FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
JULY 22, 1998
(Date of report)
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
DELAWARE 001-11981 74-2717523
<S> <C> <C>
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
</TABLE>
218 NORTH CHARLES STREET, SUITE 500
BALTIMORE, MARYLAND 21201
(Address of Principal Executive Offices)(Zip Code)
(410) 962-8044
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
On July 21, 1998, Municipal Mortgage and Equity, L.L.C. (the
"Registrant"), announced the price per share of its underwritten
offering of 2,500,000 of the Registrant's common shares (the
"Offering"). Reference is made to the press release, dated July
23, 1998, annexed hereto as Exhibit 20.1, for further
information regarding the Offering.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
<S> <C>
1.1 Underwriting Agreement, among the Registrant and the several
Underwriters named therein.
8.1 Opinion of Rogers & Wells LLP concerning certain tax matters.
20.1 Press release, dated July 23, 1998, announcing the pricing of
the Offering.
</TABLE>
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
Date: July 24, 1998 By: /s/ Michael L. Falcone
Michael L. Falcone
President
3
<PAGE>
Exhibit 1.1
2,500,000 Shares
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
Common Shares
UNDERWRITING AGREEMENT
July 22, 1998
LEGG MASON WOOD WALKER, INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
WHEAT FIRST SECURITIES, INC.
As Representatives of the several Underwriters
c/o Legg Mason Wood Walker, Incorporated
100 Light Street
Baltimore, MD 21202
Ladies and Gentlemen:
Municipal Mortgage and Equity, L.L.C., a limited liability company
organized under the laws of the State of Delaware (the "Company"), proposes to
sell an aggregate of 2,500,000 growth share limited liability company
interests (the "Common Shares") of the Company, without par value (the "Firm
Shares"), to you and to the other underwriters named in Schedule I, acting
severally and not jointly (collectively, the "Underwriters"), for whom you are
acting as representatives (the "Representatives"). The Company has also
agreed to grant to you and the other Underwriters an option (the "Option") to
purchase up to an additional 375,000 Common Shares (the "Option Shares") as
set forth below. The Firm Shares and the Option Shares are hereinafter
collectively referred to as the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Agreement to Sell and Purchase.
(a) On the basis of the respective representations, warranties
and agreements of the Company herein contained and subject to all the terms
and conditions of this Agreement, (i) the Company agrees to sell to the
several Underwriters and (ii) each of the Underwriters, severally and not
jointly, agrees to purchase from the Company, at the purchase price of $21.125
per share, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I, plus such additional number of Firm Shares which
such Underwriter may become obligated to purchase pursuant to Section 9
hereof.
<PAGE>
(b) Subject to all the terms and conditions of this Agreement,
the Company grants the Option to the several Underwriters to purchase,
severally and not jointly, up to 375,000 Option Shares from the Company at the
same price per share as the Underwriters shall pay for the Firm Shares. The
Option may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters and may be exercised in whole or in part at any
time (but not more than once) on or before the 30th day after the date hereof,
upon written or telegraphic notice (the "Option Shares Notice") by the
Representatives to the Company no later than 12:00 noon, New York City time,
at least two and no more than five business days before the date specified for
closing in the Option Shares Notice (the "Option Closing Date") setting forth
the aggregate number of Option Shares to be purchased and the time and date
for such purchase. On the Option Closing Date, the Company will issue and
sell to the Underwriters the number of Option Shares set forth in the Option
Shares Notice, and each Underwriter will purchase such percentage of the
Option Shares as is equal to the percentage of Firm Shares that such
Underwriter is purchasing, as adjusted by the Representatives in such manner
as they deem advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be made
to the Representatives for the accounts of the Underwriters at the office of
Legg Mason Wood Walker, Incorporated, 100 Light Street, 34th Floor,
Baltimore, Maryland 21202, against payment of the purchase price therefor by
wire transfer of Federal Funds or similar same day funds to an account which
has been designated in writing by the Company to Legg Mason Wood Walker,
Incorporated at least one business day prior to the Closing Date (as
hereinafter defined). Such payment shall be made at 10:00 A.M., New York City
time, on the third business day after the date on which this Agreement is
executed or on the fourth business day if this Agreement is executed after the
daily closing time of the New York Stock Exchange or at such time on such
other date, not later than ten business days after such date, as may be agreed
upon by the Company and the Representatives (such date is hereinafter referred
to as the "Closing Date"). The place of closing for the Firm Shares may also
be varied by agreement between you and the Company.
2
<PAGE>
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date on the Option
Closing Date.
Certificates evidencing the Shares shall be in definitive form and shall
be registered in such names and in such denominations as the Representatives
shall request at least two business days prior to the Closing Date or the
Option Closing Date, as the case may be, by written notice to the Company.
For the purpose of expediting the checking and packaging of certificates for
the Shares, the Company agrees to make such certificates available for
inspection and packaging not later than 9:30 A.M., New York City Time, at
least 24 hours prior to the Closing Date or the Option Closing Date, as the
case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares and Option Shares by the Company to
the respective Underwriters shall be borne by the Company. The Company shall
pay and save each Underwriter and any subsequent holder of the Shares harmless
from any and all liabilities with respect to or resulting from any failure or
delay in paying Federal and state stamp and other transfer taxes, if any,
which may be payable or determined to be payable in connection with the
original issuance or sale to such Underwriter of the Firm Shares and Option
Shares.
3. Representations and Warranties of the Company.
The Company represents, warrants and covenants to each Underwriter that:
(a) A registration statement (Registration No. 333-56049) on
Form S-3 relating to Common Shares with an aggregate initial offering price of
$349,304,375, including a prospectus and such amendments to such registration
statement as may have been required to the date of this Agreement, have been
prepared by the Company under the provisions of the Securities Act of 1933, as
amended (the "Act"), and the published rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. The Company has complied with the conditions for the use of Form
3
<PAGE>
S-3. Such registration statement and any post-effective amendment thereto
have become effective under the Act. The Company also has filed, or proposes
to file, with the Commission pursuant to Rule 424(b) under the Act, a
prospectus supplement specifically relating to the Shares (the "prospectus
supplement").
The term "registration statement" as used in this Agreement means the
registration statement (including all financial statements, schedules and
exhibits), as amended at the time it became effective, as supplemented or
amended prior to the execution of the Agreement, including all information (if
any) deemed to be a part of such registration statement at the time it became
effective pursuant to Rule 430A or Rule 424 of the Rules and Regulations under
the Act. If it is contemplated, at the time this Agreement is executed, that
a post-effective amendment to the registration statement will be filed and
must be declared effective before the offering of the Shares may commence, the
term "registration statement" means the registration statement as amended by
said post-effective amendment. The term "prospectus" as used herein means a
base prospectus as contemplated by Rule 430 or Rule 430A of the Rules and
Regulations included at any time as part of the registration statement at the
time it became effective (the "base prospectus") under the Act together with
the prospectus supplement dated July 22, 1998 in the form first filed with
the Commission pursuant to Rule 424(b)(2) under the Act. The term
"pre-pricing prospectus supplement" as used herein means the base prospectus
together with any prospectus supplement subject to completion included in the
registration statement as filed with the Commission pursuant to Rule 424(b)
under the Act, and as such pre-pricing prospectus supplement shall have been
amended or supplemented from time to time prior to the date of the
prospectus. Copies of such registration statement and amendments, each
related prospectus, and each prospectus supplement, including the pre-pricing
prospectus supplement, have been delivered to the Representatives. Any
reference herein to any "registration statement," "base prospectus,"
"prospectus," "prospectus supplement" or "pre-pricing prospectus supplement"
shall be deemed to refer to, describe and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the
date of the registration statement, prospectus or pre-pricing prospectus
supplement, as the case may be, and any reference to any amendment or
supplement to the registration statement, the prospectus or any pre-pricing
prospectus supplement shall be deemed to refer to, describe and include any
documents filed after such date under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3.
4
<PAGE>
(b) No order preventing or suspending the use of any pre-pricing
prospectus supplement or prospectus has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Company, threatened by
the Commission or the securities authority of any state or other jurisdiction.
No stop order suspending the effectiveness of the registration statement or
any part thereof has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the Commission
or the securities authority of any state or other jurisdiction.
