedness of the Company (including commitment
fees, accounting fees, legal fees, closing and other costs) or any securities
offerings of the Company;
(e) expenses connected with communications to holders of securities
of the Company or its Subsidiaries and other bookkeeping and clerical work
necessary in maintaining relations with holders of such securities and in
complying with the continuous reporting and other requirements of governmental
bodies or agencies, including, without limitation, all costs of preparing and
filing required reports with the Securities and Exchange Commission, the costs
13
(including transfer agent and registrar costs) in connection with the listing
and/or trading of the Company's securities on any exchange or inter-dealer
quotation system, the fees to any such exchange or inter-dealer quotation system
in connection with its listing, costs of complying with the rules, regulations
or policies of such exchange or inter-dealer quotation system, costs of
preparing, printing and mailing the Company's annual report to its stockholders
and proxy materials with respect to any meeting of the stockholders of the
Company;
(f) the allocable costs associated with any computer software or
hardware, electronic equipment or purchased information technology services from
third party vendors that is used for the Company;
(g) expenses incurred by managers, officers, employees and agents
of the Manager and its Affiliates for travel on the Company's behalf and other
out-of-pocket expenses incurred by managers, officers, employees and agents of
the Manager and its Affiliates in connection with the purchase, financing,
refinancing, sale or other disposition of an Investment or establishment and
maintenance of any credit facilities and other indebtedness or any securities
offerings of the Company;
(h) the allocable costs and expenses incurred with respect to
market information systems and publications, research publications and
materials, and settlement, clearing and custodial fees and expenses;
(i) compensation and expenses of the Company's custodian and
transfer agent, if any;
(j) the costs of maintaining compliance with all federal, state and
local rules and regulations or any other regulatory agency;
(k) all taxes and license fees;
(l) all insurance costs incurred in connection with the operation
of the Company's business except for the costs attributable to the insurance
that the Manager elects to carry for itself and its employees;
(m) costs and expenses incurred in contracting with third parties,
including Affiliates of the Manager, for the servicing and special servicing of
assets of the Company;
(n) all other costs and expenses relating to the Company's business
and investment operations, including, without limitation, the costs and expenses
of acquiring, owning, protecting, maintaining, developing and disposing of
Investments, including appraisal, reporting, audit and legal fees;
(o) expenses relating to any office(s) or office facilities,
including but not limited to disaster backup recovery sites and facilities,
maintained for the Company or Investments separate from the office or offices of
the Manager;
(p) expenses connected with the payments of interest, dividends or
distributions in cash or any other form authorized or caused to be made by the
Board of Directors to or on account of the holders of securities of the Company
or its Subsidiaries, including, without limitation, in connection with any
dividend reinvestment plan;
(q) any judgment or settlement of pending or threatened proceedings
(whether civil, criminal or otherwise) against the Company or any Subsidiary, or
against any trustee, director or officer of the Company or of any Subsidiary in
14
his or her capacity as such for which the Company or any Subsidiary is required
to indemnify such trustee, director or officer by any court or governmental
agency, or settlement of pending or threatened proceedings or by the charter and
bylaws of the Company;
(r) the allocable portion of rent, telephone, utilities, office
furniture, equipment, machinery and other office, internal and overhead expenses
of the Manager and its Affiliates required for the Company's operations; and
(s) all other expenses actually incurred by the Manager or its
Affiliates which are reasonably necessary for the performance by the Manager of
its duties and functions under this Agreement.
Without regard to the amount of compensation received under this
Agreement by the Manager, the Manager shall bear the expense of the wages and
salaries of the Manager's officers and employees.
The provisions of this Section 9 shall survive the expiration or
earlier termination of this Agreement to the extent such expenses have
previously been incurred or are incurred in connection with such expiration or
termination.
SECTION 10. CALCULATIONS OF EXPENSES.
