Contract
EXHIBIT 10.10
THIS STOCK
PURCHASE AGREEMENT (this “Agreement”) dated as
of September 16, 2009 is between CreXus Investment Corp., a Maryland corporation
(the “Company”), and Annaly
Capital Management, Inc., a Maryland corporation (the “Purchaser”).
RECITALS
WHEREAS,
the Purchaser has a substantive, pre-existing relationship with the
Company;
WHEREAS,
the Company has registered shares of its common stock, par value $0.01 per share
(“Common
Stock”), with the Securities and Exchange Commission pursuant to the
registration statement of the Company on Form S-11 (File No. 333-160254) (the
“Registration
Statement”) pursuant to which the Company intends to conduct a public
offering of shares of the Company’s Common Stock (the “Public Offering”);
and
WHEREAS,
the Company desires to issue and sell shares of its Common Stock to the
Purchaser on the terms and conditions set forth herein.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises
hereinafter set forth, and, other good and valuable consideration, the parties
hereto agree as follows:
ARTICLE
1
AUTHORIZATION,
SALE AND ISSUANCE OF SHARES AND OPTIONS
Section
1.1 Authorization. Subject
to and concurrent with the consummation of the Public Offering, the Company
shall issue 4,527,778 shares of Common Stock of the Company (the “Shares”) at a
purchase price per share equal to the Public Offering price per share (the
“Share
Price”).
Section
1.2 Sale and Issuance of the
Shares. Subject to the terms and conditions hereof, the
Company shall sell and Purchaser shall purchase the Shares at the Closing (as
defined below).
ARTICLE
2
CLOSING
Section
2.1 Closing. The
closing (“Closing”) shall only
occur immediately before, and shall be subject to, the closing of the Public
Offering. Upon the Closing of this transaction, the Purchaser will
deliver to the Company a wire transfer of immediately available funds to
accounts specified by the Company or certified check in the amount equal to the
Share Price multiplied by the number of Shares.
Section
2.2 Delivery. Subject
to the terms of this Agreement, within five (5) days of the Closing, the Company
will deliver to the Purchaser the certificates representing the Shares to be
purchased by the Purchaser from the Company.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Section
3.1 Representations and
Warranties by the Company. The Company hereby represents and
warrants to the Purchaser as of the Closing date as follows:
(a) The
Company has been duly formed and incorporated and is existing as a corporation
in good standing under the laws of the State of Maryland, is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or assets or the
conduct of its business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the business, assets,
properties, prospects, financial condition or results of operation of the
Company taken as a whole (a “Material Adverse
Effect”), and has full corporate power and authority necessary to own,
hold, lease and/or operate its assets and properties, to conduct the business in
which it is engaged and to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby, and the
Company is in compliance in all material respects with the laws, orders, rules,
regulations and directives issued or administered by such
jurisdictions.
(b) The
authorized capital stock of the Company is 1,100,000,000 shares of stock,
consisting of 1,000,000,000 shares of Common Stock, of which 250,000 shares are
issued and outstanding as of the date hereof, and 100,000,000 shares of
preferred stock, par value $0.01 per share, of which none are issued and
outstanding. All of the issued and outstanding shares of capital
stock have been duly and validly authorized and issued and are fully paid and
non-assessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of any preemptive right, resale
right, right of first refusal or similar right.
(c) The
Shares have been duly and validly authorized by the Company for issuance and
sale pursuant to this Agreement and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and fully paid and
non-assessable, free and clear of any pledge, lien, encumbrance, security
interest or other claim.
(d) The
certificates for the Shares are in due and proper form and the holders of the
Shares will not be subject to personal liability by reason of being such
holders.
(e) 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 enforcement thereof may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
enforcement of creditors’ rights or by general equitable
principles.
(f) The
management agreement (the “Management
Agreement”), dated as of August 31, 2009, between the Company and Fixed
Income Discount Advisory Company (the “Manager”), and any
amendments thereto, have 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 enforcement thereof may
be limited by bankruptcy, insolvency, reorganization or other laws affecting
enforcement of creditors’ rights or by general equitable
principles.
