EXHIBIT 1.1
LUMINENT MORTGAGE CAPITAL, INC.
10,000,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
March 29, 2004
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
CREDIT SUISSE FIRST BOSTON LLC
JMP SECURITIES LLC
FLAGSTONE SECURITIES, LLC
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 Xxxxxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Luminent Mortgage Capital, Inc., a Maryland corporation (the "Company"),
confirms its agreement with each of the Underwriters listed on Schedule I hereto
(collectively, the "Underwriters"), for whom you are acting as representatives
(in such capacity, the "Representatives"), with respect to (i) the sale by the
Company of Ten Million (10,000,000) shares (the "Initial Shares") of Common
Stock, par value $0.001 per share, of the Company ("Common Stock") and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of shares of Common Stock set forth opposite the names of the
Underwriters in Schedule I hereto, and (ii) the grant of the option to the
Underwriters described in Section 1(b) hereof to purchase from the Company all
or any part of One Million, Five Hundred Thousand (1,500,000) additional shares
of Common Stock to cover over-allotments (the "Option Shares"), if any, as set
forth in Schedule I hereto. The Initial Shares and all or any part of the Option
Shares are hereinafter called, collectively, the "Shares."
The Company understands that the Underwriters propose to offer the Shares
for sale to the public as set forth in the Prospectus (as defined below).
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (No. 333-113493) relating to
the registration of the Shares under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations thereunder (the "Securities Act
Regulations"). The Company has prepared and filed such amendments to such
registration statement and such preliminary and final prospectuses as may have
been required to the date hereof, and will file such additional amendments
thereto and such amended prospectuses as may hereafter be required. Such
registration statement has been declared effective under the Securities Act by
the Commission. Such registration statement, as amended at the time it became
effective, including all information deemed to be a part of the registration
statement (whether by incorporation by reference, pursuant to Rule 430A(b) of
the Securities Act Regulations or otherwise), is hereinafter called the
"Registration Statement," except that, if the Company files a post-effective
amendment to
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such registration statement which becomes effective prior to the Closing Time
(as defined below), "Registration Statement" shall refer to such registration
statement as so amended. Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the 462(b) Registration Statement. Each prospectus included in the
registration statement, or amendments thereof or supplements thereto, and any
prospectus filed with the Commission by the Company with the consent of the
Underwriters pursuant to Rule 424(a) of the Securities Act Regulations is
hereinafter called the "Preliminary Prospectus." The term "Prospectus" means the
prospectus in the form included in the Registration Statement at the time of
effectiveness, or if Rule 430A of the Securities Act Regulations is relied upon,
the term "Prospectus" shall mean the final prospectus, as first filed with the
Commission pursuant to Rule 424(b) of the Securities Act Regulations, and any
amendments thereof or supplements thereto. The Commission has not issued any
order preventing or suspending the use of any Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $________________ for the Common Stock, the Company agrees to
sell to each Underwriter the Initial Shares, and each Underwriter agrees,
severally and not jointly, to purchase from the Company the number of Initial
Shares set forth in Schedule I opposite such Underwriter's name, plus any
additional number of Initial Shares which such Underwriter may become obligated
to purchase pursuant to the provisions of Section 8 hereof, subject in each
case, to such adjustments among the Underwriters as the Representatives in their
sole discretion shall make to eliminate any sales or purchases of fractional
shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company hereby grants an option
to purchase up to One Million, Five Hundred Thousand (1,500,000) shares of
Common Stock to the Underwriters, acting severally and not jointly, in the
respective numbers of shares of Common Stock set forth opposite the names of the
Underwriters in Schedule I hereto, plus any additional number of Option Shares
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof. The option hereby granted will expire 30 days
after the date hereof and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Shares upon notice by the
Representatives to the Company setting forth the number of Option Shares as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Shares. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives, but
shall not be later than three full business days (or earlier, without the
consent of the Company, than two full business days) after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined.
2. Payment and Delivery:
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(a) Initial Shares. Payment of the purchase price for the Initial
Shares shall be made to the Company by wire transfer of immediately available
funds at the offices of O'Melveny & Xxxxx LLP, located at 000 Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000 (unless another place shall be
agreed upon by the Representatives and the Company) against delivery of the
certificates for the Initial Shares to the Representatives for the respective
accounts of the Underwriters. Such payment and delivery shall be made at 9:30
a.m., New York City time, on the third (fourth, if pricing occurs after 4:30
p.m., New York City time) business day after the date hereof (unless another
time, not later than ten business days after such date, shall be agreed to by
the Representatives and the Company). The time at which such payment and
delivery are actually made is hereinafter sometimes called the "Closing Time."
Unless the Representatives elect to take delivery of the Initial Shares by
credit through full FAST transfer to the accounts at The Depository Trust
Company designated by the Representatives, certificates for the Initial Shares
shall be delivered to the Representatives in definitive form registered in such
names and in such denominations as the Representatives shall specify. For the
purpose of expediting the checking of the certificates for the Initial Shares by
the Representatives, the Company agrees to make such certificates available to
the Representatives for such purpose at least one full business day preceding
the Closing Time.
(b) Option Shares. In addition, payment of the purchase price for
the Option Shares shall be made to the Company by wire transfer of immediately
available funds at the offices of O'Melveny & Xxxxx LLP located at the location
indicated in Section 2(a) above (unless another place shall be agreed upon by
the Representatives and the Company) against delivery of the certificates for
the Option Shares to the Representatives for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 9:30 a.m., New York
City time, on each Date of Delivery determined pursuant to Section 1(b) above.
