ANNALY MORTGAGE MANAGEMENT, INC.
34,100,000 SHARES
COMMON STOCK
($0.01 PAR VALUE)
UNDERWRITING AGREEMENT
APRIL 6, 2006
UNDERWRITING AGREEMENT
April 6, 2006
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Citigroup Global Markets Inc.
UBS Securities LLC
As Representatives of the several Underwriters,
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Annaly Mortgage Management, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters"), for whom Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") Citigroup Global
Markets Inc. and UBS Securities LLC are acting as representatives, an aggregate
of 34,100,000 shares (the "Firm Shares") of common stock, $0.01 par value (the
"Common Stock"), of the Company. In addition, solely for the purpose of covering
over-allotments, the Company proposes to grant to the Underwriters the option to
purchase from the Company up to an additional 5,115,000 shares of Common Stock
(the "Additional Shares"). The Firm Shares and the Additional Shares are
hereinafter collectively sometimes referred to as the "Shares." The Shares are
described in the Prospectus which is referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Securities Act"), with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-120920), as amended, including a base prospectus, with respect to the
Shares, and which incorporates by reference documents which the Company has
filed or will file in accordance with the provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (collectively,
the "Exchange Act"). The Company has prepared a prospectus supplement (the
"Prospectus Supplement") to the base prospectus included as part of such
registration statement setting forth the terms of the offering, sale and plan of
distribution of the Shares and additional information concerning the Company and
its business. The Company has furnished to Xxxxxxx Xxxxx, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses,
containing the base prospectus included as part of such registration statement,
as supplemented by a preliminary Prospectus Supplement, and including the
documents incorporated in such base prospectus by reference (each, a
"Preliminary Prospectus"), relating to the Shares. Except where the context
otherwise requires, such
registration statement, as amended when it became effective, including all
documents filed as part thereof or incorporated by reference therein, and
including any information contained in a Prospectus (as defined below)
subsequently filed with the Commission pursuant to Rule 424(b) under the
Securities Act and also including any other registration statement filed
pursuant to Rule 462(b) under the Securities Act, collectively, are herein
called the "Registration Statement," and the base prospectus, including all
documents incorporated therein by reference, included in the Registration
Statement, as supplemented by the Prospectus Supplement, in the form filed by
the Company with the Commission pursuant to Rule 424(b) and Rule 430(A) under
the Securities Act on or before the second Business Day (as defined below)
following the date of this Underwriting Agreement (the "Agreement") (or on such
other day as the parties may mutually agree), is herein called the "Prospectus."
The information included in such prospectus that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Any
reference herein to the Registration Statement, the Prospectus, any Preliminary
Prospectus or any amendment or supplement thereto shall be deemed to refer to
and include the documents incorporated by reference therein, and any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Prospectus or any Preliminary Prospectus shall be
deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein. For
purposes of this Agreement, all references to the Registration Statement, the
Prospectus, any Preliminary Prospectus or to any amendment or supplement thereto
shall be deemed to include any copy filed with the Commission pursuant to its
Electronic Data Gathering Analysis and Retrieval System ("XXXXX"), and such copy
shall be identical in content to any Prospectus or Preliminary Prospectus
delivered to the Underwriters for use in connection with the offering of the
Shares.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any Preliminary Prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any Preliminary Prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such Preliminary
Prospectus or the Prospectus, as the case may be.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell the Firm Shares to the several Underwriters,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Company the respective number of Firm Shares (subject to such adjustment as
Xxxxxxx Xxxxx may determine to avoid fractional shares) set forth opposite the
name of such Underwriter in Schedule A annexed hereto at a purchase price of
$11.1625 per Share. The Company is advised by Xxxxxxx Xxxxx that the
Underwriters intend (i) to make a public offering of the Shares as soon as the
Underwriters deem advisable after this Agreement
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has been executed and delivered and (ii) initially to offer the Firm Shares upon
the terms set forth in the Prospectus. The Underwriters may from time to time
increase or decrease the public offering price after the initial public offering
to such extent as they may determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company ratably
in accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as Xxxxxxx Xxxxx shall determine to avoid fractional
shares), all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by Xxxxxxx Xxxxx on behalf of the
several Underwriters at any time and from time to time on or before the
thirtieth day following the date hereof, by written notice to the Company. Each
such notice shall set forth the aggregate number of Additional Shares as to
which the option is being exercised and the date and time when Additional Shares
are to be delivered (such date and time being herein referred to as an
"additional time of purchase"); provided, however, that an additional time of
purchase shall not be (i) earlier than the time of purchase (as defined below)
or (ii) later than the tenth Business Day after the date on which the option
shall have been exercised. The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same proportion to the aggregate
number of Additional Shares being purchased as the number of Firm Shares set
forth opposite the name of such Underwriter on Schedule A hereto bears to the
aggregate number of Firm Shares (subject, in each case, to such adjustment as
Xxxxxxx Xxxxx may determine to eliminate fractional shares). As used herein
"Business Day" shall mean a day on which the New York Stock Exchange (the
"NYSE") is open for trading and commercial banks in the City of New York are
open for business.