(g) The
Company has no “significant subsidiaries” (as such term is defined in Rule 1-02
of Regulation S-X promulgated under the Securities Act of 1933, as amended (the
“Securities
Act”)) and does not own, directly or indirectly, any shares of stock or
any other equity or long-term debt securities of any corporation or have any
equity interest in any firm, partnership, joint venture, association or other
entity. Complete and correct copies of the articles of incorporation
and of the bylaws of the Company and all amendments thereto have been delivered
to the Purchaser and, except as set forth in the forms of documents delivered to
the Purchaser, no changes therein will be made subsequent to the date hereof and
prior to the time of purchase.
(h) The
financial statements of the Company, together with the related schedules and
notes thereto, delivered to the Purchaser are accurate in all material respects
and fairly present the financial condition of the Company as of the dates
indicated and the results of operations, changes in financial position,
stockholders’ equity and cash flows for the periods therein specified are in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated
therein). The selected financial and statistical data delivered to
the Purchaser present fairly the information shown therein and, to the extent
based upon or derived from the financial statements, have been compiled on a
basis consistent with the financial statements presented therein.
(i) The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
business in which it is engaged. The Company has no reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
(j) The
Company is not in breach of, or in default under (nor has any event occurred
which with notice, lapse of time, or both would result in any breach of, or
constitute a default under), (i) its articles of incorporation or bylaws or (ii)
any obligation, agreement, covenant or condition contained in any contract,
license, repurchase agreement, indenture, mortgage, deed of trust, bank loan or
credit agreement, note, lease or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company is a party or by
which it or any of its assets or properties may be bound or affected, the effect
of which breach or default under clause (ii) above could have a Material Adverse
Effect. The execution, delivery and performance of this Agreement,
the issuance and sale of the Shares and the consummation of the transactions
contemplated hereby will not conflict with, or result in any breach of,
constitute a default under or a Repayment Event (as defined below) under (nor
constitute any event which with notice, lapse of time, or both would result in
any breach of, constitute a default under or a Repayment Event under), (i) any
provision of the articles of incorporation or bylaws of the Company, (ii) any
provision of any contract, license, repurchase agreement, indenture, mortgage,
deed of trust, bank loan or credit agreement, note, lease or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to which
the Company is a party or by which the Company or any of its assets or
properties may be bound or affected, the effect of which could have a Material
Adverse Effect, or (iii) under any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the
Company. As used herein, a “Repayment Event”
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries.
(k) There
are no actions, suits, claims, investigations, inquiries or proceedings pending
or, to the best of the Company’s knowledge, threatened to which the Company or
any of its officers or directors is a party or of which any of its properties or
other assets is subject at law or in equity, or before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, authority
or agency which could result in a judgment, decree or order having a Material
Adverse Effect.
(l) No
approval, authorization, consent or order of or filing with any national, state
or local governmental or regulatory commission, board, body, authority or agency
is required in connection with the issuance and sale of the Shares or the
consummation by the Company of the transaction contemplated hereby other than
any necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Company.
(m) The
Company has all necessary licenses, authorizations, consents and approvals and
has made all necessary filings required under any federal, state, local or
foreign law, regulation or rule, and has obtained all necessary permits,
authorizations, consents and approvals from other Persons (as defined below), in
order to conduct its business, except as such as could not have a Material
Adverse Effect. The Company is not required by any applicable law to
obtain accreditation or certification from any governmental agency or authority
in order to provide the products and services which it currently provides or
which it proposes to provide except as such as could not have a Material Adverse
Effect. The Company is not in violation of, or in default under, any
such license, permit, authorization, consent or approval or any federal, state,
local or foreign law, regulation or rule or any decree, order or judgment
applicable to the Company, the effect of which could have a Material Adverse
Effect.
(n) The
Company has not incurred any liability for any finder’s fees or similar payments
in connection with the transactions herein contemplated.
(o) The
Company owns or possesses adequate license or other rights to use all patents,
trademarks, service marks, trade names, copyrights, software and design
licenses, trade secrets, manufacturing processes, other intangible property
rights and know-how (collectively, “Intangibles”)
necessary to entitle the Company to conduct its business, and the Company has
not received notice of infringement of or conflict with (and the Company knows
of no such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which could have a Material Adverse
Effect.