(c) The Company and the transactions contemplated by this
Agreement meet the requirements and conditions for using a registration
statement on Form S-3 under the Act, set forth in the General Instructions to
Form S-3. When the registration statement or any amendment thereto was
declared effective it complied in all material respects with the requirements
of the Act and the rules and regulations of the Commission thereunder and on
such date and on the Closing Date it did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading on such date. When the prospectus
or any amendment or supplement thereto is filed with the Commission pursuant
to Rule 424(b) and at the Closing Date (or the Option Closing Date, as the
case may be), the prospectus, as amended or supplemented at any such time, (i)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The representation and warranty in this paragraph
(c) does not apply to statements in or omissions from the registration
statement or the prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of any
Underwriter through you expressly for use therein. For all purposes of this
Agreement, the legend concerning stabilization on the inside front cover of
the Prospectus, the list of Underwriters and their respective allotments
appearing under the caption "Underwriting" in the prospectus and the
statements in the first, third, eighth, ninth, tenth and eleventh paragraphs
under the caption "Underwriting" in the prospectus constitute the only
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the pre-pricing prospectus
supplement, the registration statement or the prospectus. The Company has not
distributed any offering material in connection with the offering or sale of
the Shares other than the registration statement, the pre-pricing prospectus
supplement, the prospectus or any other materials, if any, permitted by the
Act.
5
<PAGE>
(d) The documents incorporated by reference in the registration
statement heretofore filed, when they were filed (or, if any amendment with
respect to any such document was filed, when such amendment was filed),
conformed in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, no such document when it was filed
(or, if an amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading.
(e) The Company has been duly organized and is validly existing
as a limited liability company of duration as set forth in Section 10 of the
Company's Amended and Restated Certificate of Formation and Operating
Agreement, with transferable limited liability company growth shares in good
standing under the laws of the State of Delaware with full power and authority
to own and lease its properties and to conduct its business as now conducted.
The only subsidiaries (as defined in the Rules and Regulations) of the Company
are the subsidiaries listed on Exhibit A hereto (the "Subsidiaries"). None of
the Subsidiaries other than Municipal Mortgage Investments, LLC is a
"significant subsidiary" as such term is defined in the rules and regulations
of the Commission. Each of the Subsidiaries is, and at the Closing Date will
be, duly organized and validly existing in good standing under the laws of its
jurisdiction of organization. The Company and each of the Subsidiaries has,
and at the Closing Date will have, full power and authority to conduct all the
activities conducted by it, to own or lease all the assets and properties,
owned or leased by it and to conduct its business as described in the
registration statement and the prospectus. Each of the Company and the
Subsidiaries is, and at the Closing Date will be, duly licensed or qualified
to do business and in good standing (i) in the jurisdiction in which it has
its principal place of business and (ii) in all other jurisdictions in which
the nature of the activities conducted by it or the character of the assets
owned or leased by it makes such licensing or qualification necessary except
where the failure to so license or qualify in any such other jurisdiction will
not have a material adverse effect on the business, properties, condition
(financial or otherwise), or results of operations of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"). All of the
outstanding shares of limited liability company interests of the Subsidiaries
have been duly authorized and validly issued, and are fully paid and
non-assessable (subject to the requirements under Delaware law that a
shareholder may have liability to repay a distribution under Section 16-607(b)
of the Delaware Limited Liability Company Act (the "Distribution Liability"))
and are, except as set forth in Exhibit A or as disclosed in the registration
statement or prospectus, owned by the Company or a Subsidiary, free and clear
of all liens, encumbrances and claims whatsoever and, except as set forth in
Exhibit A or as disclosed in the registration statement or prospectus, no
options, warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligations into any shares of limited
liability company interests of any Subsidiary are outstanding. Except for the
limited liability company interests of the Subsidiaries or except as disclosed
in Exhibit A or as disclosed in the registration statement or prospectus, the
Company does not own, and at the Closing Date will not own, directly or
indirectly, any shares of stock or any other equity or long-term debt
6
<PAGE>
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, limited liability company, association or other
entity that are required to be described in the registration statement or
prospectus. Complete and correct copies of the Amended and Restated
Certificate of Formation and Operating Agreement and Bylaws of the Company and
the operating agreement of each Subsidiary and all amendments or supplements
thereto have been delivered to the Representatives, and no changes therein
will be made subsequent to the date hereof and prior to the Closing Date or,
if later, the Option Closing Date.
(f) The Company has full right, power and authority to enter
into this Agreement, to issue, sell and deliver the Shares as provided herein
and to consummate the transactions contemplated herein. This Agreement has
been duly authorized, executed and delivered by the Company and constitutes a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws of general applicability relating to
or affecting creditors' rights, or by general equity principles and except to
the extent the indemnification and contribution provisions set forth in
Section 8 of this Agreement may be limited by federal or state securities laws
or the public policy underlying such laws.
(g) Each consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with any
governmental agency or body necessary for the valid authorization, issuance,
sale and delivery of the Shares, the execution, delivery and performance of
this Agreement and the consummation by the Company of the transactions
contemplated hereby has been made or obtained and is in full force and effect
(except in any case in which the failure to do so would not have a Material
Adverse Effect).
(h) Neither the issuance, sale and delivery by the Company of
the Shares, nor the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated hereby by the Company, will
conflict with or result in a breach or violation of any of the terms and
provisions of, or (with or without the giving of notice or the passage of time
or both) constitute a default under, the certificate of formation and
7
<PAGE>
operating agreement or the certificate of limited partnership or partnership
agreement of the Company or any Subsidiary, as the case may be; any indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which the Company or any Subsidiary is a party or to which it,
they, any of them, or any of their respective properties or other assets are
subject; or any applicable statute, judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to any
business of the foregoing or any of their respective properties; or result in
the creation or imposition of any lien, charge, claim or encumbrance upon any
property or assets of any of the foregoing (except in any case in which the
failure to do so would not have a Material Adverse Effect).
(i) The Shares to be issued and sold to the Underwriters
hereunder have been validly authorized by the Company. When issued and
delivered against payment therefor as provided in this Agreement, the Shares
will be duly and validly issued, fully paid and nonassessable (subject to the
Distribution Liability). No statutory or other preemptive rights of
shareholders exist with respect to any of the Shares. No person or entity
holds a right to require or participate in the registration under the Act of
the Shares pursuant to the registration statement; and, except as set forth in
the registration statement or prospectus, no person holds a right to require
registration under the Act of any shares of limited liability company interest
of the Company at any other time. No person or entity has a right of
participation or first refusal with respect to the sale of the Shares by the
Company. The form of certificates evidencing the Shares complies with all
applicable requirements of Delaware law.
(j) The Company's authorized, issued and outstanding limited
liability company interests are as disclosed in the prospectus. All of the
issued limited liability company interests of the Company have been duly
authorized and validly issued, are fully paid and nonassessable (subject to
the Distribution Liability and subject to the provisions of the Company's
Amended and Restated Certificate of Formation and Operating Agreement
regarding the liability of the Special Shareholder). None of the issued
limited liability company interests of the Company has been issued or is owned
or held in violation of any statutory or other preemptive rights of
shareholders. Except as disclosed in the prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and no commitment,
plan or arrangement to issue, any limited liability company interests of the
Company or any security convertible into or exchangeable for limited liability
company interests of the Company.
8
<PAGE>
(k) All offers and sales of the Company's limited liability
company interests prior to the date hereof were at all relevant times duly
registered under the Act or exempt from the registration requirements of the
Act by reason of Sections 3(b), 4(2) or 4(6) thereof and were duly registered
or were issued pursuant to an available exemption from the registration
requirements of the applicable state securities or blue sky laws.
(l) The consolidated financial statements of the Company
(together with related notes and schedules) included or incorporated by
reference in the registration statement and prospectus present fairly the
financial position of the Company as of the dates indicated and the results of
operations and cash flows for the Company for the periods specified, all in
conformity with generally accepted accounting principles applied on a
consistent basis. The financial statement schedules and summaries and
Investment and Property information included or incorporated by reference in
the registration statement and in the prospectus, including the existing and
pending investment information contained under the captions "Prospectus
Supplement Summary--The Investments," "--Recent Transactions," "--Summary
Financial Data," "The Investments" and "The Properties" accurately reflect the
information shown therein. All other financial, operating, statistical and
investment information (including the related notes) included in the
prospectus or any pre-pricing prospectus supplement complies as to form in all
material respects to the applicable accounting requirements of the Act and the
Rules and Regulations thereunder.