Unless the Representatives elect to take delivery of the Initial Shares by
credit through full FAST transfer to the accounts at The Depository Trust
Company designated by the Representatives, certificates for the Option Shares
shall be delivered to the Representatives in definitive form registered in such
names and in such denominations as the Representatives shall specify. For the
purpose of expediting the checking of the certificates for the Option Shares by
the Representatives, the Company agrees to make such certificates available to
the Representatives for such purpose at least one full business day preceding
the relevant Date of Delivery.
3. Representations and Warranties of the Company: The Company represents
and warrants to the Underwriters that:
(a) the Company has an authorized capitalization as set forth in the
Preliminary Prospectus and Prospectus under the caption "Capitalization"; all of
the outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable; except as
disclosed in the Preliminary Prospectus and Prospectus, there are no outstanding
(i) securities or obligations of the Company convertible into or exchangeable
for any capital stock of the Company, (ii) warrants, rights or options to
subscribe for or purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations, or (iii) obligations of
the Company to issue any shares of capital stock, any such convertible or
exchangeable securities or obligation, or any such warrants, rights or options;
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(b) the Company has no Subsidiaries (each corporation, partnership,
joint venture or limited liability company in which the Company owns at least
fifty percent (50%) of the equity interests of such corporation, partnership,
joint venture or limited liability company shall be a "Subsidiary" of the
Company);
(c) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland with
corporate power and authority to own its properties, to conduct its business as
described in the Registration Statement and Prospectus and to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
(d) the Company is duly qualified or licensed by each jurisdiction
in which it conducts its business and in which the failure to be so qualified or
licensed could reasonably be expected to have a material adverse effect on the
assets, business, operations, earnings, properties or condition (financial or
otherwise) of the Company (a "Material Adverse Effect on the Company"), and the
Company is duly qualified, and in good standing, in each jurisdiction in which
it owns or leases real property or maintains an office and in which such
qualification is necessary, except where the failure to be so qualified and in
good standing would not reasonably be expected to have a Material Adverse Effect
on the Company; the Company does not own, directly or indirectly, any capital
stock or other equity securities of any other corporation or any ownership
interest in any partnership, joint venture or other association, provided that
for purposes of this paragraph, the mortgage-backed securities owned by the
Company shall not be deemed capital stock, equity securities or ownership
interests;
(e) the Company is in material compliance with all applicable
federal, state, local and foreign laws, rules, regulations, orders, decrees and
judgments necessary to conduct the business now operated by it and has not
received any notice of changes in existing federal, state, local and foreign
laws, rules, regulations, orders, decrees and judgments that, if modified
adversely to the Company would have a Material Adverse Effect on the Company;
(f) the Company is not in breach of or in default under (nor has any
event occurred that with notice, lapse of time, or both, would constitute a
breach of, or default under) its articles of incorporation or by-laws
(collectively, the "Company Charter Documents"), or in the performance or
observance of any obligation, agreement, covenant or condition contained in any
license, indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument to which the Company is a party or by which it or its
properties is bound, except for such breaches or defaults that would not have a
Material Adverse Effect on the Company; the execution, delivery and performance
of this Agreement, and consummation of the transactions contemplated hereby will
not: (i) conflict with, or result in any breach of, or constitute a default
under (nor constitute any event which with notice, lapse of time, or both would
constitute a breach of, or default under), (A) any provision of the Company
Charter Documents, or (B) any provision of any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company is a party or by which it or its properties may be bound or
affected, or under any federal, state, local or foreign law, regulation or rule
or any decree, judgment or order applicable to the Company or (ii) result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or assets of the Company, except in
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the case of clause (i)(B) and this clause (ii) for such breaches, defaults,
liens, charges, claims or encumbrances which would not have a Material Adverse
Effect on the Company;
(g) this Agreement has been duly authorized, executed and delivered
by the Company and constitutes a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general principles of
equity, and except to the extent that the indemnification and contribution
provisions of Section 9 hereof may be limited by federal or state securities
laws and public policy considerations in respect thereof;
(h) no approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the transactions
contemplated hereby, and its sale and delivery of the Shares, other than (i)
such as have been obtained, or will have been obtained at the Closing Time or
the relevant Date of Delivery, as the case may be, under the Securities Act,
(ii) such approvals as have been obtained, or will have been obtained at the
Closing Time or the relevant Date of Delivery, as the case may be, in connection
with the approval of the quotation and listing of the Shares on the New York
Stock Exchange, (iii) any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Shares are being offered by
the Underwriters and (iv) such approvals as may be required by the rules of the
National Association of Securities Dealers, Inc. ("NASD");
(i) the Company possesses all certificates, authorizations or
permits required to be issued by appropriate governmental agencies or bodies in
order to conduct its business as described in the Prospectus and has not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit that, if determined or modified
adversely to the Company, would, individually or in the aggregate, have a
Material Adverse Effect on the Company;
(j) the Registration Statement is effective (and any Rule 462(b)
Registration Statement will become effective) under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement (or any
Rule 462(b) Registration Statement) has been issued under the Securities Act
and, to the Company's knowledge, no proceedings for that purpose have been
instituted or are pending or are threatened by the Commission and any request on
the part of the Commission for additional information has been complied with;
(k) the Preliminary Prospectus and the Registration Statement comply
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable
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filing date and at the Closing Time and on each Date of Delivery (if any),
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no warranty or representation with
respect to any statement contained in the Registration Statement or the
Prospectus in reliance upon and in conformity with the information concerning