The Manager shall prepare a statement documenting the Expenses of the
Company and the Expenses incurred by the Manager on behalf of the Company during
each calendar month, and shall deliver such statement to the Company within 20
days after the end of each calendar month. Expenses incurred by the Manager on
behalf of the Company shall be reimbursed by the Company to the Manager on the
first business day of the month immediately following the date of delivery of
such statement; provided, however, that such reimbursements may be offset by the
Manager against amounts due to the Company. The provisions of this Section 10
shall survive the expiration or earlier termination of this Agreement.
SECTION 11. LIMITS OF MANAGER RESPONSIBILITY; INDEMNIFICATION.
(a) The Manager assumes no responsibility under this Agreement
other than to render the services called for under this Agreement in good faith
and shall not be responsible for any action of the Board of Directors in
following or declining to follow any advice or recommendations of the Manager,
including as set forth in Section 7(b) of this Agreement. The Manager, its
members, managers, officers, employees and Affiliates (including Resource
America) will not be liable to the Company or any Subsidiary, to the Board of
Directors, or the Company's or any Subsidiary's stockholders or partners for any
acts or omissions by the Manager, its members, managers, officers, employees or
Affiliates (including Resource America), pursuant to or in accordance with this
Agreement, except by reason of acts constituting bad faith, willful misconduct,
gross negligence or reckless disregard of the Manager's duties under this
Agreement. The Company shall, to the full extent lawful, reimburse, indemnify
and hold the Manager, its members, managers, officers, employees and Affiliates
(including Resource America) and each other Person, if any, controlling the
Manager (each, an "Indemnified Party"), harmless of and from any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever (including attorneys' fees) in respect of or arising from any
acts or omissions of such Indemnified Party made in good faith in the
performance of the Manager's duties under this Agreement and not constituting
such Indemnified Party's bad faith, willful misconduct, gross negligence or
reckless disregard of the Manager's duties under this Agreement.
15
(b) The Manager and Resource America, jointly and severally, shall,
to the full extent lawful, reimburse, indemnify and hold the Company, its
stockholders, directors, officers and employees and each other Person, if any,
controlling the Company (each, a "Company Indemnified Party"), harmless of and
from any and all expenses, losses, damages, liabilities, demands, charges and
claims of any nature whatsoever (including attorneys' fees) in respect of or
arising from the Manager's bad faith, willful misconduct, gross negligence or
reckless disregard of its duties under this Agreement or any claims by Manager's
employees relating to the terms and conditions of their employment by Manager.
SECTION 12. NO JOINT VENTURE. Nothing in this Agreement shall be
construed to make the Company, the Manager and Resource America partners or
joint venturers or impose any liability as such on either of them.
SECTION 13. TERM; TERMINATION.
(a) Until this Agreement is terminated in accordance with its
terms, this Agreement shall be in effect until March 31, 2008 (the "Initial
Term") and shall be automatically renewed for a one-year term each anniversary
date thereafter (a "Renewal Term") unless at least two-thirds of the Independent
Directors or the holders of at least a majority of the outstanding Common Shares
agree not to automatically renew because (i) there has been unsatisfactory
performance by the Manager that is materially detrimental to the Company or (ii)
the compensation payable to the Manager hereunder is unfair; provided, that the
Company shall not have the right to terminate this Agreement under clause (ii)
above if the Manager agrees to continue to provide the services under this
Agreement at a fee that at least two-thirds of the Independent Directors
determines to be fair pursuant to the procedure set forth below. If the Company
elects not to renew this Agreement at the expiration of the Initial Term or any
such one-year extension term as set forth above, the Company shall deliver to
the Manager prior written notice (the "Termination Notice") of the Company's
intention not to renew this Agreement based upon the terms set forth in this
Section 13(a) not less than 180 days prior to the expiration of the then
existing term. If the Company so elects not to renew this Agreement, the Company
shall designate the date (the "Effective Termination Date"), not less than 180
days from the date of the notice, on which the Manager shall cease to provide
services under this Agreement and this Agreement shall terminate on such date;
provided, however, that in the event that such Termination Notice is given in
connection with a determination that the compensation payable to the Manager is
unfair, the Manager shall have the right to renegotiate such compensation by
delivering to the Company, no fewer than forty-five (45) days prior to the
prospective Effective Termination Date, written notice (any such notice, a
"Notice of Proposal to Negotiate") of its intention to renegotiate its
compensation under this Agreement. Thereupon, the Company (represented by the
Independent Directors) and the Manager shall endeavor to negotiate in good faith
the revised compensation payable to the Manager under this Agreement. Provided
that the Manager and at least two-thirds of the Independent Directors agree to
the terms of the revised compensation to be payable to the Manager within 45
days following the receipt of the Notice of Proposal to Negotiate, the
Termination Notice shall be deemed of no force and effect and this Agreement
shall continue in full force and effect on the terms stated in this Agreement,
except that the compensation payable to the Manager hereunder shall be the
revised compensation then agreed upon by the parties to this Agreement. The
Company and the Manager agree to execute and deliver an amendment to this
Agreement setting forth such revised compensation promptly upon reaching an
agreement regarding same. In the event that the Company and the Manager are
unable to agree to the terms of the revised compensation to be payable to the
Manager during such 45 day period, this Agreement shall terminate, such
termination to be effective on the date which is the later of (A) ten (10) days
following the end of such 45 day period and (B) the Effective Termination Date
originally set forth in the Termination Notice.