(m) PricewaterhouseCoopers LLP, who have examined and are
reporting upon certain audited financial statements included in the
registration statement, are, and were during the periods covered by their
reports included in the registration statement and the prospectus, independent
public accountants within the meaning of the Act, the Exchange Act and the
respective rules and regulations of the Commission thereunder.
(n) Neither the Company nor any Subsidiary has sustained, since
March 31, 1998, any material loss or interference with its business, whether
or not covered by insurance; and, since the respective dates as of which
information is given in the registration statement and the prospectus, and
except as otherwise stated in the registration statement and prospectus, there
has not been (i) any material change in the limited liability company
interests, long-term debt, obligations under capital leases or short-term
borrowings of the Company or any Subsidiary, (ii) any change, or any
development which could reasonably be seen as involving a prospective change,
that could reasonably be expected to have a Material Adverse Effect, (iii) any
liability or obligation, direct or contingent, incurred or undertaken by the
9
<PAGE>
Company or any Subsidiary that could reasonably be expected to have a Material
Adverse Effect, except for liabilities or obligations incurred in the ordinary
course of business, (iv) any declaration or payment of any dividend or
distribution of any kind on or with respect to the limited liability company
interests of the Company except for dividends on shares of the Company other
than Common Shares and Preferred Shares, or (v) any transaction that could
reasonably be expected to have a Material Adverse Effect, except transactions
in the ordinary course of business.
(o) Neither the Company nor any Subsidiary is in violation of
its respective certificate of formation, articles of organization, operating
agreement, bylaws, certificate of trust, declaration of trust certificate of
limited partnership, partnership agreement, as the case may be, and no default
exists, and no event has occurred, nor state of facts exists which, with
notice or after the lapse of time to cure or both, would constitute a default
by the Company or any Subsidiary, and to the best knowledge of the Company, no
other party thereto is in default, and no event has occurred, nor state of
fact exists which, with notice or after the lapse of time to cure or both,
would constitute a default, in the due performance and observance of any
obligation, agreement, term, covenant, consideration or condition contained in
any indenture, mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which any such entity is a party or to which any
such entity or any of its properties is subject, except as may be properly
described in the registration statement or prospectus or such as in the
aggregate do not now have or are not reasonably expected to have a Material
Adverse Effect, respectively. Neither of the Company or any Subsidiary is in
violation of, or in default with respect to, any statute, rule, regulation,
order, judgment or decree, except as may be properly described in the
prospectus or such as in the aggregate do not now have and are not reasonably
expected to have a Material Adverse Effect.
(p) There is not pending or, to the best knowledge of the
Company or any Subsidiary, threatened, any action, suit, proceeding, inquiry
or investigation against the Company or any Subsidiary or any of their
respective officers and directors, trustees, general partners or members or to
which the properties, assets or rights of the Company or any Subsidiary are
subject, before or brought by any court or governmental agency or body or
board of arbitrators, which could reasonably be expected to result in any
Material Adverse Effect or which could reasonably be expected to adversely
affect the consummation of the transactions contemplated by this Agreement.
(q) The descriptions included in the registration statement and
the prospectus of the contracts, leases and other legal documents therein
described present fairly the information required to be shown, and there are
no contracts, leases, or other documents of a character required to be
10
<PAGE>
described in the registration statement or the prospectus or document
incorporated by reference therein, or to be filed as exhibits to the
registration statement or any document incorporated by reference therein,
which are not described or filed as required. To the best knowledge of the
Company and the Subsidiaries, there are no statutes or regulations applicable
to the Company or any Subsidiary or material certificates, permits or other
authorizations from governmental regulatory officials or bodies required to be
obtained or maintained by the Company or any Subsidiary of a character
required to be disclosed in the registration statement or the prospectus which
have not been so disclosed and properly described therein.
(r) To the best knowledge of the Company, the interest on all
but one of the Mortgage Bonds (as defined in the prospectus) is excludable
from gross income for federal income tax purposes, except that for any
Mortgage Bond the proceeds of which are not loaned to a charitable
organization such income is not excludable during any period when such Mortgage
Bond is held by a "substantial user" or a "related person" (as such terms are
used in the Internal Revenue Code of 1986, as amended (the "Code")). With
respect to one Mortgage Bond, to the best knowledge of the Company, base
interest is excludable from gross income for federal income tax purposes,
except with respect to any period in which it is held by a "substantial user"
or a "related person" (as such terms are used in the Code) and the contingent
interest payable on such Mortgage Bond is taxable. To the best knowledge of
the Company, the Company is not, in any material respect, a "substantial user"
of any of the Properties or a "related person" to a "substantial user," and
after consummation of the offering, will not be such a "substantial user" or
"related person." Neither the Company nor any Subsidiary has or will have any
financial liability or risk of loss with respect to Mortgage Bonds sold into a
trust in connection with a securitization transaction completed on or prior to
the date of this Agreement, except to the extent of a loss of any Company
investment in the residual interests in the trust or the Mortgage Bonds and
other bond related investments used to secure repayment of the P-Float
Interests. To the best knowledge of the Company, none of the counterparties
to the Company's hedging agreements or the hedging agreements of the owners of
the Mortgage Properties with respect to the debt service obligations on the
Mortgage Bonds is financially unsound or insolvent.
(s) Each of the Company and the Subsidiaries owns or possesses
or has obtained all material permits, licenses, franchises, certificates,
consents, orders, approvals and other authorizations of governmental or
regulatory authorities or other entities as are necessary to own or lease, as
the case may be, and to operate its respective assets and properties and to
carry on its business as presently conducted, or as contemplated in the
prospectus to be conducted (except in any case in which the failure to do so
would not have a Material Adverse Effect), and none of the Company or any
Subsidiary has received any notice of proceedings relating to revocation or
modification of any such licenses, permits, franchises, certificates,
consents, orders, approvals or authorizations that could reasonably be
expected to have a Material Adverse Effect.
11
<PAGE>
(t) Each of the Company and the Subsidiaries owns or possesses
adequate license or other rights to use all trademarks, service marks, trade
names, copyrights, software and design licenses, trade secrets, other
intangible property rights and know-how (collectively "Intangibles") necessary
to entitle the Company or the Subsidiary, as the case may be, to conduct its
respective business now, and as proposed to be conducted or operated as
described in the prospectus (except in any case in which the failure to do so
would not have a Material Adverse Effect), and none of the Company or any
Subsidiary has received notice of infringement or of conflict with (and knows
of no such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which could reasonably be expected to have a
Material Adverse Effect.
(u) The Company's and the Subsidiaries' system of internal
accounting controls taken as a whole is sufficient to meet the broad
objectives of internal accounting control insofar as those objectives pertain
to the prevention or detection of errors or irregularities in amounts that
would be material in relation to the Company's or the Subsidiaries', financial
statements; and, to the best knowledge of the Company and the Subsidiaries,
none of the Company, the Subsidiaries, or any employee or agent thereof, has
made any payment of funds of the Company or the Subsidiaries, as the case may
be, or received or retained any funds and no funds of the Company or the
Subsidiaries, as the case may be, have been set aside to be used for any
payment, in each case in violation of any law, rule or regulation.
(v) The Company has filed on a timely basis all necessary
federal, state, local and foreign income, personal property tax and franchise
tax returns required to be filed through the date hereof and has paid all
taxes shown as due thereon, except where the failure to so file would not have
a Material Adverse Effect, and no tax deficiency has been asserted against the
Company, nor does the Company know of any tax deficiency which is likely to be
asserted against it, which if determined adversely to the Company, would have
a Material Adverse Effect. All tax liabilities are adequately provided for on
the respective books of such entities to the extent required under generally
accepted accounting principles.
12
<PAGE>
(w) The Company maintains insurance (issued by insurers of
recognized financial responsibility) of the types and in the amounts generally
deemed adequate for their respective businesses and properties, and,
consistent with insurance coverage maintained by similar companies in similar
businesses, all of which insurance is in full force and effect.