(p) The
Company has filed all federal, state and foreign income and franchise tax
returns required to be filed on or prior to the date hereof and has paid taxes
shown as due thereon (or that are otherwise due and payable), other than taxes
which are being contested in good faith and for which adequate reserves have
been established in accordance with generally accepted accounting
principles. The Company has no knowledge, after due inquiry, of any
tax deficiency which has been asserted or threatened against the
Company. To the knowledge of the Company, there are no tax returns of
the Company that are currently being audited by federal, state or local taxing
authorities or agencies which would have a Material Adverse Effect.
(q) The
Company is not in violation, and has not received notice of any violation with
respect to, any applicable environmental, safety or similar law applicable to
the business of the Company. The Company has received all permits,
licenses or other approvals required of them under applicable federal and state
occupational safety and health and environmental laws and regulations to conduct
its business, and the Company is in compliance with all terms and conditions of
any such permit, license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals which could not, singly or in the aggregate, have a Material Adverse
Effect.
(r) There
are no existing or threatened labor disputes with the employees of the Company
which are likely to have individually or in the aggregate a Material Adverse
Effect.
(s) Neither
the Company nor any of its subsidiaries nor, to the Company’s knowledge, any
employee or agent of the Company or its subsidiaries has made any payment of
funds of the Company or its subsidiaries or received or retained any funds in
violation of any law, rule or regulation, except as disclosed to the
Purchaser.
(t) Subsequent
to the respective dates as of which information is delivered to the Purchaser,
there has not been (i) any material adverse change, or any development which
would reasonably be expected to cause a material adverse change, in the
business, properties or assets, or the results of operations, condition
(financial or otherwise), net worth, business, prospects or operations of the
Company taken as a whole, (ii) any transaction which is material to the Company,
except transactions in the ordinary course of business, (iii) any obligation,
direct or contingent, which is material to the Company taken as a whole,
incurred by the Company, except obligations incurred in the ordinary course of
business, (iv) other than the Public Offering, any change in the capital stock
or, except in the ordinary course of business, outstanding indebtedness of the
Company, or (v) any dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock. The Company has no
material contingent obligation which has not been disclosed to the
Purchaser.
(u) The
descriptions provided to the Purchaser of the legal or governmental proceedings,
contracts, leases and other legal documents therein described present fairly the
information shown, and there are no other legal or governmental proceedings,
contracts, leases, or other documents. All agreements between the
Company and third parties delivered to the Purchaser are legal, valid and
binding obligations of the Company enforceable in accordance with their
respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles.
(v) There
are no Persons with registration or other similar rights to have any equity or
debt securities, including securities which are convertible into or exchangeable
for equity securities, of the Company registered by the Company under the
Securities Act.
(w) No
person, as such term is defined in Rule 1-02 of Regulation S-X promulgated under
the Securities Act (each, a “Person”), has the
right, contractual or otherwise, to cause the Company to issue to it any shares
of capital stock or other securities of the Company upon the issue and sale of
the Shares hereunder, nor does any Person have preemptive rights, co-sale
rights, rights of first refusal or other rights to purchase or subscribe for any
of the Shares or any securities or obligations convertible into or exchangeable
for, or any contracts or commitments to issue or sell any of, the Shares or any
options, rights or convertible securities or obligations, other than those that
have been expressly waived prior to the date hereof.
(x) The
Company (i) does not have any issued or outstanding preferred stock or (ii) has
not defaulted on any installment on indebtedness for borrowed money or on any
rental on one or more long term leases, which defaults would have a Material
Adverse Effect on the financial position of the Company.
(y) Each
of the Company and its officers, directors and controlling Persons has not,
directly or indirectly, (i) taken any action designed to cause or to result in,
or that has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock to facilitate the
sale of the Shares, or (ii) except with respect to the Public Offering (A) sold,
bid for, purchased, or paid anyone any compensation for soliciting purchases of,
the Shares or (B) paid or agreed to pay to any Person any compensation for
soliciting another to purchase any other securities of the Company.
(z) Neither
the Company nor any of its affiliates (i) is required to register as a “broker”
or “dealer” in accordance with the provisions of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) 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 Bylaws of the
Financial Industry Regulatory Authority (“FINRA”)) any member
firm of the FINRA.
(aa) Any
certificate signed by any officer of the Company delivered to the Purchaser
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to the Purchaser as to the matters
covered thereby.