16
(b) In the event that this Agreement is terminated in accordance
with the provisions of Section 13(a) of this Agreement, the Company shall pay to
the Manager, on the date on which such termination is effective, a termination
fee (the "Termination Fee") equal to the amount of four times the sum of the
average annual Base Management Fee and the average annual Incentive Compensation
earned by the Manager during the two 12-month periods immediately preceding the
date of such termination, calculated as of the end of the most recently
completed fiscal quarter prior to the date of termination. The obligation of the
Company to pay the Termination Fee shall survive the termination of this
Agreement.
(c) No later than 180 days prior to the expiration of the Initial
Term or any Renewal Term, the Manager may deliver written notice to the Company
informing it of the Manager's intention to decline to renew this Agreement,
whereupon this Agreement shall not be renewed and extended and this Agreement
shall terminate effective upon expiration of the then current term.
(d) If this Agreement is terminated pursuant to this Section 13,
such termination shall be without any further liability or obligation of either
party to the other, except as provided in Sections 6, 9, 10, 13(b) and 16 of
this Agreement. In addition, Sections 8(i) (including the provisions of Exhibit
B), 8(k) and 11 of this Agreement shall survive termination of this Agreement.
SECTION 14. ASSIGNMENT.
(a) Except as set forth in Section 14(b) of this Agreement, this
Agreement shall terminate automatically in the event of its assignment, in whole
or in part, by the Manager, unless such assignment is consented to in writing by
the Company with the consent of a majority of the Independent Directors. Any
such permitted assignment shall bind the assignee under this Agreement in the
same manner as the Manager is bound, and the Manager shall be liable to the
Company for all errors or omissions of the assignee under any such assignment.
In addition, the assignee shall execute and deliver to the Company a counterpart
of this Agreement naming such assignee as Manager. This Agreement shall not be
assigned by the Company without the prior written consent of the Manager, except
in the case of assignment by the Company to another REIT or other organization
which is a successor (by merger, consolidation or purchase of assets) to the
Company, in which case such successor organization shall be bound under this
Agreement and by the terms of such assignment in the same manner as the Company
is bound under this Agreement.
(b) Notwithstanding any provision of this Agreement, the Manager
may subcontract and assign any or all of its responsibilities under Sections
2(b), 2(c) and 2(d) of this Agreement to any of its Affiliates in accordance
with the terms of this Agreement applicable to any such subcontract or
assignment, and the Company hereby consents to any such assignment and
subcontracting. In addition, provided that the Manager provides prior written
notice to the Company for informational purposes only, nothing contained in this
Agreement shall preclude any pledge, hypothecation or other transfer of any
amounts payable to the Manager under this Agreement.
SECTION 15. TERMINATION FOR CAUSE.