the Underwriters and furnished in writing by or on behalf of the Underwriters
through the Representatives to the Company expressly for use in the Registration
Statement or the Prospectus (that information being limited to that described in
the last sentence of the first paragraph of Section 9(c) hereof);
(l) the Preliminary Prospectus was and the Prospectus delivered to
the Underwriters for use in connection with this offering will be identical to
the versions of the Preliminary Prospectus and Prospectus created to be
transmitted to the Commission for filing via the Electronic Data Gathering
Analysis and Retrieval System ("XXXXX"), except to the extent permitted by
Regulation S-T;
(m) all legal or governmental proceedings, contracts or documents of
a character required to be filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus have been so filed, summarized or
described as required, and such descriptions present fairly the information
required to be shown;
(n) there are no actions, suits, proceedings, or, to the knowledge
of the Company, inquiries or investigations, pending or, to the knowledge of the
Company, threatened against the Company or any of the officers or directors of
the Company or to which the properties, assets or rights of the Company are
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which would be reasonably likely to result in a judgment, decree, award
or order having a Material Adverse Effect on the Company;
(o) the financial statements, including the notes thereto, included
in the Registration Statement and the Prospectus present fairly, in all material
respects, the financial position of the Company as of the dates indicated and
the results of operations and changes in financial position and cash flows of
the Company for the periods specified; such financial statements, including the
notes thereto, have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis during the periods involved
and in accordance with Regulation S-X promulgated by the Commission; and the
financial statement schedules included in the Registration Statement and the
amounts in the Prospectus under the captions "Selected Financial Data" and
"Capitalization" fairly present the information shown therein and have been
compiled on a basis consistent with the financial statements included in the
Registration Statement and the Prospectus;
(p) Deloitte & Touche LLP, whose reports on the audited financial
statements of the Company are filed with the Commission as part of the
Registration Statement and Prospectus, is and was, to the Company's knowledge,
during the periods covered by its reports, an independent public accountant as
required by the Securities Act and the Securities Act Regulations;
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(q) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has not been
(i) any material adverse change in the assets, business, operations, earnings,
properties or condition (financial or otherwise) of the Company, whether or not
arising in the ordinary course of business, (ii) any transaction, which is
material to the Company, contemplated or entered into by the Company which is
outside the ordinary course of the Company's business, (iii) any obligation,
contingent or otherwise, directly or indirectly incurred by the Company, which
is material to the Company and which is outside the ordinary course of the
Company's business or (iv) any dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock;
(r) the Shares, the Management Agreement (as defined below) and the
Registration Rights Agreement (as defined below) conform in all material
respects to the description thereof contained in the Registration Statement and
the Prospectus;
(s) there are no persons with registration or other similar rights
to have any equity securities of the Company, including securities which are
convertible into or exchangeable for equity securities, registered pursuant to
the Registration Statement or otherwise registered by the Company under the
Securities Act, other than pursuant to the Registration Rights Agreement dated
as of June 11, 2003 (the "Registration Rights Agreement"), by and between the
Company and FBR or the Management Agreement dated as of June 11, 2003 (the
"Management Agreement"), by and between the Company and Seneca Capital
Management LLC, a California limited liability company ("Seneca");
(t) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and nonassessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the Company Charter Documents, under
any agreement to which the Company is a party;
(u) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(v) neither the Company nor any of its affiliates, except for
affiliates of the Company who are associated or affiliated with Seneca, (i) is
required to register as a "broker" or "dealer" in accordance with the provisions
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the
rules and regulations thereunder, or (ii) directly, or indirectly through one or
more intermediaries, controls or has any other association with (within the
meaning of Article I of the By-laws of the NASD) any member firm of the NASD;
(w) any certificate signed by any officer of the Company delivered
to the Representatives or to counsel for the Underwriters pursuant to or in
connection with this Agreement shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby;
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(x) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the Company Charter Documents and the
requirements of the New York Stock Exchange;
(y) the Company is not in breach of, or default under (nor has any
event occurred which with notice, lapse of time, or both would constitute a
breach of, or default under), the Management Agreement, except for breaches or
defaults that would not have a Material Adverse Effect on the Company; the
Management Agreement has not been amended, and constitutes a legal, valid and
binding agreement of the Company enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general principles of equity;
(z) the Company does not own or lease any real property; the Company
has good title to all personal property owned by it, free and clear of all
liens, security interests, pledges, charges, encumbrances, mortgages and
defects, except such as are disclosed in the Prospectus or such as do not
materially and adversely affect the value of such property and do not materially
interfere with the use made of such property by the Company; and any property
held under lease by the Company are held under valid, existing and enforceable
leases, with such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the use made or proposed to be made of such
property by the Company;
(aa) the Company owns, possesses or can acquire on reasonable terms
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company to conduct its
business as described in the Prospectus, and the Company has not received
written notice of infringement of or conflict with asserted rights of others
with respect to any Intangibles which could have a Material Adverse Effect on
the Company;
(bb) the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(cc) the Company has filed on a timely basis all necessary federal,
state, local and foreign income and franchise tax returns required to be filed
through the date hereof and has paid or will pay on a timely basis all taxes
shown as due thereon; 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 it could have a Material
Adverse Effect on the Company; all tax liabilities are adequately provided for
on the books of the Company;
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(dd) the Company maintains insurance (issued by insurers of
recognized financial responsibility) of the types and in the amounts generally