(x) The Company and the Subsidiaries are in compliance in all
material respects with all federal, state and local employment and labor laws,
including, but not limited to, laws relating to non-discrimination in hiring,
promotion and pay of employees; no labor dispute with the employees of the
Company or any Subsidiary exists or, to the knowledge of the Company or any
Subsidiary, is imminent or threatened; and none of the Company or any
Subsidiary is aware of any existing, imminent or threatened labor disturbance
by the employees of any of its principal vendors or contractors that could
reasonably be expected to result in a Material Adverse Effect.
(y) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) maintained or contributed to by the Company or any
Subsidiary, or with respect to which the Company or any Subsidiary could incur
any liability under ERISA (collectively, the "Benefit Plans"), no event has
occurred and, to the best knowledge of the Company or any Subsidiary, there
exists no condition or set of circumstances, in connection with which the
Company, the or any Subsidiary could be subject to any liability under the
terms of such Benefit Plan, applicable law (including, without limitation,
ERISA and the Code) or any applicable agreement, except in any case in which
the liability would not reasonably be expected to have a Material Adverse
Effect.
(z) None of the Company or the Subsidiaries, or to the knowledge
of the Company, their officers, directors or affiliates has taken, directly or
indirectly, any action designed to, or that might reasonably be expected to,
cause or result in or constitute the stabilization or manipulation of any
security of the Company or to facilitate the sale or resale of the Shares.
13
<PAGE>
(aa) The Common Shares are registered pursuant to Section 12(b)
of the Exchange Act and are listed on the New York Stock Exchange.
(bb) Neither the Company nor the Subsidiaries have incurred any
liability for a fee, commission or other compensation on account of the
employment of a broker or finder in connection with the transactions
contemplated by this Agreement other than as contemplated hereby or as
described in the registration statement or prospectus.
(cc) For federal income tax purposes, the Company has at all
times since its formation been classified as a partnership, and not as an
association taxable as a corporation, and has not at any time since its
formation been treated as a corporation under Section 7704 of the Code and, to
the knowledge of the Company, will continue to be treated as a partnership and
not as a corporation under Section 7704 of the Code for the year ending
December 31, 1998.
(dd) Neither the Company nor any Subsidiary is, or will become
as a result of the transactions contemplated hereby, "an investment company,"
or a company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
(ee) None of the officers, trustees or 5% or greater
shareholders of the Company have any affiliation with the National Association
of Securities Dealers, Inc. (the "NASD"), except as disclosed in the
registration statement and except for Charles Baum. Any certificate signed by
any officer of the Company on behalf of the Company or any Subsidiary and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by such entity to each Underwriter as to the
matters covered thereby.
14
<PAGE>
4. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for a post-effective amendment to the registration statement to
be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause such post-effective amendment to become
effective as soon as possible and will advise you promptly and, if requested
by you, will confirm such advice in writing, when such post-effective
amendment has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the registration statement, any
pre-pricing prospectus supplement or the prospectus or for additional
information; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction or the initiation of any proceeding for such purpose; and (iii)
within the period of time referred to in paragraph (e) below, of any change in
the Company's and the Subsidiaries' financial condition, business, prospects,
investments, net worth or results of operations, or of the happening of any
event, which makes any statement of a material fact made in the registration
statement or the prospectus (as then amended or supplemented) untrue or which
requires the making of any additions to or changes in the registration
statement or the prospectus (as then amended or supplemented) in order to
state a material fact required by the Act or the regulations thereunder to be
stated therein or necessary in order to make the statements therein, as to the
prospectus in light of the circumstances in which they were made, not
misleading, or of the necessity to amend or supplement the prospectus (as then
amended or supplemented) to comply with the Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the registration statement, the Company will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge, (i) one
copy of the registration statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits
thereto, (ii) such number of conformed copies of the registration statement as
originally filed and of each amendment thereto, but without exhibits, as you
may reasonably request, (iii) such number of copies of the documents
incorporated by reference, without exhibits, as you may reasonably request,
and (iv) five copies of the exhibits to the documents incorporated by
reference.
15
<PAGE>
(d) During the period described in (e) below, (i) the Company
will not file any amendment to the registration statement or make any
amendment or supplement to the prospectus or file any document which upon
filing, becomes a document incorporated by reference therein, of which you
shall not previously have been advised or to which, after you shall have
received a copy of the document proposed to be filed, you shall reasonably
object; and (ii) no such further document, when it is filed, will contain an
untrue statement of a material fact or will omit, together with the documents
which it amends or supplements or into which it is incorporated by reference,
to state a material fact required to be stated therein or necessary in order
to make the statements therein not misleading.
(e) As soon after the execution and delivery of this Agreement
as possible and thereafter from time to time for such period as in the opinion
of counsel for the Underwriters a prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer, the Company
will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the prospectus (and of any amendment or supplement
thereto) as you may reasonably request. Subject to the provisions of
subsection (g) below, the Company consents to the use of the prospectus (and
of any amendment or supplement thereto) in accordance with the provisions of
the Act and with the securities or Blue Sky laws or real estate syndication
laws of the jurisdictions in which the Shares are offered by the several
Underwriters and by all dealers to whom Shares may be sold, both in connection
with the offering and sale of the Shares and for such period of time
thereafter as the prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer. If during such period of
time any event shall occur that in the judgment of the Company or in the
opinion of counsel for the Underwriters is required to be set forth in the
prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the prospectus (or to file under the Exchange Act any document which,
upon filing, becomes a document incorporated by reference therein) in order to
comply with the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such document), and will
expeditiously furnish to the Underwriters and dealers a reasonable number of
copies thereof.
(f) The Company will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws or real estate syndication laws of such
jurisdictions as you may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
registration or qualification and continue such qualification in effect so
long as required for distribution of the Shares; provided that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it
to service of process in suits or taxation, other than those arising out of
the offering or sale of the Shares, in any jurisdiction where it is not now so
subject.
16
<PAGE>
(g) The Company will make generally available to its
shareholders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
registration statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11 (a) of the Act.
(h) The Company will furnish to its shareholders, as soon as
practicable after the end of each respective period, annual reports (including
financial statements audited by independent public accountants) and unaudited
quarterly reports of operations for each of the first three quarters of the
fiscal year, and during the period of three years hereafter, the Company will
furnish to you (i) concurrently with mailing or filing, a copy of each report
of the Company mailed to shareholders or filed with the Commission, and (ii)
from time to time such other information concerning the Company as you may
reasonably request.
(i) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
Section 10 hereof or by notice given by you terminating this Agreement
pursuant to Section 9 or Section 10 hereof) or if this Agreement shall be
terminated by the Underwriters because of any failure or refusal on the part
of the Company to comply with the terms or fulfill any of the conditions of
this Agreement to be complied with or fulfilled by the Company, the Company
agrees to reimburse the Representatives for all reasonable out-of-pocket
expenses (including fees and expenses of counsel for the Underwriters)
incurred by you in connection herewith.
(j) The Company will apply the net proceeds from the sale of the
Shares substantially in accordance with the description set forth under the
caption "Use of Proceeds" in the prospectus.
(k) The Company will timely file the prospectus pursuant to Rule
424(b) under the Act and will advise you of the time and manner of such
filing.
(l) Except as provided in this Agreement, the Company will not
offer for sale, contract to sell, sell or otherwise issue or dispose of,
directly or indirectly, any Common Shares other than Common Shares issued by
the Company pursuant to the Company's 1996 Non-Employee Directors' Share Plan,
1998 Non-Employee Directors' Share Plan, 1996 Share Incentive Plan and 1998
Share Incentive Plan, or sell or grant options, rights or warrants with
respect to any Common Shares (other than the grant of options pursuant to the
Company's option plans) for a period of ninety (90) days after the date of the
Prospectus, without the prior written consent of Legg Mason Wood Walker,
Incorporated; provided, however, that the foregoing shall not prohibit the
Company from issuing Common Shares upon conversion of the Preferred Shares or
Preferred CD Shares.
17
<PAGE>
(m) The Company has furnished or will furnish to you "lock-up"
letters in form and substance satisfactory to you, signed by each of its
current executive officers and directors named in the prospectus.
(n) Except as stated in this Agreement and in any pre-pricing
prospectus supplement and prospectus or as permitted by applicable law, the
Company has not taken, nor will take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Shares.