(a) The Company may terminate this Agreement effective upon thirty
(30) days' prior written notice of termination from the Company to the Manager,
without payment of any Termination Fee, if (i) the Manager materially breaches
any provision of this Agreement and such breach shall continue for a period of
30 days after the Manager's receipt of written notice thereof specifying such
breach and requesting that the same be remedied in such 30 day period, (ii) the
Manager engages in any act of fraud, misappropriation of funds, or embezzlement
against the Company, (iii) there is an event of any gross negligence on the part
of the Manager in the performance of its duties under this Agreement, (iv) there
is a Change of Control of the Manager and a majority of the Independent
17
Directors determines, in their sole discretion, at any point during the 18
months following such Change of Control, that such Change of Control was
detrimental to the ability of the Manager to perform its duties hereunder in
substantially the manner conducted prior to such Change of Control, or (v) there
is entered an order for relief or similar decree or order with respect to the
Manager by a court having competent jurisdiction in an involuntary case under
the federal bankruptcy laws as now or hereafter constituted or under any
applicable federal or state bankruptcy, insolvency or other similar laws; or
(vi) the Manager (A) ceases, or admits in writing its inability to pay its debts
as they become due and payable, or makes a general assignment for the benefit
of, or enters into an composition or arrangement with, creditors; (B) applies
for, or consents (by admission of material allegations of a petition or
otherwise) to a sequestrator (or other similar official) of the Manager or of
any substantial part of its properties or assets, or authorizes such an
application or consent, or proceedings seeking such appointment are commenced
without such authorization, consent or application against the Manager and
continue undismissed for 60 days; (C) authorizes or files a voluntary petition
in bankruptcy, or applies for or consents (by admission of material allegations
of a petition or otherwise) to the application of any bankruptcy,
reorganization, arrangement, readjustment of debt, insolvency, dissolution,
liquidation or other similar law of any jurisdiction, or authorizes such
application or consent, or proceedings to such end are instituted against the
Manager without such authorization, application or consent and are approved as
properly instituted and remain undismissed for 60 days or result in adjudication
of bankruptcy or insolvency; or (D) permits or suffers all or any substantial
part of its properties or assets to be sequestered or attached by court order
and the order remains undismissed for 60 days.
(b) The Manager agrees that if any of the events specified above
occur, it will give prompt written notice thereof to the Company's Board of
Directors after the occurrence of such event.
(c) The Manager may terminate this Agreement effective upon sixty
(60) days' prior written notice of termination to the Company in the event that
the Company shall default in the performance or observance of any material term,
condition or covenant contained in this Agreement and such default shall
continue for a period of 30 days after written notice thereof specifying such
default and requesting that the same be remedied in such 30 day period.
(d) The Manager may terminate this Agreement, without the Company
being required to pay the Termination Fee, in the event the Company becomes
regulated as an "investment company" under the Investment Company Act, with such
termination deemed to have occurred immediately prior to such event.
SECTION 16. ACTION UPON TERMINATION. From and after the effective date
of termination of this Agreement, pursuant to Sections 13, 14, or 15 of this
Agreement, the Manager shall not be entitled to compensation for further
services under this Agreement, but shall be paid all compensation accruing to
the date of termination and, if terminated pursuant to Section 13 or Section
15(c), the applicable Termination Fee. Upon such termination, the Manager shall
forthwith:
(i) after deducting any accrued compensation and reimbursement
for its Expenses to which it is then entitled, pay over to the
Company or a Subsidiary all money collected and held for the
account of the Company or a Subsidiary pursuant to this Agreement;
(ii) deliver to the Board of Directors a full accounting,
including a statement showing all payments collected by it and a
statement of all money held by it, covering the period following
the date of the last accounting furnished to the Board of Directors
with respect to the Company or a Subsidiary; and
18
(iii) deliver to the Board of Directors all property and
documents of the Company or any Subsidiary then in the custody of
the Manager.
SECTION 17. RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST.