2. PAYMENT AND DELIVERY. Payment of the purchase price for the Firm
Shares shall be made to the Company by federal funds wire transfer against
delivery of the certificates for the Firm Shares to Xxxxxxx Xxxxx through the
facilities of the Depository Trust Company ("DTC") for the respective accounts
of the Underwriters. Such payment and delivery shall be made at 10:00 A.M., New
York City time, on April 12, 2006 (unless another time shall be agreed to by
Xxxxxxx Xxxxx and the Company or unless postponed in accordance with the
provisions of Section 8 hereof). The time at which such payment and delivery are
actually made is herein sometimes called the "time of purchase." Certificates
for the Firm Shares shall be delivered to Xxxxxxx Xxxxx, through the facilities
of DTC, in definitive form in such names and in such denominations as Xxxxxxx
Xxxxx shall specify no later than the second Business Day preceding the time of
purchase. For the purpose of expediting the checking of the certificates for the
Firm Shares by Xxxxxxx Xxxxx, the Company agrees to make such certificates
available to Xxxxxxx Xxxxx for such purpose at least one full Business Day
preceding the time of purchase.
Payment of the purchase price for Additional Shares shall be made at
each additional time of purchase in the same manner and at the same office as
the payment for the Firm Shares. Certificates for Additional Shares shall be
delivered to Xxxxxxx Xxxxx, through the facilities of DTC, in definitive form in
such names and in such denominations as Xxxxxxx Xxxxx shall specify no later
than the second Business Day preceding each additional time of purchase. For the
purpose of expediting the checking of the certificates for Additional Shares by
Merrill
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Xxxxx, the Company agrees to make such certificates available to Xxxxxxx Xxxxx
for such purpose at least one full Business Day preceding each additional time
of purchase.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters as of the date hereof, the
Applicable Time referred to in Section 3(b), as of the time of purchase and, if
applicable, at each additional time of purchase that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement has been filed with the Commission
and has been declared effective under the Securities Act. The Company has not
received, and has no notice of, any order of the Commission preventing or
suspending the use of the Registration Statement, or threatening or instituting
proceedings for that purpose. Any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement have been so
described or filed. The Prospectus Supplement has been or will be so prepared
and will be filed pursuant to Rule 424(b) of the Securities Act on or before the
second Business Day following the date of this Agreement or on such other day as
the parties may mutually agree. The Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the requirements of the
Securities Act. Copies of the Registration Statement, the Preliminary Prospectus
and the Prospectus, any such amendments or supplements and all documents
incorporated by reference therein that were filed with the Commission on or
prior to the date of this Agreement (including one fully executed copy of each
of the Registration Statement and of each amendment thereto for the
Underwriters) have been delivered to the Underwriters and their counsel. The
Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus, the Prospectus, Issuer General Use Free Writing
Prospectuses (as defined below) or any other materials, if any, permitted by the
Securities Act.