(o) The Company covenants that it will conduct the Company's
operations in a manner such that the Company will continue at all times to be
properly treated for federal income tax purposes as a partnership and not as a
corporation under Section 7704 of the Code.
5. Conditions of Underwriters' Obligations. The several obligations
of the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for a post-effective amendment to the registration statement to
be declared effective before the offering of the Shares may commence, such
post-effective amendment shall have become effective not later than 5:30 P.M.,
New York City time, on the date hereof, or at such later date and time as
shall be consented to in writing by you, and all filings, if any, required by
Rule 424 under the Act shall have been timely made; no stop order suspending
the effectiveness of the registration statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request
of the Commission for additional information (to be included in the
registration statement or the prospectus or otherwise) shall have been
complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the financial condition, business,
properties, investments, net worth, results of operations or cash flow of the
Company and the Subsidiaries taken as a whole not contemplated by the
prospectus, which in your reasonable opinion, as Representatives of the
several Underwriters, would materially, adversely affect the market for the
Shares, (ii) any event or development relating to or involving the Company or
any Subsidiary or any officer or director of the Company which makes any
statement made in the prospectus of a material fact untrue or which, in the
reasonable opinion of the Company and its counsel or the Underwriters and
their counsel, requires the making of any addition to or change in the
prospectus in order to state a material fact required by the Act or any other
law to be stated therein or necessary in order to make the statements therein
not misleading in light of the circumstances under which they were made, if
amending or supplementing the prospectus to reflect such event or development
would, in your reasonable opinion, as Representatives of the several
Underwriters, materially adversely affect the market for the Shares, or (iii)
any suspension of trading in any of the equity securities of the Company by
the Commission, the NASD or the New York Stock Exchange.
18
<PAGE>
(c) You shall have received on the Closing Date, an opinion of
Rogers & Wells LLP, counsel for the Company, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, to the
effect that:
(i) The Company has been duly organized and is validly
existing as a limited liability company in good standing under the laws of the
State of Delaware with full power and authority to own and lease its assets
and properties, and to conduct its business as now conducted as described in
the prospectus; and each of the Subsidiaries is duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
organization, with power and authority to own or lease its assets and
properties owned by it and conduct its business as described in the
prospectus. The outstanding shares of limited liability company interests of
Municipal Mortgage Investments, LLC have been duly authorized and validly
issued and are fully paid and nonassessable (subject to the Distribution
Liability) and, to the best of such counsel's knowledge, such shares are owned
by the Company free and clear of all liens, encumbrances and claims, and no
options, warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligations into shares of limited
liability company interests of Municipal Mortgage Investments, LLC are
outstanding.
(ii) The Company has full power and authority to enter into
this Agreement, to issue, sell and deliver the Shares as provided herein and
to consummate the transactions contemplated herein. This Agreement has been
duly authorized by all necessary action and has been executed and delivered by
the Company.
(iii) No consent, approval, authorization or other order of
or registration or filing with, any governmental agency or body is required
for the valid authorization, issuance, sale and delivery of the Shares to the
Underwriters as contemplated by this Agreement.
(iv) Neither the issuance, sale and delivery by the Company
of the Shares, nor the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby, will (a) violate
the amended and restated certificate of formation and operating agreement or
bylaws of the Company; (b) constitute a default under any contract or
agreement to which the Company is a party of which such counsel is aware; or
(c) violate any applicable statute or regulation or, to the knowledge of such
counsel, any judgment, decree, order or rule of any court or governmental
agency or body.
(v) The Shares to be issued and sold to the Underwriters
hereunder have been validly authorized by the Company. When issued and
delivered against payment therefor as provided in this Agreement, such Shares
will be validly issued, fully paid and nonassessable (subject to the
Distribution Liability). No preemptive rights of shareholders exist with
respect to any of the Shares under Delaware law, the Company's Certificate of
Formation and Operating Agreement and Bylaws or any agreements of which such
counsel is aware. To such counsel's knowledge, no person or entity holds a
right to require or participate in the registration under the Act of the Shares
20
<PAGE>
pursuant to the registration statement; and, to such counsel's knowledge,
except as set forth in the registration statement or prospectus, no person or
entity holds a right to require registration under the Act of any shares of
beneficial interest of the Company at any other time. To such counsel's
knowledge, no person or entity has a right of participation or first refusal
with respect to the sale of the Shares by the Company. The form of
certificates evidencing the Shares complies in all material respects with all
applicable requirements of Delaware law.
(vi) At March 31, 1998, the Company had authorized limited
liability company shares as set forth in the prospectus under the caption
"Capitalization." To the knowledge of such counsel, none of the issued
limited liability company interests of the Company has been issued or is owned
or held in violation of any preemptive rights of shareholders. To the
knowledge of such counsel, except as included in the prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any limited liability company
interests of the Company or any security convertible or exchangeable for
limited liability company interests of the Company.
(vii) The descriptions in the registration statement and
the prospectus of each document filed as an exhibit with the Commission and
described in the registration statement and the prospectus accurately reflect
the information required to be shown or described and there are no contracts,
leases or other documents known to such counsel of a character required to be
described in the registration statement or the prospectus or to be filed as
exhibits with the Commission, which are not described or filed as required.
There are no statutes or regulations applicable to the Company or any
Subsidiary or certificates, permits or other authorizations from governmental
regulatory officials or bodies required to be obtained or maintained by any
such entity, known to such counsel, of a character required to be disclosed in
the registration statement or the prospectus which have not been so disclosed
and properly described therein.
(viii) To such counsel's knowledge and except as described
in the registration statement or prospectus, there is not pending or
threatened, any action, suit, proceeding, inquiry or investigation against the
Company or any Subsidiary or any of their respective officers, directors or to
which the properties, assets or rights of any such entity are subject, which,
if determined adversely to any such entity, would individually or in the
aggregate have a Material Adverse Effect.
(ix) The registration statement has become effective under
the Act and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the registration statement has been issued and no proceeding
for that purpose has been instituted or is pending or contemplated under the
Act. Other than financial statements and other financial and operating or
statistical data and schedules contained therein, as to which counsel need
express no opinion, the registration statement and the prospectus, as of the
date of filing thereof, and each document incorporated by reference therein,
appear on their face to conform as to form in all material respects with the
requirements of the Act or the Exchange Act, as the case may be, and the
respective Rules and Regulations thereunder promulgated by the Commission.
21
<PAGE>
(x) Neither the Company nor the Subsidiaries are, or solely
as a result of the consummation of the transactions contemplated hereby will
become, an "investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(xi) The descriptions of statutes, regulations, legal or
governmental proceedings included or incorporated by reference in the
registration statement and prospectus are accurate in all material respects
and present fairly a summary of the information required to be disclosed under
the Act and the Rules and Regulations promulgated by the Commission. The
information in the prospectus under the captions "Risk Factors -- Tax Risks,"
"-- Registration Under the Investment Company Act," "The Company -- General"
(the second and third paragraphs thereof), "Federal Income Tax
Considerations," "Description of Common Shares," and the information in the
Company's annual report on Form 10-K for the year ended December 31, 1997, as
amended, under the caption "Description of Shares," to the extent that such
information constitutes matters of law or legal conclusions, or descriptions
of documents, has been reviewed by such counsel, is correct in all material
respects and accurately reflects the information required to be disclosed
therein under the Act and the Rules and Regulations promulgated by the
Commission.
(xii) All statements in the sections "Risk Factors -- Tax
Risks" and "Federal Income Tax Considerations," in the prospectus described as
opinions of Rogers & Wells LLP with respect to certain federal income tax
matters are hereby reaffirmed as opinions to and for the benefit of the
Underwriters, subject to the assumptions, qualifications, limitations,
representations and covenants described in those sections.
(xiii) To such counsel's knowledge, the conditions for use
of a registration statement on Form S-3 set forth in the General Instructions
to Form S-3 have been satisfied with respect to the Company and the
transactions contemplated by this Agreement and the registration statement.
In rendering their opinion as aforesaid, counsel may rely upon
an opinion or opinions, each dated the Closing Date, of Piper & Marbury L.L.P.
as to subparagraphs (iii) and (iv) above as to matters of Maryland law or
other counsel retained by them or the Company as to laws of any jurisdiction
other than the United States and jurisdictions in which they are admitted,
provided that (1) each such local counsel is acceptable to the
Representatives, (2) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to the
Representatives and is, in form and substance satisfactory to them and their
counsel, and (3) counsel shall state in their opinion that they believe that
they and the Underwriters are justified in relying thereon.