deemed adequate for its business and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect;
(ee) the Company has not, to its knowledge, violated, or received
written notice of any violation with respect to, any applicable environmental,
safety or similar law applicable to the business of the Company, nor any federal
or state law relating to discrimination in the hiring, promotion or pay of
employees, nor any applicable federal or state wages and hours law, nor any
provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, the violation of any of which would be
reasonably expected to have a Material Adverse Effect on the Company;
(ff) neither the Company nor any executive officer or director
purporting to act on behalf of the Company has at any time (i) made any unlawful
contributions to any candidate for political office or failed to disclose fully
any such contributions, or (ii) made any payment to any state, federal or
foreign governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or allowed by
applicable law;
(gg) except as otherwise disclosed in the Prospectus, there are no
outstanding loans or advances or guarantees of indebtedness by the Company to or
for the benefit of Seneca or any of the officers or directors of the Company or
any of the members of the families of any of them;
(hh) all securities issued by the Company have been issued and sold
in material compliance with (i) all applicable federal and state securities
laws, (ii) the laws of the applicable jurisdiction of incorporation of the
issuing entity, and (iii) to the extent applicable, to the issuing entity, the
requirements of the New York Stock Exchange;
(ii) in connection with this offering, the Company has not offered
and will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common Stock in a manner in violation of the
Securities Act; in connection with this offering, the Company has not
distributed and will not distribute any offering materials in connection with
the offer and sale of the Shares other than the Preliminary Prospectus, the
Prospectus and any related marketing materials developed jointly and approved by
the Company and the Representatives;
(jj) the Company has complied and will comply with all the
provisions of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of
Florida); neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba;
9
(kk) the Company has not incurred any liability for any finder's
fees or similar payments in connection with the transactions herein
contemplated, other than pursuant to this Agreement;
(ll) except for the stockholder demand provisions of Section
857(f)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), the
Company, since its date of inception, has been, and upon the sale of the Shares
will continue to be, organized and operated in material conformity with the
requirements for qualification and taxation as a "real estate investment trust"
(a "REIT") under Sections 856 through 860 of the Code, for all taxable years
commencing with its taxable year ended December 31, 2003; the current and
proposed method of operation of the Company as described in the Prospectus will
enable the Company to continue to meet the requirements for qualification and
taxation as a REIT under the Code presently in effect, and, to the Company's
knowledge, no actions have been taken (or not taken which are required to be
taken) by the Company which would cause such qualification to be lost; as of the
date of this Agreement, the Company intends to continue to operate in a manner
which would permit it to qualify as a REIT under the Code; as of the date of
this Agreement, the Company has no intention of changing its operations or
engaging in activities which would cause it to fail to qualify as a REIT;
(mm) the Company has retained Deloitte & Touche LLP as its qualified
accountants and qualified tax experts, and Deloitte & Touche LLP (i)
periodically tests procedures and conduct annual compliance reviews designed to
determine compliance with the REIT provisions of the Code and (ii) assists the
Company in monitoring what it believes are appropriate accounting systems and
procedures designed to determine compliance with the REIT provisions of the
Code;
(nn) the Company is not, and, after giving effect to the offering
and sale of the Shares, will not be an "investment company", or an entity
"controlled" by an "investment company", as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act"); and
(oo) each of the directors of the Company who is designated as an
"Independent Director" in the Prospectus is an "Independent Director" as defined
in the Amended and Restated Bylaws of the Company; each of the directors of the
Company who is designated as "Independent Director" in the Prospectus satisfies
the requirements for independence under the Xxxxxxxx-Xxxxx Act of 2002 and the
rules of the New York Stock Exchange and the Chairman of the Audit Committee of
the Board of Directors of the Company is a qualified financial expert under the
Xxxxxxxx-Xxxxx Act of 2002.
4. Certain Covenants: The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such states as the Representatives may designate and to
maintain such qualifications in effect as long as required for the distribution
of the Shares, provided that the Company shall not be required to qualify as a
foreign corporation or to consent to the service of process under the laws of
any such state (except service of process with respect to the offering and sale
of the Shares);
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(b) to prepare the Prospectus in a form approved by the Underwriters
and to file such Prospectus with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations by not later than 10:00 a.m. (New York City time) on
the second business day following the execution and delivery of this Agreement
or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Securities Act, and to furnish promptly (and with respect to the initial
delivery of such Prospectus, not later than 10:00 a.m. (New York City time) on
the second business day following the execution and delivery of this Agreement)
to the Underwriters as many copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the Registration Statement) as
the Underwriters may reasonably request for the purposes contemplated by the
Securities Act Regulations;
(c) to advise the Representatives promptly and (if requested by the
Representatives) to confirm such advice in writing when any post-effective
amendment thereto becomes effective under the Securities Act Regulations;
(d) to advise the Representatives promptly, of (i) the receipt of
any comments from, or any request by, the Commission for amendments or
supplements to the Registration Statement, Preliminary Prospectus or Prospectus,
or for additional information with respect thereto, or (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, or of the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the initiation or
threatening in writing of any proceedings for any of such purposes and, if the
Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which the Representatives shall
reasonably object in writing;
(e) to furnish to the Underwriters at the request of any of the
Representatives, for a period of two years from the date of this Agreement, (i)
as soon as reasonably practicable, copies of all annual, quarterly and current
reports or other communications supplied to holders of shares of Common Stock,
(ii) as soon as reasonably practicable after the filing thereof, copies of all
reports filed by the Company with the Commission, the NASD or any securities
exchange and (iii) such other information as the Underwriters may reasonably
request regarding the Company; provided, however, any information that is deemed
by the Company to be confidential will be subject to the execution and delivery