The Manager agrees that any money or other property of the Company or Subsidiary
held by the Manager under this Agreement shall be held by the Manager as
custodian for the Company or Subsidiary, and the Manager's records shall be
appropriately marked clearly to reflect the ownership of such money or other
property by the Company or such Subsidiary. Upon the receipt by the Manager of a
written request signed by a duly authorized officer of the Company requesting
the Manager to release to the Company or any Subsidiary any money or other
property then held by the Manager for the account of the Company or any
Subsidiary under this Agreement, the Manager shall release such money or other
property to the Company or any Subsidiary within a reasonable period of time,
but in no event later than sixty (60) days following such request. The Manager
shall not be liable to the Company, any Subsidiary, the Independent Directors,
or the Company's or a Subsidiary's stockholders or partners for any acts
performed or omissions to act by the Company or any Subsidiary in connection
with the money or other property released to the Company or any Subsidiary in
accordance with the second sentence of this Section 17. The Company and any
Subsidiary shall indemnify the Manager and its members, managers, officers and
employees against any and all expenses, losses, damages, liabilities, demands,
charges and claims of any nature whatsoever, which arise in connection with the
Manager's release of such money or other property to the Company or any
Subsidiary in accordance with the terms of this Section 17. Indemnification
pursuant to this provision shall be in addition to any right of the Manager to
indemnification under Section 11 of this Agreement.
SECTION 18. REPRESENTATIONS AND WARRANTIES.
(a) The Company hereby represents and warrants to the Manager as
follows:
(i) The Company is duly organized, validly existing and in
good standing under the laws of the State of Maryland, has the
corporate power to own its assets and to transact the business in
which it is now engaged and is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except for
failures to be so qualified, authorized or licensed that could not
in the aggregate have a material adverse effect on the business
operations, assets or financial condition of the Company.
(ii) The Company has the corporate power and authority to
execute, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action to
authorize this Agreement on the terms and conditions hereof and the
execution, delivery and performance of this Agreement and all
obligations required hereunder. No consent of any other person
including, without limitation, stockholders or creditors of the
Company, and no license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required by the
Company in connection with this Agreement or the execution,
delivery or performance of this Agreement and all obligations
required hereunder. This Agreement has been, and each instrument or
document required hereunder will be, executed and delivered by a
duly authorized officer of the Company, and this Agreement
constitutes, and each instrument or document required hereunder
when executed and delivered hereunder will constitute, the valid
and binding obligation of the Company enforceable against the
Company in accordance with its terms.
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(iii) The execution, delivery and performance of this
Agreement and the documents or instruments required hereunder will
not violate any provision of any existing law or regulation binding
on the Company, or any order, judgment, award or decree of any
court, arbitrator or governmental authority binding on the Company,
or the charter or bylaws of, or any securities issued by, the
Company or of any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Company is a
party or by which the Company or any of its assets may be bound,
the violation of which would have a material adverse effect on the
business operations, assets or financial condition of the Company,
and will not result in, or require, the creation or imposition of
any lien on any of its property, assets or revenues pursuant to the
provisions of any such mortgage, indenture, lease, contract or
other agreement, instrument or undertaking.
(b) The Manager hereby represents and warrants to the Company as
follows:
(i) The Manager is duly organized, validly existing and in
good standing under the laws of the State of Delaware, has the
corporate power to own its assets and to transact the business in
which it is now engaged and is duly qualified to do business and is
in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualification, except for failures to be so
qualified, authorized or licensed that could not in the aggregate
have a material adverse effect on the business operations, assets
or financial condition of the Manager and its Subsidiaries, taken
as a whole.
(ii) The Manager has the corporate power and authority to
execute, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action to
authorize this Agreement on the terms and conditions hereof and the
execution, delivery and performance of this Agreement and all
obligations required hereunder. No consent of any other person
including, without limitation, stockholders or creditors of the
Manager, and no license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required by the
Manager in connection with this Agreement or the execution,
delivery or performance of this Agreement and all obligations
required hereunder. This Agreement has been, and each instrument or
document required hereunder will be, executed and delivered by a
duly authorized agent of the Manager, and this Agreement
constitutes, and each instrument or document required hereunder
when executed and delivered hereunder will constitute, the valid
and binding obligation of the Manager enforceable against the
Manager in accordance with its terms.