(b) Each part of the Registration Statement, when such part became or
becomes effective or was or is filed with the Commission, and the Prospectus and
any amendment or supplement thereto, on the date of filing thereof with the
Commission and at the time of purchase and, if applicable, at each additional
time of purchase, conformed or will conform in all material respects with the
requirements of the Securities Act. Each part of the Registration Statement,
when such part became or becomes effective or was or is filed with the
Commission, did not or will not 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 not misleading. The Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission and at the
time of purchase and, if applicable, at each additional time of purchase, did
not or will not include an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
foregoing shall not apply to statements in, or omissions from, any such document
in reliance upon, and in conformity with, written information concerning the
Underwriters that was furnished in writing to the Company by Xxxxxxx Xxxxx, on
behalf of the several Underwriters, specifically for use in the preparation
thereof.
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(c) As of the Applicable Time neither (x) the Issuer General Use Free
Writing Prospectus(es) (as defined below) issued at or prior to the Applicable
Time and the Statutory Prospectus (as defined below) as of the Applicable Time,
all considered together (collectively, the "General Disclosure Package"), nor
(y) any individual Issuer Limited Use Free Writing Prospectus, when considered
together with the General Disclosure Package, included any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
As of the time of the filing of the Final Term Sheet, the General
Disclosure Package, when considered together with the Final Term Sheet (as
defined in Section 4(b)), will include any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
As used in this subsection and elsewhere in this Agreement:
"Applicable Time" means 9:00 pm (Eastern time) on April 6, 2006 or such
other time as agreed by the Company and Xxxxxxx Xxxxx.
"Issuer Free Writing Prospectus" means any "issuer free writing
prospectus," as defined in Rule 433 of the 1933 Act Regulations ("Rule 433"),
relating to the Shares that (i) is required to be filed with the Commission by
the Company, (ii) is a "road show that is a written communication" within the
meaning of Rule 433(d)(8)(i) whether or not required to be filed with the
Commission or (iii) is exempt from filing pursuant to Rule 433(d)(5)(i) because
it contains a description of the Shares or of the offering that does not reflect
the final terms, in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the
Company's records pursuant to Rule 433(g).
"Issuer General Use Free Writing Prospectus" means any Issuer Free
Writing Prospectus that is intended for general distribution to prospective
investors, as evidenced by it being specified in Schedule B hereto.
"Issuer Limited Use Free Writing Prospectus" means any Issuer Free
Writing prospectus that is not an Issuer General Use Free Writing Prospectus.
"Statutory Prospectus" as of any time means the prospectus relating to
the Shares that is included in the Registration Statement immediately prior to
that time, including any document incorporated by reference therein.
Each Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Shares or until any earlier date that the Company notified or notifies Xxxxxxx
Xxxxx as described in the next sentence, did not, does not and will not include
any information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus, including any
document incorporated by reference therein, and any preliminary or other
prospectus deemed to be a part thereof that has not been superseded or modified.
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The representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement, the Prospectus or
any Issuer Free Writing Prospectus made in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through Xxxxxxx
Xxxxx expressly for use therein.
(d) (i) At the time the Company or any person acting on its behalf
(within the meaning, for this clause only, of Rule 163(c) of the 1933 Act
Regulations) made any offer relating to the Shares in reliance on the exemption
of Rule 163 of the 1933 Act Regulations and (ii) at the date hereof, the Company
is a "well-known seasoned issuer" as defined in Rule 405 of the 1933 Act
Regulations ("Rule 405"), including not having been and not being an "ineligible
issuer" as defined in Rule 405.
(e) The documents incorporated by reference in the Registration
Statement, the Prospectus or any amendment or supplement thereto, when they
became or become effective under the Securities Act or were or are filed with
the Commission under the Securities Act or the Exchange Act, as the case may be,
conformed or will conform in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable.