of non-disclosure agreements in favor of the Company;
(f) to advise the Underwriters promptly of the happening of any
event known to the Company within the time during which a Prospectus relating to
the Shares is required to be delivered under the Securities Act Regulations
which, in the judgment of the Company, would require the making of any change in
the Prospectus then being used so that the Prospectus would not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and, during such
time, to prepare and furnish, at the Company's expense, to the Underwriters
promptly such amendments or supplements to the Prospectus as may be necessary to
reflect any such change and to furnish to the Underwriters a
11
copy of such proposed amendment or supplement before filing any such amendment
or supplement with the Commission;
(g) to furnish promptly to each Representative, upon request, a
signed copy of the Registration Statement, as initially filed with the
Commission, and all amendments or supplements thereto (including all exhibits
filed therewith or incorporated by reference therein) and such number of
conformed copies of the foregoing as the Representatives may reasonably request;
(h) to furnish to each Representative, not less than two business
days before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (f) above, a copy of
any document proposed to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act;
(i) to apply the net proceeds of the sale of the Shares in
accordance with its statements under the caption "Use of Proceeds" in the
Prospectus;
(j) to make generally available to its security holders as soon as
practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the Registration
Statement, an earnings statement complying with the provisions of Section 11(a)
of the Securities Act (in form, at the option of the Company, complying with the
provisions of Rule 158 of the Securities Act Regulations) covering a period of
12 months beginning after the effective date of the Registration Statement;
(k) to use its best efforts to effect and maintain the quotation and
listing of the Shares on the New York Stock Exchange and to file with such
exchange all documents and notices required by such exchange of companies that
have securities that are traded thereon;
(l) to engage and maintain, at its expense, a registrar and transfer
agent for the Shares;
(m) to use its reasonable efforts to meet the requirements for
qualification as a real estate investment trust under Sections 856 through 860
of the Code;
(n) to conduct its affairs in such a manner so as to reasonably
ensure that the Company will not be an "investment company" or an entity
"controlled" by an investment company within the meaning of the Investment
Company Act;
(o) to refrain, until June 11, 2004, without the prior written
consent of Friedman, Billings, Xxxxxx & Co., Inc. ("FBR"), from (i) offering,
pledging, selling, contracting to sell, selling any option or contract to
purchase, purchasing any option or contract to sell, granting any option for the
sale of, or otherwise disposing of or transferring, directly or indirectly, any
share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or filing any registration statement under the
Securities Act with respect to any of the foregoing, or (ii) entering into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common
12
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Shares to be sold hereunder, (B) the registration and
sale of the Shares in accordance with the terms of the Registration Rights
Agreement, (C) any shares of Common Stock issued by the Company upon the
exercise of an option issued under the Company's 2003 Employee Stock Incentive
Plan or 2003 Outside Advisors Stock Incentive Plan, (D) issuances of options or
grants of restricted stock under the Company's 2003 Employee Stock Incentive
Plan or 2003 Outside Advisors Stock Incentive Plan, or (E) any shares of Common
Stock issued by the Company in accordance with the Management Agreement as
described in the Prospectus;
(p) to not itself, and to use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Shares or (iii) pay or agree to pay
to any person any compensation for soliciting any order to purchase any other
securities of the Company; and
(q) if at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in the reasonable opinion
of the Representatives the market price of the Common Stock has been or is
likely to be materially affected (regardless of whether such rumor, publication
or event necessitates a supplement to or amendment of the Prospectus) and after
written notice from the Representatives advising the Company to the effect set
forth above, to forthwith prepare, consult with the Representatives concerning
the substance of, and disseminate a press release, reasonably satisfactory to
the Representatives, or other public statement, responding to or commenting on
such rumor, publication or event.
5. Payment of Expenses: The Company agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment to Underwriters, dealers,
and/or prospective investors), (iv) the qualification of the Shares for offering
and sale under state laws that the Company and the Representatives have mutually
agreed are appropriate and the determination of their eligibility for investment
under state law as aforesaid (including the legal fees and filing fees and other
disbursements of counsel for the Underwriters) and the preparation, printing and
furnishing of copies of any blue sky surveys or legal investment surveys to the
Underwriters and to dealers, (v) filing for review of the public offering of the
Shares by the NASD (including the legal fees and filing fees and other
disbursements of counsel for the
13
Underwriters relating thereto), (vi) the fees and expenses of any transfer agent
or registrar for the Shares and miscellaneous expenses referred to in the
Registration Statement, (vii) the fees and expenses incurred in connection with
the inclusion of the Shares for quotation and listing on the New York Stock
Exchange, (viii) making road show presentations with respect to the offering of
the Shares, (ix) preparing and distributing bound volumes of transaction
documents for the Representatives and their legal counsel, and (x) the
performance of the Company's other obligations hereunder. Upon the request of
the Representatives, the Company will provide funds in advance for filing fees.
Except as set forth in clauses (iv) and (v) of the paragraph
immediately above, the Company shall not reimburse the Underwriters for any of
their expenses in connection with their activities under this Agreement, whether
or not the transactions contemplated hereunder are consummated or this Agreement
is terminated.
6. Conditions of the Underwriters' Obligations: The obligations of the
Underwriters hereunder to purchase Shares at the Closing Time or on the Date of
Delivery, as applicable, are subject to the accuracy of the representations and
warranties on the part of the Company in all material respects on the date
hereof and at the Closing Time and on each Date of Delivery, as applicable, the
performance by the Company of its obligations hereunder in all material respects
and to the satisfaction of the following further conditions at the Closing Time
or on the Date of Delivery, as applicable:
(a) The Representatives shall have received, dated as of the Closing
Time and on each Date of Delivery, an opinion of O'Melveny & Xxxxx LLP (which
may rely upon the opinion of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx LLP to the extent
any opinion thereunder pertains to Maryland law), as special corporate counsel
for the Company, addressed and in form and substance satisfactory to the
Representatives covering the matters described in Exhibit A hereto.