(bb) As
of the date of this Agreement, the Company has no plan or intention to
materially alter its capital investment policy or investment allocation
strategy, both as described to the Purchaser. The Company has good
and marketable title to all of the properties and assets owned by it, in each
case free and clear of any security interests, liens, encumbrances, equities,
claims and other defects (except for any security interest, lien, encumbrance or
claim that may otherwise exist under any applicable repurchase agreement),
except such as do not have a Material Adverse Effect and do not interfere with
the use made or proposed to be made of such property or asset by the Company,
and except as described to the Purchaser. The Company owns no real
property. Any real property and buildings held under lease by the
Company are held under valid, existing and enforceable leases, with such
exceptions as are disclosed to the Purchaser or are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company.
(cc) 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 as applied in the United States 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.
(dd) The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-14 and 15d-14 under the Exchange Act); such
disclosure controls and procedures are designed to ensure that material
information relating to the Company is made known to the Company’s Chief
Executive Officer and its Chief Financial Officer, and such disclosure controls
and procedures are effective to perform the functions for which they were
established; any significant material weaknesses in internal controls have been
identified for the Company’s Chief Executive Officer and its Chief Financial
Officer; and since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect internal
controls.
(ee) The
Company has not, directly or indirectly, including through any of its
subsidiaries, extended credit, arranged to extend credit, or renewed any
extension of credit, in the form of a personal loan, to or for any director or
executive officer of the Company, or to or for any family member or affiliate of
any director or executive officer of the Company.
(ff) The
Company is in compliance with all presently applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated thereunder
(the “Xxxxxxxx-Xxxxx
Act”) and is actively taking steps to ensure that it will be in
compliance with other applicable provisions of the Xxxxxxxx-Xxxxx Act upon the
effectiveness of such provisions.
(gg) Deloitte
& Touche LLP, are and, during the periods covered by their reports, were our
independent public accountants.
(hh) The
Company has been, and upon the sale of the Shares will continue to be, organized
and operated in conformity with the requirements for qualification and taxation
as a “real estate investment trust” (a “REIT”) under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (collectively, the “Code”), for all
taxable years commencing with its taxable year ending on December 31,
2009. The proposed method of operation of the Company as described to
the Purchaser will enable the Company to continue to meet the requirements for
qualification and taxation as a REIT under the Code, and no actions have been
taken (or not taken which are required to be taken) which would cause such
qualification to be lost. The Company intends to continue to operate
in a manner which would permit it to qualify as a REIT under the
Code. The Company has no intention of changing its operations or
engaging in activities which would cause it to fail to qualify, or make
economically undesirable its continued qualification, as a REIT.
(ii) 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 terms are defined in the Investment Company Act of 1940, as
amended.
(jj) The
Company has a substantive, pre-existing relationship with the Purchaser and was
directly contacted by the Purchaser or its agents outside of the Public Offering
effort. The Company (i) did not identify or contact the Purchaser
through the marketing of the Public Offering and (ii) was not independently
contacted by the Purchaser as a result of the general solicitation by means of
the Registration Statement.
(kk) No
representation or warranty made by the Company in this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make any such representation or warranty, in light of the circumstances in
which it was made, not misleading.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF PURCHASER AND
RESTRICTIONS
ON TRANSFER IMPOSED BY THE SECURITIES ACT
Section
4.1 Representations and
Warranties by the Purchaser. The Purchaser represents and
warrants to the Company as of the day of Closing as follows:
(a) Investment
Intent. The Purchaser is acquiring the Shares for investment
for the Purchaser’s own account, not as nominee or agent, and not with a view to
or for resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act and applicable law. The Purchaser has
the requisite corporate power and authority to enter into and perform this
Agreement.
(b) Shares Not
Registered. The Purchaser understands and acknowledges that
the offering of the Shares pursuant to this Agreement will not be registered
under the Securities Act on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration under the Securities
Act pursuant to Section 4(2) thereof and exempt from registration pursuant to
applicable state securities or blue sky laws, and that the Company’s reliance
upon such exemptions is predicated upon such Purchaser’s representations set
forth in this Agreement. The Purchaser acknowledges and understands that the
Shares must be held indefinitely unless the Shares are subsequently registered
under the Securities Act and qualified under state law or unless an exemption
from such registration and such qualification is available.