22
<PAGE>
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that while such counsel has not
independently verified and is not passing upon, and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the registration statement or the prospectus, on the basis of
their participation in the preparation of the registration statement and the
prospectus supplement dated July , 1998 (but not in the preparation of the
items incorporated by reference therein) and conferences with officers and
other representatives of the Company and representatives of the independent
public accountants for the Company, at which the contents of the registration
statement and the prospectus and related matters were discussed, and their
review of the documents incorporated by reference and certain limited
liability company records, documents and proceedings, nothing has come to the
attention of such counsel that leads them to believe that the registration
statement, at the time such registration statement became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading or that the prospectus, as of its date or the Closing
Date (or the Option Closing Date, as the case may be), included or includes an
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading (it being understood that such counsel expresses no belief with
respect to the financial statements, financial schedules and other financial
and statistical data included or incorporated by reference in the registration
statement or prospectus).
(d) You shall have received on the Closing Date, an opinion of
Gallagher Evelius & Jones, counsel for the Company, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, to the
effect that the Company is qualified to transact business and is in good
standing (i) in the jurisdiction in which it has its principal place of
business and (ii) in all other jurisdictions in which there is located real
estate securing one or more of the Company's investments, except where the
failure to so qualify in any such other jurisdiction will not have a Material
Adverse Effect on the Company.
(e) You shall have received on the Closing Date an opinion of
Piper & Marbury L.L.P., counsel for the Underwriters, dated the Closing Date
and addressed to you, as Representatives of the several Underwriters, with
respect to the matters referred to in clauses (ii), (v) and (ix) of the
foregoing paragraph (c) and such other related matters as you may request.
23
<PAGE>
(f) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from PricewaterhouseCoopers LLP, independent certified public
accountants, substantially in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
registration statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any material change in the capital stock of the Company
nor any material increase in the consolidated short-term or long-term debt of
the Company (other than in the ordinary course of business) from that set
forth or contemplated in the registration statement or the prospectus (or any
amendment or supplement thereto); (iii) there shall not have been, since the
respective dates as of which information is given in the registration
statement and the prospectus (or any amendment or supplement thereto), except
as may otherwise be stated in the registration statement and prospectus (or
any amendment or supplement thereto), any material adverse change in the
financial condition, business, prospects, properties, investments, net worth,
results of operations or cash flow of the Company taken as a whole; and (iv)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date or the Option Closing Date, as the case may be, as if made
on and as of the Closing Date or Option Closing Date, and you shall have
received a certificate, dated the Closing Date or the Option Closing Date, as
the case may be, and signed by the chief executive officer and the chief
financial officer of the Company, to the effect set forth in Sections
5(g), 5(h) and 5(i) hereof.
(h) The Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of its agreements herein contained
and required to be performed or complied with by it hereunder at or prior to
the Closing Date.
(i) The officers of the Company have carefully examined the
registration statement, the pre-pricing prospectus supplement and the
prospectus and, in such officers' opinions, as of the effective date of the
registration statement, the statements contained in the registration
statement, including any document incorporated by reference therein, were true
and correct, and such registration statement and any prospectus or any
document incorporated by reference therein did not omit to state a material
fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances in which they were
made, not misleading and, in his opinion, since the effective date of the
registration statement, no event has occurred which should have been set forth
in a supplement to or an amendment of the prospectus which has not been so set
forth in such supplement or amendment or incorporated by reference in the
prospectus.
(j) The Shares shall have been listed for trading on the New
York Stock Exchange.
24
<PAGE>
(k) The NASD, upon a review of the terms of the public offering
of the Shares, if required, shall not have objected to such offering, such
terms or the Underwriters' participation in the same.
(l) The Company shall have furnished or caused to be furnished
to you such further certificates and documents as you shall have reasonably
requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel in your reasonable discretion.
The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to the satisfaction on and as of any Option Closing Date
of the conditions set forth in this Section 6, except that, if any Option Closin
g Date is other than the Closing Date, the certificates, opinions and letters
referred to in paragraphs (c) through (h) shall be dated the Option Closing
Date in question and the opinions called for by paragraphs (c) and (d) shall
be revised to reflect the sale of Option Shares.
6. Conditions of the Obligations of the Company. The obligations of
the Company to sell and deliver the Shares as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the Option
Closing Date, as the case may be, no stop order suspending the effectiveness
of the registration statement shall have been issued and in effect or
proceedings therefor initiated or threatened.
7. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each pre-pricing prospectus supplement, the
prospectus, and each amendment or supplement to any of them; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the registration
statement, each pre-pricing prospectus supplement, the prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the
Shares, including any stamp taxes in connection with the original issuance and
25
<PAGE>
sale of the Shares; (iv) the reproduction and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda, if any, and all other
agreements or documents reproduced and delivered in connection with the
offering of the Shares; (v) the listing of the Shares on the New York Stock
Exchange; (vi) the filing fees in connection with any filings required to be
made with the NASD; (vii) the transportation and other expenses incurred by or
on behalf of Company representatives in connection with presentations to
prospective purchasers of the Shares; (viii) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local
and special counsel) for the Company and (ix) the fees and expenses of the
transfer agent for the Shares.
8. Indemnification.
(a) The Company indemnifies and holds harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and each
person, if any, who controls each Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, liabilities, expenses and damages (including, without
limitation, any and all investigative, legal and other expenses reasonably
incurred in connection with, and any and all amounts paid in settlement of,
any action, suit or proceeding between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third party, or
otherwise, or any claim asserted, which settlement has been approved by the
indemnifying party), as and when incurred, to which any Underwriter, or any
such person, may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or damages arise out of
or are based on (i) any untrue statement or alleged untrue statement of a
material fact contained in any pre-pricing prospectus supplement, the
registration statement or the prospectus or any amendment or supplement to the
registration statement or the prospectus, or in any application or other
document executed by or on behalf of the Company or based on written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Shares under the securities laws thereof or filed with
the Commission, (ii) the omission or alleged omission to state in such
document a material fact required to be stated in it or necessary to make the
statements in it, as to the prospectus, in light of the circumstances under
which they were made, not misleading, or (iii) any act or failure to act by
any Underwriter in connection with, or relating in any manner to, the Shares
or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, liability, expense or damage arising out of or
based upon matters covered by clause (i) or (ii) above (provided that the
Company shall not be liable under this clause (iii) to the extent it is
finally judicially determined by a court of competent jurisdiction that such
loss, claim, liability, expense or damage resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such underwriter
through its negligence or willful misconduct), provided that the Company will
not be liable to the extent that (i) such loss, claim, liability, expense or
damage arises from the sale of the Shares in the public offering to any person
by an Underwriter and is based on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives on behalf of any Underwriter expressly for inclusion in
the registration statement, any pre-pricing prospectus supplement or the
prospectus or (ii) such statement or omission was contained or made in any
preliminary prospectus and corrected in the prospectus and (a) any such loss,
claim, damage or liability suffered or incurred by any Underwriter (or any
person who controls any Underwriter) resulted from an action, claim or suit by
any person who purchased Shares which are the subject thereof from such
Underwriter in the offering and (b) such Underwriter failed to deliver or
provide a copy of the prospectus to such person at or prior to the
confirmation of the sale of such Shares in any case where such delivery is
required by the Act. This indemnity agreement will be in addition to any
liability that the Company might otherwise have to any person who is an
indemnified party hereunder.