(b) The Representatives shall have received, dated as of the Closing
Time and on each Date of Delivery, an opinion of Xxxxxxx Xxxxx Xxxxxxx &
Ingersoll LLP, as special Maryland counsel for the Company, addressed and in
form and substance satisfactory to the Representatives covering the matters
described in Exhibit B hereto.
(c) The Underwriters shall have received at the Closing Time the
favorable opinion of Xxxxxx, Xxxx & Xxxxxxxx LLP, as counsel for the
Underwriters, dated the Closing Time, in form and substance satisfactory to the
Representatives.
(d) The Representatives shall have received from Deloitte & Touche
LLP, letters dated, respectively, as of the date of this Agreement, the Closing
Time and each Date of Delivery, as the case may be, addressed to the
Representatives, in form and substance reasonably satisfactory to the
Representatives, relating to the financial statements, including any pro forma
financial statements, of the Company, and such other matters customarily covered
by comfort letters issued in connection with registered public offerings.
(e) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
14
(f) Notification from the Company that the Registration Statement
has become effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in accordance with
Section 4(b) of this Agreement.
(g) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus
shall have been issued, and no proceedings for such purpose shall have been
initiated or threatened, by the Commission, and no suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes, shall
have occurred and, in any such instance, not been waived by the Commission; and
(ii) the Registration Statement and the Prospectus shall not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery (i) no material and adverse change in the
assets, business, operations, earnings, properties or condition (financial or
otherwise) of the Company shall occur or become known (whether or not arising in
the ordinary course of business), and (ii) no transaction which is material and
adverse to the Company shall have been entered into by the Company.
(i) The Shares shall have been approved for inclusion and listing on
the New York Stock Exchange.
(j) If the issuance and sale of the Initial Shares and/or Option
Shares to the Underwriters will result in the Underwriters individually or in
the aggregate exceeding the Aggregate Stock Ownership Limit (as defined in the
Company Charter Documents) with respect to the Company's capital stock, then, on
or prior to the Closing Time or the relevant Date of Delivery, the Underwriters
shall have received from the Company's Board of Directors a waiver or exemption
from the Aggregate Stock Ownership Limit with respect to the issuance and sale
of such Shares, in form and substance reasonably satisfactory to the
Underwriters.
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements between
the date of this Agreement and the Closing Time or the Date of Delivery, as
applicable.
(l) The Representatives shall have received lock-up agreements from
Seneca and each of the officers and directors of the Company (a "Lock-Up
Agreement") substantially in the form of Exhibit C attached hereto, and such
agreements shall be in full force and effect.
(m) The Company will, at the Closing Time and on each Date of
Delivery, deliver to the Underwriters a certificate of its Chairman of the
Board, President and Chief Executive Officer and its Senior Vice President and
Chief Financial Officer, to the effect that, to each of such officer's
knowledge, the representations and warranties of the Company set forth in this
Agreement are true and correct in all material respects and the conditions set
forth in paragraphs (g), (h) and (i) have been satisfied, in each case as of
such date.
15
(n) The Underwriters shall have received the manager certificate
from Seneca (the "Manager Certificate"), substantially in the form attached
hereto as Exhibit D. In addition, the Underwriters shall have received from
Seneca a waiver in a form reasonably acceptable to the Representatives of
Seneca's right to have shares of the Company held by Seneca registered pursuant
to the Registration Statement.
(o) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus and the performance by the
Company of its covenants contained herein and therein, as of the Closing Time or
any Date of Delivery as the Underwriters may reasonably request.
(p) The Company shall have performed its obligations under this
Agreement as are to be performed by the terms hereof and thereof at or before
the Closing Time or the relevant Date of Delivery.
7. Termination: The obligations of the several Underwriters hereunder
shall be subject to termination in the absolute discretion of the
Representatives, at any time prior to the Closing Time or any Date of Delivery,
(i) if any of the conditions specified in Section 6 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, (ii) if there
has been since the respective dates as of which information is given in the
Registration Statement, any material adverse change in or affecting the assets,
business, operations, earnings, properties, condition (financial or otherwise)
or management of the Company, whether or not arising in the ordinary course of
business, (iii) if there has occurred an outbreak or escalation of hostilities
or other national or international calamity or crisis or change in economic,
political or other conditions the effect of which on the financial markets of
the United States is such as to make it, in the reasonable judgment of the
Representatives, impracticable to market the Shares or enforce contracts for the
sale of the Shares, (iv) if trading in any securities of the Company has been
suspended by the Commission or by the New York Stock Exchange, or if trading
generally on the New York Stock Exchange or on the Nasdaq Stock Market shall
have been suspended (including automatic halt in trading pursuant to
market-decline triggers other than those in which solely program trading is
temporarily halted), or limitations on prices for trading (other than
limitations on hours or numbers of days of trading) have been fixed, or maximum
ranges for prices for securities have been required, by such exchange or the
NASD or the Nasdaq National Market or by order of the Commission or any other
governmental authority, (iv) if any federal or state statute, regulation, rule
or order of any court or other governmental authority has been enacted,
published, decreed or otherwise promulgated which in the reasonable opinion of
the Representatives materially adversely affects or will materially adversely
affect the business or operations of the Company which, in the case of a
prospective effect, cannot reasonably be expected to be remedied by the Company
prior to the occurrence of such effect, (v) if there has been a material
disruption in the securities settlement, payment or clearance services in the
United States, (vi) if a banking moratorium shall have been declared either by
the United States or New York State authorities, or (vii) if any action has been
taken by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the reasonable opinion of the
Representatives has a material adverse effect on the securities markets in the
United States.