(c) No
Transfer. Subject to the provisions of Section 5.2, the
Purchaser covenants that in no event will the Purchaser dispose of any of the
Shares (other than in conjunction with an effective registration statement for
the Shares under the Securities Act) unless and until (i) the Purchaser shall
have notified the Company of the proposed disposition and shall have furnished
the Company with a statement of the circumstances surrounding the proposed
disposition, and (ii) if reasonably requested by the Company, the Purchaser
shall have furnished the Company with an opinion of counsel satisfactory in form
and substance to the Company to the effect that (x) such disposition will not
require registration under the Securities Act, and (y) appropriate action
necessary for compliance with the Securities Act and any other applicable state,
local, or foreign law has been taken, and (iii) the Company has consented, which
consent shall not be unreasonably delayed or withheld.
(d) Authority. This
Agreement has been duly authorized, executed and delivered by the Purchaser and
constitutes a valid and binding agreement of the Purchaser enforceable in
accordance with its terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
enforcement of creditors’ rights or by general equitable
principles.
(e) No
Breach. The execution, delivery and performance of this
Agreement by the Purchaser and the consummation of the transactions by the
Purchaser contemplated hereby will not conflict with, or result in any breach
of, constitute a default under (nor constitute any event which with notice,
lapse of time, or both would result in any breach of, or constitute a default
under), (i) any provision of the articles of incorporation or bylaws of the
Purchaser, (ii) any provision of any contract, license, repurchase agreement,
indenture, mortgage, deed of trust, bank loan or credit agreement, note, lease
or other evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Purchaser is a party or by which the Purchaser or any of
its assets or properties may be bound or affected, the effect of which could
have a Material Adverse Effect, or (iii) under any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable to
the Purchaser.
(f) Knowledge and
Experience. The Purchaser (i) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the Purchaser’s prospective investment in the Shares; (ii)
has the ability to bear the economic risks of the Purchaser’s prospective
investment; and (iii) has not been offered the Shares by any form of
advertisement, article, notice, or other communication published in any
newspaper, magazine, or similar medium; or broadcast over television or radio;
or any seminar or meeting whose attendees have been invited by any such
medium.
(g) Investigation. The
Purchaser has carefully reviewed the representations concerning the Company
contained in this Agreement, and has made detailed inquiry concerning the
Company, its business and its personnel; the officers of the Company have made
available to the Purchaser any and all written information which it has
requested and have answered to the Purchaser’s satisfaction all inquiries made
by the Purchaser; and the Purchaser has sufficient business and financial
knowledge and experience so as to be capable of evaluating the merits and risks
of its investment in the Company. The Purchaser has received a copy
of the Company’s articles of incorporation, as amended, the Company’s bylaws, as
amended, and this Agreement and has read and understands the respective contents
thereof. The Purchaser has had the opportunity to ask questions of
the Company and has received answers to such questions from the
Company. The Purchaser has carefully reviewed and evaluated these
documents and understands the risks and other considerations relating to the
investment.
(h) Qualified Institutional
Buyer. The Purchaser is a “qualified institutional buyer” as
defined in Rule 144A, promulgated under the Securities Act.
(i) Accredited
Investor. The Purchaser is an “accredited investor” as defined
in Rule 501(a)(8) of Regulation D, promulgated under the Securities
Act.
(j) Pre-existing
Relationship. The Purchaser has a substantive, pre-existing
relationship with the Company and was directly contacted by the Company or its
agents outside of the Public Offering effort. The Purchaser (i) was
not identified or contacted through the marketing of the Public Offering and
(ii) did not independently contact the Company as a result of the general
solicitation by means of the Registration Statement.
(k) Finder’s
Fees. The Purchaser has not incurred any liability for any
finder’s fees or similar payments in connection with the transactions herein
contemplated.
Section
4.2 Legends. Each
certificate representing the Shares shall be endorsed with the following
legends:
(a) Federal
Legend. The securities represented by this certificate have
not been registered under the Securities Act of 1933, as amended, and are
“restricted securities” as defined in Rule 144 promulgated under the Securities
Act. The securities may not be sold or offered for sale or otherwise distributed
except (i) in conjunction with an effective registration statement for the
shares under the Securities Act of 1933, as amended, or (ii) pursuant to an
opinion of counsel, satisfactory to the company, that such registration or
compliance is not required as to said sale, offer, or distribution.