(iii) The execution, delivery and performance of this
Agreement and the documents or instruments required hereunder, will
not violate any provision of any existing law or regulation binding
on the Manager, or any order, judgment, award or decree of any
court, arbitrator or governmental authority binding on the Manager,
or the charter or bylaws of, or any securities issued by, the
Manager or of any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Manager is a
party or by which the Manager or any of its assets may be bound,
the violation of which would have a material adverse effect on the
business operations, assets or financial condition of the Manager
and its subsidiaries, taken as a whole, and will not result in, or
require, the creation or imposition of any lien on any of its
20
property, assets or revenues pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument
or undertaking.
(c) Resource America hereby represents and warrants to the Company
as follows:
(i) Resource America is duly organized, validly existing and
in good standing under the laws of the State of Delaware, has the
corporate power to own its assets and to transact the business in
which it is now engaged and is duly qualified to do business and is
in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business
requires such qualification, except for failures to be so
qualified, authorized or licensed that could not in the aggregate
have a material adverse effect on the business operations, assets
or financial condition of Resource America and its Subsidiaries,
taken as a whole.
(ii) Resource America has the corporate power and authority to
execute, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action to
authorize this Agreement on the terms and conditions hereof and the
execution, delivery and performance of this Agreement and all
obligations required hereunder. No consent of any other person
including, without limitation, stockholders or creditors of
Resource America, and no license, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required by
Resource America in connection with this Agreement or the
execution, delivery or performance of this Agreement and all
obligations required hereunder. This Agreement has been, and each
instrument or document required hereunder will be, executed and
delivered by a duly authorized agent of Resource America, and this
Agreement constitutes, and each instrument or document required
hereunder when executed and delivered hereunder will constitute,
the valid and binding obligation of Resource America enforceable
against Resource America in accordance with its terms.
(iii) The execution, delivery and performance of this
Agreement and the documents or instruments required hereunder, will
not violate any provision of any existing law or regulation binding
on Resource America, or any order, judgment, award or decree of any
court, arbitrator or governmental authority binding on Resource
America, or the charter or bylaws of, or any securities issued by,
Resource America or of any mortgage, indenture, lease, contract or
other agreement, instrument or undertaking to which Resource
America is a party or by which Resource America or any of its
assets may be bound, the violation of which would have a material
adverse effect on the business operations, assets or financial
condition of Resource America and its subsidiaries, taken as a
whole, and will not result in, or require, the creation or
imposition of any lien on any of its property, assets or revenues
pursuant to the provisions of any such mortgage, indenture, lease,
contract or other agreement, instrument or undertaking.
SECTION 19. NOTICES. Unless expressly provided otherwise in this
Agreement, all notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made and received when delivered against receipt or upon actual
receipt of (i) personal delivery, (ii) delivery by reputable overnight courier,
(iii) delivery by facsimile transmission with telephonic confirmation or (iv)
delivery by registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:
21
(a) If to the Company:
Resource Capital Corp.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
(b) If to Resource America:
Resource America, Inc.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Chief Legal Officer
(c) If to the Manager:
Resource Capital Manager, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
With a copy to:
Resource America, Inc.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Chief Legal Officer
Either party may alter the address to which communications or copies
are to be sent by giving notice of such change of address in conformity with the
provisions of this Section 19 for the giving of notice.
SECTION 20. BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and permitted
assigns as provided in this Agreement. Each of the Company, the Manager and
Resource America agrees that the representations, warrantees, covenants and
agreements of the Company contained herein are made on behalf of the Company and
its wholly-owned Subsidiaries for the benefit of each of the Manager and
Resource America, and the representations, warranties, covenants and agreements
of each of the Manager and Resource America are for the benefit of the Company
and its wholly-owned Subsidiaries.
SECTION 21. ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter of this Agreement, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied, oral
or written, of any nature whatsoever with respect to the subject matter of this
Agreement. The express terms of this Agreement control and supersede any course
of performance and/or usage of the trade inconsistent with any of the terms of
this Agreement. This Agreement may not be modified or amended other than by an
agreement in writing signed by the parties hereto.