16
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5, 9 and 13 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments: If any Underwriter shall default
at the Closing Time or on a Date of Delivery in its obligation to take up and
pay for the Shares to be purchased by it under this Agreement on such date the
Representatives shall have the right, within 36 hours after such default, to
make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters satisfactory to the Company, to purchase all, but not less
than all, of the Shares which such Underwriter shall have agreed but failed to
take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 36 hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased on such
date, each non-defaulting Underwriter shall take up and pay for (in addition to
the number of Shares which it is otherwise obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares agreed to
be purchased by the defaulting Underwriter on such date in the proportion that
its underwriting obligations hereunder bears to the underwriting obligations of
all non-defaulting Underwriters; and (ii) if the total number of Defaulted
Shares exceeds 10% of such total, the Representatives may terminate this
Agreement by notice to the Company, without liability to any non-defaulting
Underwriter except as set forth in Section 9 (provided that if such default
occurs with respect to the Initial Shares after the Closing Time, this Agreement
will not terminate as to the Initial Shares or any Option Shares purchased prior
to such termination).
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that the
Company will not sell any Shares hereunder on such date unless all of the Shares
to be purchased on such date are purchased on such date by the Underwriters (or
by substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the like effect
as, if such substituted Underwriter had originally been named in this Agreement.
17
9. Indemnity and Contribution by the Company and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
the Securities Act, from and against any loss, expense, liability, damage or
claim (including the reasonable cost of investigation) which, jointly or
severally, any such Underwriter or controlling person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss, expense,
liability, damage or claim arises out of or is based upon (i) any breach of any
representation, warranty or covenant of the Company contained herein, (ii) any
failure on the part of the Company to comply with any applicable law, rule or
regulation relating to the offering of securities being made pursuant to the
Prospectus, (iii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration Statement
as amended by any post-effective amendment thereof by the Company) or in a
Prospectus (the term Prospectus for the purpose of this Section 9 being deemed
to include any Preliminary Prospectus, the Prospectus and the Prospectus as
amended or supplemented by the Company), or (iv) any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement or Prospectus or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as any such loss, expense, liability, damage or claim
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission of a material fact contained in and made in
reliance upon and in conformity with information furnished in writing by the
Underwriters through the Representatives to the Company expressly for use in
such Registration Statement or such Prospectus (that information being limited
to that described in the last sentence of Section 9(c) hereof), provided,
however, that the indemnity agreement contained in this subsection (a) with
respect to the Preliminary Prospectus or the Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) with respect to any person asserting any such loss, expense,
liability, damage or claim which is the subject thereof if the Prospectus
prepared with the consent of the Representatives and furnished to the
Underwriters prior to the Closing Time corrected any such alleged untrue
statement or omission and if such Underwriter failed to send or give a copy of
the Prospectus to such person at or prior to the written confirmation of the
sale of Shares to such person, unless such failure resulted from noncompliance
by the Company with Section 4(b) above).
(b) If any action is brought against an Underwriter or controlling
person in respect of which indemnity may be sought against the Company pursuant
to subsection (a) above, such Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company shall assume the
defense of such action, including the employment of counsel of its choosing and
payment of expenses, provided, however, that any failure or delay to so notify
the Company will not relieve the Company of any obligation hereunder, except to
the extent that its ability to defend is actually impaired or otherwise
prejudiced by such failure or delay, and after notice from the Company to such
indemnified party of its election so to assume the defense thereof, the Company
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation, except as
provided below. Such Underwriter or controlling person shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or such controlling
person unless the employment of such counsel shall have been
18
authorized in writing by the Company in connection with the defense of such
action, or the Company shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of such action by
such indemnified party or such indemnified party or parties shall have
reasonably concluded (based on the advice of counsel) that there exists an
actual and material conflict of interest between the interests of the Company
and such indemnified party in connection with such action (in which case the
Company shall not have the right to direct the defense of such action on behalf
of the indemnified party or parties), in any of which events such fees and
expenses shall be borne by the Company and paid as incurred (it being
understood, however, that the Company shall not be liable for the expenses of
more than one separate firm of attorneys for the Underwriters or controlling
persons in any one action or series of related actions in the same jurisdiction
(other than local counsel in any such jurisdiction) representing the indemnified
parties who are parties to such action). Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any settlement of
any such claim or action effected without its prior written consent.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify, defend and hold harmless the Company, the Company's directors and
officers, and any person who controls the Company within the meaning of the
Securities Act, from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which, jointly or severally,
the Company or any such person may incur under the Securities Act, the Exchange
Act or otherwise, but only insofar as such loss, expense, liability, damage or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and made in reliance upon and in
conformity with information furnished in writing by such Underwriter through the
Representatives to the Company expressly for use in the Registration Statement
(or in the Registration Statement as amended by any post-effective amendment
thereof by the Company) or in a Prospectus, or arises out of or is based upon
any omission or alleged omission to state therein a material fact in connection
with such information required to be stated either in such Registration
Statement or Prospectus or necessary to make such information, in the light of
the circumstances under which made, not misleading. The following statements
constitute the only information furnished by or on behalf of any Underwriter
through the Representatives to the Company for purposes of Section 3(i) and this
Section 9: (i) the names of the Representatives on the cover page of the
Prospectus, and (ii) the table at the end of the first paragraph and the
_________, __________ and _________ paragraphs under the caption "Underwriting"
in the Prospectus.