(b) REIT
Legend. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND
TRANSFER. SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS
EXPRESSLY PROVIDED IN THE CORPORATION’S CHARTER, DURING THE PERIOD COMMENCING ON
THE INITIAL DATE AND PRIOR TO THE RESTRICTION TERMINATION DATE (I) NO PERSON MAY
BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF ANY CLASS OR SERIES OF THE CAPITAL
STOCK OF THE CORPORATION IN EXCESS OF NINE AND EIGHT-TENTHS PERCENT (9.8%) IN
VALUE OR IN NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE, OF ANY CLASS OR
SERIES OF CAPITAL STOCK OF THE CORPORATION UNLESS SUCH PERSON IS AN EXCEPTED
HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) NO
PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK THAT WOULD
RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(H) OF THE CODE;
AND (III) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK THAT WOULD RESULT IN
THE CAPITAL STOCK OF THE CORPORATION BEING BENEFICIALLY OWNED BY LESS THAN ONE
HUNDRED (100) PERSONS (DETERMINED WITHOUT REFERENCE TO ANY RULES OF
ATTRIBUTION). ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO
BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSES OR WILL
CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN
EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE
CORPORATION IN WRITING, OR IN THE CASE OF SUCH A PROPOSED OR ATTEMPTED
TRANSACTION, GIVE AT LEAST FIFTEEN (15) DAYS PRIOR WRITTEN NOTICE. IF
ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP IN (I), (II) AND (III) ABOVE
ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE
AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A CHARITABLE TRUST FOR THE BENEFIT OF
ONE OR MORE CHARITABLE BENEFICIARIES. IF, NOTWITHSTANDING THE
FOREGOING SENTENCE, A TRANSFER TO THE CHARITABLE TRUST IS NOT EFFECTIVE FOR ANY
REASON TO PREVENT A VIOLATION OF THE RESTRICTIONS ON TRANSFER AND OWNERSHIP IN
(I), (II) AND (III) ABOVE, THEN THE ATTEMPTED TRANSFER OF THAT NUMBER OF SHARES
OF CAPITAL STOCK THAT OTHERWISE WOULD CAUSE ANY PERSON TO VIOLATE SUCH
RESTRICTIONS SHALL BE VOID AB INITIO. IF ANY OF THE RESTRICTIONS ON
TRANSFER AND OWNERSHIP IN (IV) AND (V) ABOVE ARE VIOLATED, THEN THE ATTEMPTED
TRANSFER OF THAT NUMBER OF SHARES OF CAPITAL STOCK THAT OTHERWISE WOULD CAUSE
ANY PERSON TO VIOLATE SUCH RESTRICTIONS SHALL BE VOID AB INITIO. IF,
NOTWITHSTANDING THE FOREGOING SENTENCE, A PURPORTED TRANSFER IS NOT TREATED AS
BEING VOID AB INITIO FOR ANY REASON, THEN THE SHARES TRANSFERRED IN SUCH
VIOLATION SHALL AUTOMATICALLY BE TRANSFERRED TO A CHARITABLE TRUST FOR THE
BENEFIT OF A CHARITABLE BENEFICIARY, AND THE PURPORTED OWNER OR TRANSFEREE WILL
ACQUIRE NO RIGHTS IN SUCH SHARES. IN ADDITION, THE CORPORATION MAY
REDEEM SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS
IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A
TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED
ABOVE. ALL CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED
IN THE CHARTER OF THE CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME,
A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE
FURNISHED TO EACH HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND
WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE
SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.
(c) Other
Legends. With respect to any other legends required by
applicable law, the Company need not register a transfer of legended Shares, and
may also instruct its transfer agent not to register the transfer of the Shares,
unless the conditions specified in such legend is satisfied.
Section
4.3 Rule
144. The Purchaser is aware of the adoption of Rule 144 by the
SEC promulgated under the Securities Act, which permits limited public resale of
securities acquired in a nonpublic offering, subject to the satisfaction of
certain conditions. The Purchaser understands that under Rule 144, the
conditions include, among other things: the availability of certain, current
public information about the issuer and the resale occurring not less than one
year after the party has purchased and paid for the securities to be
sold.