26
<PAGE>
(b) Each Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the registration statement
to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only insofar as losses, claims, liabilities, expenses or
damages arise out of or are based on any untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity
with information relating to any Underwriter furnished in writing to the
Company by the Representatives on behalf of such Underwriter expressly for use
in the registration statement, pre-pricing prospectus supplement or the
prospectus. This indemnity will be in addition to any liability that each
Underwriter might otherwise have; provided, however, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discounts and commissions received by such Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section 8 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is
to be made against an indemnifying party or parties under this Section 8,
notify each such indemnifying party of the commencement of such action,
enclosing a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve it from any liability that it may have to
any indemnified party under the foregoing provisions of this Section 8 unless,
and only to the extent that, such omission results in the forfeiture of
substantive rights or defenses by the indemnifying party. If any such action
is brought against any indemnified party and it notifies the indemnifying
party of its commencement, the indemnifying party will be entitled to
participate in and, to the extent that it elects by delivering written notice
to the indemnified party promptly after receiving notice of the commencement
of the action from the indemnified party, jointly with any other indemnifying
party similarly notified, to assume the defense of the action, with counsel
reasonably satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified
party in connection with the defense. The indemnified party will have the
right to employ its own counsel in any such action, but the fees, expenses and
other charges of such counsel will be at the expense of such indemnified party
unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different from
or in addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified
party) between the indemnified party and the indemnifying party (in which case
the indemnifying party will not have the right to direct the defense of such
action on behalf of the indemnified party) or (4) the indemnifying party has
not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
27
<PAGE>
for the reasonable fees, disbursements and other charges of more than one
separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. An indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not
be unreasonably withheld). No indemnifying party shall, without the prior
written consent of each indemnified party, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated by this Section 8 (whether or
not any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising or that may arise out of such claim, action
or proceeding. Notwithstanding any other provision of this Section 8(c), if
at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as required
under this Section 8(c), such indemnifying party agrees that it shall be
liable for any settlement effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with this
Section 8(c) or otherwise provided for such reimbursement prior to the date of
such settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 8 is applicable in accordance with its terms but
for any reason is held to be unavailable from the Company or the Underwriters,
the Company and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and
other expenses reasonably incurred in connection with, and any amount paid
consistent with the Agreement in settlement of, any action, suit or proceeding
or any claim asserted, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Act, officers of the Company who signed
the Registration Statement and directors of the Company, who also may be
liable for contribution) to which the Company and any one or more of the
Underwriters may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate
to reflect not only the relative benefits referred to in the foregoing
sentence but also the relative fault of the Company, on the one hand, and the
28
<PAGE>
Underwriters, on the other, with respect to the statements or omissions which
resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to
information supplied by the Company or the Representatives on behalf of the
Underwriters, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) were to be
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to above
in this Section 8(d) shall be deemed to include, for purpose of this Section
8(d), any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions received by it, and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Act) will be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 8(d) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 8(d),
any person who controls a party to this Agreement within the meaning of the
Act will have the same rights to contribution as that party, and each officer
of the Company who signed the registration statement will have the same rights
to contribution as the Company, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice
of commencement of any action against such party in respect of which a claim
for contribution may be made under this Section 8(d), will notify any such
party or parties from whom contribution may be sought, but the omission so to
notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 8(d).
Except for a settlement entered into pursuant to the last sentence of Section
8(c) hereof, no party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).
(e) The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of the Underwriters, (ii)
acceptance of any of the Shares and payment therefor or (iii) any termination
of this Agreement.
29
<PAGE>
9. Termination. The obligations of the several Underwriters under
this Agreement may be terminated at any time prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
written notice to the Company from Legg Mason Wood Walker, Incorporated,
without liability on the part of any Underwriter to the Company, if, prior to
delivery and payment for the Shares (or the Option Shares, as the case may
be), in the sole judgment of the Representatives, (i) trading in securities
generally on the New York Stock Exchange shall have been suspended or limited
or minimum or maximum prices shall have been generally established on such
exchange or on The Nasdaq Stock Market, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by such exchanges or by order of
the Commission or the NASD or any court or other governmental authority, (ii)
a general banking moratorium shall have been declared by either Federal or New
York State authorities or (iii) any material adverse change in the financial
or securities markets in the United States or in political, financial or
economic conditions in the United States or any outbreak or escalation of
hostilities or declaration by the United States of a national emergency or war
or other calamity or crisis shall have occurred, the effect of any of which is
such as to make it, in the sole judgment of the Representatives, impracticable
or inadvisable to market the Shares on the terms and in the manner
contemplated by the prospectus.
10. Substitution of Underwriters. If any one or more of the
Underwriters shall fail or refuse to purchase any of the Firm Shares which it
or they have agreed to purchase hereunder, and the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of Firm
Shares, the other Underwriters shall be obligated, severally, to purchase the
Firm Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase, in the proportions which the number of Firm
Shares which they have respectively agreed to purchase pursuant to Section 1
bears to the aggregate number of Firm Shares which all such non-defaulting
Underwriters have so agreed to purchase, or in such other proportions as the
Representatives may specify; provided that in no event shall the maximum
number of Firm Shares which any Underwriter has become obligated to purchase
pursuant to Section 1 be increased pursuant to this Section 10 by more than
one-ninth of the number of Firm Shares agreed to be purchased by such
Underwriter without the prior written consent of such Underwriter. If any
Underwriter or Underwriters shall fail or refuse to purchase any Firm Shares
and the aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase exceeds one-tenth of the
aggregate number of the Firm Shares and arrangements satisfactory to the
Representatives and the Company for the purchase of such Firm Shares are not
made within 48 hours after such default, this Agreement will terminate without
30
<PAGE>
liability on the part of any non-defaulting Underwriter, or the Company for
the purchase or sale of any Shares under this Agreement. In any such case
either the Representatives or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus
or in any other documents or arrangements may be effected. Any action taken
pursuant to this Section 10 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
11. Miscellaneous. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, 218
North Charles Street, Baltimore, Maryland 21201, attention, Mark K. Joseph
with a copy to Robert E. King, Jr., Esq., Rogers & Wells LLP, 200 Park Avenue,
New York, New York, 10166 or (b) if to the Underwriters, to Legg Mason Wood
Walker, Incorporated at the offices of Legg Mason Wood Walker, Incorporated,
100 Light Street, 34th Floor, Baltimore, MD 21202, Attention:
Corporate Finance Department, with a copy to Piper & Marbury L.L.P., 36 S.
Charles Street, Baltimore, MD 21201, Attention: R.W. Smith, Jr. Any such
notice shall be effective only upon receipt. Any notice hereunder may be made
by telex or telephone, but if so made shall be subsequently confirmed in
writing.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company and of the controlling persons, directors and
officers referred to in Section 8, and their respective successors and
assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" as used in this
Agreement shall not include a purchaser, as such purchaser, of Shares from any
of the several Underwriters.
All representations, warranties and agreements of the Company contained
herein or in certificates or other instruments delivered pursuant hereto,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any of their
controlling persons and shall survive delivery of and payment for the Shares
hereunder.
31
<PAGE>
Any action required or permitted to be taken by the Representatives under
this Agreement may be taken by them jointly or by Legg Mason Wood Walker,
Incorporated.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby irrevocably waive any right
they may have to a trial by jury in respect of any claim based upon or arising
out of this Agreement or the transactions contemplated hereby.
This Agreement may not be amended or otherwise modified or any provision
hereof waived except by an instrument in writing signed by Legg Mason Wood
Walker, Incorporated, on behalf of the Underwriters and the Company.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
MUNICIPAL MORTGAGE AND EQUITY, L.L.C.
By: /s/ Michael L. Falcone
Name: Michael L. Falcone
Title: President
32
<PAGE>
Confirmed as of the date first above mentioned:
LEGG MASON WOOD WALKER, INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
WHEAT FIRST SECURITIES, INC.
Acting on behalf of themselves and
as the Representatives of the several
Underwriters named in Schedule I hereof.