22
SECTION 22. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 23. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of any party hereto, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law. No waiver of any provision hereto shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
SECTION 24. Costs and Expenses. Each party hereto shall bear its own
costs and expenses (including the fees and disbursements of counsel and
accountants) incurred in connection with the negotiations and preparation of and
the closing under this Agreement, and all matters incident thereto.
SECTION 25. HEADINGS. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed
part of this Agreement.
SECTION 26. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts of this Agreement, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
SECTION 27. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction
SECTION 28. GENDER. Words used herein regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.
23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
RESOURCE CAPITAL CORP.
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
RESOURCE CAPITAL MANAGER, INC.
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
RESOURCE AMERICA, INC.
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
24
Exhibit A
---------
MANAGER'S CONFLICT OF INTEREST POLICY
A-1
Exhibit B
---------
REGISTRATION RIGHTS AGREEMENTS
1. Piggyback Rights. The Manager and any Permitted Transferee (as
hereinafter defined) shall have the unlimited right to piggyback on to any
registration statement of the Company (other than a registration statement on
Form S-4 or Form S-8 or any successor form), subject to the following cutbacks
only in underwritten offerings: (i) in the event of an underwritten initial
public offering, the managing underwriters may exclude entirely the shares of
the Manager and any Permitted Transferee, if the managing underwriters determine
in good faith that marketing factors require a limitation on the number of
shares to be included in such offering, and (ii) in the event of any other
underwritten offering, the managing underwriters may exclude the shares of the
Manager and any Permitted Transferee to the same extent and in the same
proportion that shares of holders (other than the Company) are excluded, if the
managing underwriters determine in good faith that marketing factors require a
limitation on the number of shares to be included in such offering.
2. Demand Rights. The Manager and any Permitted Transferee shall also
have the right to require the Company to prepare, file and maintain at all times
such number of registration statements as are specified in the next sentence of
this Section 2 exclusively for the issuance and resale of the stock portion of
the Incentive Compensation (the "Incentive Shares"). The Manager and any
Permitted Transferee shall be entitled to (i) an unlimited number of
registrations on Form X-0, Xxxx X-0 or any successor or replacement forms and
(ii) if the Management Agreement terminates and the Company is not then eligible
to use Form X-0, Xxxx X-0 or any successor or replacement form, a single
registration on such other form as the Company is then eligible to use.
Notwithstanding anything herein to the contrary, the demand rights described
herein may only be exercised upon request of the Manager and any Permitted
Transferee, in the case of clause (i), who hold in the aggregate at least twenty
percent (20%) of all outstanding Incentive Shares and, in the case of clause
(ii), who hold in the aggregate at least one-third of all outstanding Incentive
Shares.
3. Registration Procedures. The Company shall use its commercially
reasonable efforts to effect or cause to be effected the registration of the
Incentive Shares under the Securities Act of 1933, as amended (the "Securities
Act"), to permit the resale of the Incentive Shares by the Manager or any
Permitted Transferee.
4. Expenses. The Company shall bear all expenses of registration,
including its professional fees and registration and filing fees with the SEC,
state securities administrators and applicable stock exchanges, and printing,
word processing and delivery and distribution fees with respect to any
registration statement, prospectus (preliminary or final), or any amendments or
supplements thereto, and reasonable fees and disbursements of one counsel to the
Manager and any Permitted Transferees, provided, however, the Company shall not
be liable for the underwriting discounts and commissions associated with the
sale of the Incentive Shares.