ARTICLE
5
AFFIRMATIVE
COVENANTS OF THE PARTIES
Section
5.1 Reports. The
Company hereby covenants and agrees as follows: The Company will
furnish to the holders of the Shares copies of all annual or quarterly financial
statements the Company regularly provides to the banks or other lenders
extending credit to the Company as requested by the holders of the Shares as
would be required for a the holder of the Shares to make any resales of Shares
under Rule 144(b) of the Securities Act. In addition, the Company
will furnish to the holders of the Shares such other information as may
reasonably be required by any holder of the Shares to furnish information
required by any governmental authority.
ARTICLE
6
CONDITIONS
TO CLOSING
Section
6.1 Conditions to the
Purchaser’s Obligations. The obligations of the Purchaser to
purchase the Shares at the Closing are subject to the fulfillment to its
satisfaction, on or prior to the Closing, of the following conditions, any of
which may be waived:
(a) Representations and
Warranties Correct. The representations and warranties made by the
Company in Article 3 hereof shall be true and correct when made and at the
Closing. The Company’s business and assets shall not have been adversely
affected in any material way prior to the Closing. The Company shall have
performed in all material respects all obligations and conditions herein
required to be performed or observed by it on or prior to the
Closing.
(b) Public
Offering. The Company shall complete the Public Offering (it
being agreed that this condition must be met and cannot be waived by either
party hereto).
Section
6.2 Conditions to Obligations of
the Company. The Company’s obligation to sell the Shares at
the Closing is subject to the condition that the representations and warranties
made by the Purchaser in Article 4 hereof shall be true and correct when made,
and on the Closing.
ARTICLE
7
REGISTRATION
RIGHTS
The
Purchaser is not entitled to any registration rights under this Agreement or
associated with the purchase of the Shares. The purchase shall be subject to
such private restrictions on the transfer of the Shares as are designated from
time to time by the Company or its investment bankers or
underwriters.
ARTICLE
8
MISCELLANEOUS
Section
8.1 Governing
Law. This Agreement shall be governed in all respects by the
laws of the State of New York without regard to conflicts of law principles
contrary (with references to Section 5-1401 of the New York General Obligation
Law which by its terms applies to the this Agreement).
Section
8.2 Survival. The
representations, warranties, covenants and agreements made herein shall survive
the Closing of the transactions contemplated hereby, notwithstanding any
investigation made by the Purchaser. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder as of the date of such certificate or instrument.
Section
8.3 Successors and
Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties
hereto.
Section
8.4 Entire
Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof and they
supersede, merge, and render void every other prior written and/or oral
understanding or agreement among or between the parties hereto.
Section
8.5 Notices,
etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
mailed by first class mail, postage prepaid, or delivered by courier or
overnight delivery, addressed (a) if to the Purchaser, at such Purchaser’s
address as Purchaser shall have furnished to the Company in writing, or (b) if
to the Company, at such other address as the Company shall have furnished to the
Purchaser in writing. Notices that are mailed shall be deemed received five (5)
days after deposit in the United States mail. Notices sent by courier or
overnight delivery shall be deemed received two (2) days after they have been so
sent.
Section
8.6 Severability. In
case any provision of this Agreement shall be found by a court of law to be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions of this Agreement shall not in any way be affected
or impaired thereby.
Section
8.7 Expenses. The
Company and the Purchaser shall each bear their own expenses and legal fees in
connection with the consummation of this transaction.
Section
8.8 Titles and
Subtitles. The titles of the sections and subsections of this
Agreement are for convenience of reference and are not to be considered in
construing this Agreement.
Section
8.9 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one
instrument.
Section
8.10 Delays or Omissions.
No delay or omission to exercise any right, power, or remedy accruing to the
Company or to any holder of any securities issued or to be issued hereunder
shall impair any such right, power, or remedy of the Company or such holder, nor
shall it be construed to be a waiver of any breach or default under this
Agreement, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any failure to exercise any right, power, or
remedy or any waiver of any single breach or a waiver of any other right, power,
or remedy or breach or default theretofore or thereafter occurring. All
remedies, either under this Agreement, or by law or otherwise afforded to the
Company or any holder, shall be cumulative and not alternative.
[Signature
Page Follows]
IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
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ANNALY
CAPITAL MANAGEMENT, INC.
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|
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By: /s/ Xxxxx
Xxxxxxx
Name: Xxxxx
Xxxxxxx
Title: CEO
& President
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By: /s/ Xxxxxxx X.X.
Xxxxxxx
Name: Xxxxxxx
X.X. Xxxxxxx
Title: Chairman,
CEO & President
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