By: LEGG MASON WOOD WALKER, INCORPORATED
By: /s/Edwin Bradley
Authorized Officer
<PAGE>
UNDERWRITERS
Name of Underwriters Number of Firm Shares Purchased
Legg Mason Wood Walker, Incorporated . . . . . . . . . . .529,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . .528,000
Wheat First Securities, Inc. . . . . . . . . . . . . . . .528,000
Bear, Sterns & Co. Inc. . . . . . . . . . . . . . . . . . 50,000
BT Alex. Brown Incorporated. . . . . . . . . . . . . . . . 50,000
A.G. Edwards & Sons, Inc.. . . . . . . . . . . . . . . . . 50,000
Morgan Stanley & Co. Incorporated. . . . . . . . . . . . . 50,000
Smith Barney Inc.. . . . . . . . . . . . . . . . . . . . . 50,000
Advest Inc.. . . . . . . . . . . . . . . . . . . . . . . . 35,000
J.C. Bradford & Co.. . . . . . . . . . . . . . . . . . . . 35,000
Branch, Cabell & Co., Inc. . . . . . . . . . . . . . . . . 35,000
Crowell, Weedon & Co.. . . . . . . . . . . . . . . . . . . 35,000
Everen Securities, Inc.. . . . . . . . . . . . . . . . . . 35,000
Ferris, Baker Watts, Incorporated. . . . . . . . . . . . . 35,000
Folger Nolan Fleming Douglas Inc.. . . . . . . . . . . . . 35,000
Gabelli & Company, Inc.. . . . . . . . . . . . . . . . . . 35,000
J.J.B. Hilliard W.L. Lyons Inc.. . . . . . . . . . . . . . 35,000
Janney Montgomery Scott Inc. . . . . . . . . . . . . . . . 35,000
Edward D. Jones & Co., L.P.. . . . . . . . . . . . . . . . 35,000
McDonald & Company Securities, Inc.. . . . . . . . . . . . 35,000
Parker/Hunter Incorporated . . . . . . . . . . . . . . . . 35,000
Raymond James & Associates, Inc. . . . . . . . . . . . . . 35,000
The Robinson-Humphrey Company, LLC . . . . . . . . . . . . 35,000
Scott & Stringfellow, Inc. . . . . . . . . . . . . . . . . 35,000
Stifel, Nicolaus & Company, Incorporated . . . . . . . . . 35,000
Sutro & Co. Incorporated . . . . . . . . . . . . . . . . . 35,000
Tucker Anthony Incorporated. . . . . . . . . . . . . . . . 35,000
---------
Total . . . . . . . . . . . . . . . . . . . . . . .2,500,000
=========
<PAGE>
Exhibit A
Municipal Mortage Investments, LLC
Municipal Mortgage Servicing LLC
MMA Cap LLC
Exhibit 8.1
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
July 24, 1998
Municipal Mortgage
and Equity, LLC
218 North Charles Street
Suite 500
Baltimore, Maryland 21201
Re: Municipal Mortgage and Equity, LLC (the "Company")
Offering of up to 2,875,000 Common Shares
Ladies and Gentlemen:
You have requested our opinion with respect to certain federal income tax
matters in connection with the transactions contemplated by the Prospectus
Supplement dated July 22, 1998 to the Prospectus dated June 30, 1998 (together,
the "Prospectus"), included in the Registration Statement on Form S-3 (File No.
333-56049), originally filed with the Securities and Exchange Commission on
June 4, 1998, and as subsequently amended, relating to the Company. All
capitalized terms used herein have their respective meanings set forth in the
Prospectus unless otherwise stated.
We have acted as counsel to the Company with respect to the Offering of the
Common Shares pursuant to the Registration Statement. This letter is for
delivery in connection with the Offering and is intended to confirm as of the
date hereof the opinions described in the sections of the Prospectus captioned
"Risk Factors-Tax Risks" and "Federal Income Tax Considerations." We hereby
consent to the use of this opinion letter as an exhibit to the Registration
Statement of the Company and to the reference to this Firm in the Registration
Statement under the captions "Risk Factors-Tax Risks," "Federal Income Tax
Considerations" and "Legal Matters."
In rendering the opinion stated below, we have examined and relied, with your
consent, upon the following:
(i) the Prospectus, the Registration Statement, as subsequently
amended;
(ii) the Amended and Restated Certificate of Formation and Operating
Agreement; and
(iii) such other documents, records and instruments as we have
deemed necessary to enable us to render the opinions referred to in this
letter.
In our examination of the foregoing documents, we have assumed, with your
consent, that (i) all documents reviewed by us are original documents, or true
and accurate copies of original documents, and have not been subsequently
amended, (ii) the signatures on each original document are genuine, (iii) each
<PAGE>
Municipal Mortgage Page 2
and Equity, LLC
July 24, 1998
party who executed the document had proper authority and capacity, (iv) all
representations and statements set forth in such documents are true and
correct, (v) all obligations imposed by any such documents on the parties
thereto have been or will be performed or satisfied in accordance with their
terms and (vi) the Company at all times will be organized and operated in
accordance with the terms of such documents. We have further assumed the
accuracy of the statements and descriptions of the Company's intended
activities as described in the Prospectus.
For purposes of rendering the opinion stated below, we have also assumed, with
your consent, the accuracy of the representations and covenants contained in
the Certificate of Representations dated as of the date hereof provided to us
by the Company and attached hereto. These representations generally relate to
the classification and the operation of the Company.
Based upon and subject to the foregoing, we are of the opinion that:
(1) The opinions set forth in the Prospectus under the captions
"Risk Factors-Tax Risks" and "Federal Income Tax Considerations" and identified
as our opinions are hereby confirmed.
(2) The summary of federal income tax considerations set forth in
the Prospectus fairly summarizes the federal income tax considerations that are
likely to be material to a typical holder of Common Shares.
The opinions stated above are subject to and based upon the assumptions,
qualifications, limitations, representations and covenants discussed in the
Prospectus. The opinions stated above also represent our conclusions as to the
application of federal income tax laws existing as of the date of this letter
to the transactions contemplated in the Prospectus and we can give no assurance
that legislative enactments, administrative changes or court decisions may not
be forthcoming that would modify or supersede our opinions. Moreover, there
can be no assurance that positions contrary to our opinions will not be taken
by the Internal Revenue Service, or that a court considering the issues would
not hold contrary to such opinions. Further, the opinions set forth above
represents our conclusions based upon the documents, facts and representations
referred to above. Any material amendments to such documents, changes in any
significant facts or inaccuracy of such representations could affect the
opinions referred to herein. Although we have made such inquiries and
performed such investigations as we have deemed necessary to fulfill our
professional responsibilities as counsel, we have not undertaken an independent
investigation of all of the facts referred to in this letter.
We express no opinion as to any federal income tax issue or other matter except
those set forth above.
Very truly yours,
/s/ Rogers & Wells LLP
<PAGE>
Exhibit 20.1
PRESS RELEASE CONTACT: Derek K. Cole
Director, Investor Relations
FOR IMMEDIATE RELEASE (888)788-3863
MUNIMAE ANNOUNCES THE PUBLIC OFFERING OF 2,500,000 COMMON SHARES
BALTIMORE, MD, July 23, 1998 -- Municipal Mortgage & Equity, L.L.C. (NYSE:
MMA), also known as MuniMae, announced today the public offering of
2,500,000 growth, or common, shares at a price of $21.125 per share.
Mark K. Joseph, Chairman of the Board and CEO of MuniMae stated, "We are
pleased to complete our second equity offering of the year. The proceeds
from this offering will be used to fund new investment transactions. This
offering continues, and contributes to, our plans for the growth of
MuniMae."
Net proceeds of the offering to MuniMae will be $49.7 million. The
underwriters, led by Legg Mason Wood Walker, Incorporated, Merrill Lynch &
Co. and Wheat First Butcher Singer, have an option to purchase an additional
375,000 shares to cover over-allotments. If the option is exercised in
full, the net proceeds to the Company would then be $57.2 million. The
offering is expected to close on July 28, 1998. A written prospectus
supplement prepared in connection with this offering may be obtained by
calling the Company at (888) 788-3863.
MuniMae originates, invests in, and services tax-exempt multifamily housing
bonds. The fifty-two multifamily housing complexes which secure MuniMae's
portfolio are located in twenty-six markets in thirteen states and contain
13,684 units with an average occupancy of 94%. The properties represent
approximately $600 million in real estate value. Most of MuniMae's tax-
exempt bonds and other bond related investments provide for MuniMae to
participate in the appreciation of the underlying apartments on a tax-exempt
basis.
MuniMae is organized as a limited liability company which provides for tax
advantages as well as the benefit of corporate governance. MuniMae, like
Real Estate Investment Trusts ("REITs"), is exempt from tax at the corporate
level. In addition, the Company passes through to its shareholders
primarily tax-exempt dividends which are generated by its municipal bond
investments. Dividends to shareholders are declared and paid quarterly.
MUNIMAE: TAX-EXEMPT DIVIDENDS AND GROWTH THROUGH REAL ESTATE
#
7/23/98
<PAGE>