5. Successors and Assigns; Permitted Transferees. The agreements in
this Exhibit B shall inure to the benefit of and be binding upon the successors
and assigns of each of the Company and the Manager. For purposes of this Exhibit
B, the term Permitted Transferee shall mean each person or entity to whom the
Manager transfers any Incentive Shares.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless (i) the Manager and its Permitted Transferees and
(ii) each person, if any, who controls the Manager and its Permitted Transferees
B-1
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and (iii) the respective officers, directors,
partners, employees, representatives and agents of the Manager and its Permitted
Transferees or any person who controls any of the foregoing (each person
referred to in clause (i), (ii) or (iii) are referred to collectively as the
"Indemnified Parties"), from and against any losses, claims, damages or
liabilities, joint or several, or any actions in respect thereof (including, but
not limited to, any losses, claims, damages, judgments, expenses, liabilities or
actions relating to purchases and sales of the Incentive Shares) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, judgments, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement or prospectus, including any document incorporated by reference
therein, or in any amendment or supplement thereto or in any preliminary
prospectus relating to a registration statement, or arise out of, or are based
upon, the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse, as incurred, the Indemnified Parties for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action in respect thereof;
provided, however, that (i) the Company shall not be liable in any such case to
the extent that such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in a registration statement or prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus relating to a registration
statement, in reliance upon and in conformity with written information
pertaining to the Manager or its Permitted Transferees or furnished to the
Company by or on behalf of the Manager or its Permitted Transferees specifically
for inclusion therein and (ii) with respect to any untrue statement or omission
or alleged untrue statement or omission made in any preliminary prospectus
relating to a registration statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of the Manager or any Permitted
Transferee from whom the person asserting any such losses, claims, damages or
liabilities purchased the Incentive Shares concerned, to the extent that a
prospectus relating to such Incentive Shares was required to be delivered by the
Manager or such Permitted Transferee, as the case may be, under the Securities
Act in connection with such purchase and any such loss, claim, damage or
liability of the Manager or such Permitted Transferee results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Incentive Shares to such person, a copy of the
final prospectus if the Company had previously furnished copies thereof to the
Manager or such Permitted Transferee; provided further, however, that this
indemnity agreement will be in addition to any liability which the Company may
otherwise have to such Indemnified Party. The Company shall also indemnify
underwriters, their officers and directors and each person who controls such
underwriters within the meaning of the Securities Act or the Exchange Act to the
same extent as provided above with respect to the indemnification of the Manager
or any Permitted Transferee if requested by the Manager or such Permitted
Transferee.
(b) In connection with any registration statement in which the Manager
or a Permitted Transferee is participating and as a condition to such
participation, the Manager and such Permitted Transferee, severally and not
jointly, will indemnify and hold harmless the Company, its officers, directors,
partners, employees, representatives, agents and investment advisers and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (the "Company Indemnified Persons") from and against any
losses, claims, damages or liabilities or any actions in respect thereof, to
which the Company or any such controlling person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to the registration statement, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
B-2
statements therein not misleading, but in each case only to the extent that the
untrue statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information pertaining to the
Manager or such Permitted Transferee or furnished to the Company by or on behalf
of the Manager or such Permitted Transferee specifically for inclusion therein;
and, subject to the limitation set forth immediately preceding this clause,
shall reimburse, as incurred, the Company or any Company Indemnified Person for
any legal or other expenses reasonably incurred by the Company or such Company
Indemnified Person in connection with investigating or defending any loss,
claim, damage, liability or action in respect thereof. This indemnity agreement
will be in addition to any liability which the Manager or such Permitted
Transferee may otherwise have to the Company or any Company Indemnified Person.
(c) Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 6,
notify the indemnifying party of the commencement thereof; but the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have under subsection (a) or (b) above except to the extent that it has been
materially prejudiced by such failure; and provided further that the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under subsection (a) or (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who may be counsel to the indemnifying party unless, in the reasonable
judgment of the indemnified party, a potential conflict exists), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 6 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
any unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action, and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Manager or such Permitted
Transferee or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
Section 6(d), neither the Manager nor any Permitted Transferee shall be required
B-3
to contribute any amount in excess of the amount by which the net proceeds
received by the Manager or such Permitted Transferee from the sale of the
Incentive Shares pursuant to the registration statement exceeds the amount of
damages which the Manager or such Permitted Transferees have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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. For purposes of this paragraph (d), each person, if any, who
controls such indemnified party within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as such indemnified
party and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.
(e) The agreements contained in this Section 6 shall survive the sale
of the Incentive Shares pursuant to a registration statement and shall remain in
full force and effect, regardless of any termination or cancellation of the
Management Agreement or any investigation made by or on behalf of any
indemnified party.
B-4