(d) If any action is brought against the Company or any such person
in respect of which indemnity may be sought against any Underwriter pursuant to
subsection (c) above, the Company or such person shall promptly notify the
Representatives in writing of the institution of such action and the
Representatives, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel of its choosing (who shall not,
except with the reasonable consent of the Company, be counsel to the
Representatives or the Underwriters) and payment of expenses; provided, however,
that any failure or delay to so notify the Representatives, as applicable, will
not relieve the Representatives or the Underwriters, as applicable, of any
obligation hereunder, except to the extent that their ability to defend is
actually impaired or otherwise prejudiced by such failure or delay, and after
notice from such Underwriter to such indemnified party of its election so to
assume the defense thereof, such Underwriter will not be liable to such
indemnified party under this Section for any legal or other
19
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, except as provided
below. The Company or such person shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of the Company or such person unless the employment of such counsel
shall have been authorized in writing by the Representatives in connection with
the defense of such action or the Representatives shall not have employed
counsel to have charge of the defense of such action within a reasonable time
after notice of such action by such indemnified party or such indemnified party
or parties shall have reasonably concluded (based on the advice of counsel) that
there exists an actual and material conflict of interest between the interests
of the Company and such indemnified party in connection with such action (in
which case the Representatives shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by such Underwriter and paid as
incurred (it being understood, however, that the Underwriters shall not be
liable for the expenses of more than one separate firm of attorneys in any one
action or series of related actions in the same jurisdiction (other than local
counsel in any such jurisdiction) representing the indemnified parties who are
parties to such action). Anything in this paragraph to the contrary
notwithstanding, no Underwriter shall be liable for any settlement of any such
claim or action effected without the prior written consent of the
Representatives.
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a), (b), (c), and (d) of
this Section 9 in respect of any losses, expenses, liabilities, damages or
claims referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, expenses,
liabilities, damages or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from
the offering of the Shares or (ii) if (but only if) the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Underwriters in
connection with the statements or omissions which resulted in such losses,
expenses, liabilities, damages or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault of
the Company and the Underwriters shall be determined by reference to, among
other things, whether the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission relates to information supplied by
the Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages and liabilities referred to in the first sentence of this
subsection (e) shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any claim or action which is the subject of this subsection (e).
(f) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of
20
allocation which does not take account of the equitable considerations referred
to in subsection (e)(i) and, if applicable (ii), above. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute any
amount in excess of underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
10. Survival: The indemnity and contribution agreements contained in
Section 9 and the covenants, warranties and representations of the Company
contained in Sections 3, 4 and 5 of this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter, or any person who controls any Underwriter within the meaning of
the Securities Act, or by or on behalf of the Company, its directors and
officers, or any person who controls the Company within the meaning of the
Securities Act, and shall survive any termination of this Agreement or the
issuance, the sale and delivery of the Shares. The Company and each Underwriter
agree promptly to notify the others of the commencement of any litigation or
proceeding against it and, in the case of the Company, against any of the
Company's officers and directors, in connection with the sale and delivery of
the Shares, or in connection with the Registration Statement or Prospectus.
11. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing delivered by facsimile
(with receipt confirmed), overnight courier or registered or certified mail,
return receipt requested, or by telegram and, if to the Underwriters, shall be
sufficient in all respects if delivered or sent to Friedman, Billings, Xxxxxx &
Co., Inc., 0000 Xxxxxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Syndicate Department; (facsimile: (000) 000-0000); and if to the
Company, shall be sufficient in all respects if delivered or sent to the Company
at the offices of the Company at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxxxxxx X. Xxxx; (facsimile (415)
486-2111), with a copy to O'Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, Esq.; (facsimile:
(000) 000-0000).
12. Merger: This Agreement constitutes the entire agreement between the
Company and the Underwriters and, at the Closing Time, shall supersede and
cancel any and all prior discussions, negotiations, undertakings, agreements in
principle or other oral or written agreements between the parties relating to
the subject matter hereof, including the offering of Shares hereby.
13. Governing Law; Headings: THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this Agreement have
been inserted as a matter of convenience of reference and are not a part of this
Agreement.
14. Parties at Interest: The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company, and the
controlling persons, directors and
21
officers referred to in Sections 9 and 10 hereof, and their respective
successors, assigns, executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from any
of the Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
15. Counterparts and Facsimile Signatures: This Agreement may be signed by
the parties in counterparts which together shall constitute one and the same
agreement among the parties. A facsimile signature shall constitute an original
signature for all purposes.
16. Successors: This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Sections 9 and 10.
[Signatures on following page]
22
If the foregoing correctly sets forth the understanding among the Company
and the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this Agreement shall constitute a binding agreement among the
Company and the Underwriters.
Very truly yours,
LUMINENT MORTGAGE CAPITAL, INC.
By:
-----------------------------------
Name:
Title:
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
CREDIT SUISSE FIRST BOSTON LLC
JMP SECURITIES LLC
FLAGSTONE SECURITIES, LLC
For themselves and as Representatives of the several Underwriters named in
Schedule I hereto
By: FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
-------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Senior Managing Director
SCHEDULE I
UNDERWRITERS
NUMBER OF MAXIMUM NUMBER OF
INITIAL SHARES OPTION SHARES
UNDERWRITER TO BE PURCHASED TO BE PURCHASED
----------- --------------- ---------------
Friedman, Billings, Xxxxxx & Co., Inc.
Credit Suisse First Boston LLC
JMP Securities LLC
Flagstone Securities, LLC
=============== =================
Total...............................................
Schedule I
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