(f) The consolidated financial statements of the Company, together with
the related schedules and notes thereto, set forth or included or incorporated
by reference in the Registration Statement, the General Disclosure Package, and
the Prospectus 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 included or incorporated by reference in the Registration Statement, and
the Prospectus 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. No other
financial statements are required to be set forth or to be incorporated by
reference in the Registration Statement or the Prospectus under the Securities
Act.
(g) The Preliminary Prospectus was, and the Prospectus and the General
Disclosure Package delivered to the Underwriters for use in connection with this
offering will be, identical to the versions of the Preliminary Prospectus,
Prospectus and the General Disclosure Package, respectively, created to be
transmitted to the Commission for filing via XXXXX, except to the extent
permitted by Regulation S-T.
(h) The Company has been duly formed and incorporated and is validly
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 as
described in the Prospectus and to enter into and perform
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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.
(i) The Company has no "significant subsidiaries" (as such term is
defined in Rule 1-02 of Regulation S-X promulgated under 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, except for Fixed
Income Discount Advisory Company ("FIDAC"). Complete and correct copies of the
articles of incorporation and of the bylaws of the Company and all amendments
thereto have been delivered to Xxxxxxx Xxxxx and, except as set forth in the
exhibits to, or incorporated by reference into, the Registration Statement, no
changes therein will be made subsequent to the date hereof and prior to the time
of purchase or, if applicable, each additional time of purchase.
(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) 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 subsidiary.
(k) As of December 31, 2005, as of the date of this Agreement and as of
the time of purchase, the Company had, has or will have an authorized, issued
and outstanding capitalization as set forth under the headings "Historical" and
"As adjusted for both offerings," respectively, in the section of the Prospectus
Supplement entitled "Capitalization." All of the issued and outstanding shares
of capital stock, including the Common Stock of the Company, 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.
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(l) This Agreement has been duly authorized, executed and delivered by
the Company.
(m) The capital stock of the Company, including the Shares, conforms
and will conform in all material respects to the description thereof contained
in the Registration Statement, General Disclosure Package and the Prospectus and
such description conforms to the rights set forth in the instruments defining
the same. 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.
(n) 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, and will be registered pursuant to Section 12
of the Exchange Act.
(o) 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 (i) registration of the Shares under the Securities Act, (ii) any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriters, or
(iii) such approvals as have been obtained in connection with the approval of
the listing of the Shares on NYSE.
(p) 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 to the Underwriters 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,
except with respect to shares to be issued and registered in connection with the
Company's acquisition of FIDAC as described in the Registration Statement (the
"FIDAC Shares").
(q) Deloitte & Touche LLP (the "Accountants"), whose report on the
consolidated financial statements of the Company is filed with the Commission as
part of the Registration Statement and the Prospectus, are and, during the
periods covered by their reports, were independent public accountants as
required by the Securities Act.
(r) 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, in order to
conduct its business as described in the Prospectus, except as such as could not
have a Material Adverse Effect. The Company is not required by
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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 as set forth in the
Prospectus. 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.
(s) The descriptions in the Registration Statement, the General
Disclosure Package and the Prospectus of the legal or governmental proceedings,
contracts, leases and other legal documents therein described present fairly the
information required to be shown, and there are no legal or governmental
proceedings, contracts, leases, or other documents of a character required to be
described in the Registration Statement, the General Disclosure Package or the
Prospectus or to be filed as exhibits to the Registration Statement which are
not described or filed as required. All agreements between the Company and third
parties expressly referenced in the General Disclosure Package and Prospectus
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.
(t) 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.
(u) Subsequent to the respective dates as of which information is given
in the Registration Statement, the General Disclosure Package (including as of
the Applicable Time), and the Prospectus, 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 described or
referred to in the Registration Statement, the General Disclosure Package, or
the Prospectus, 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)
any change in the capital stock or outstanding indebtedness of the Company, or
(v) except for regular quarterly dividends on the shares of Series A cumulative
redeemable preferred stock, (the "Series A Preferred Stock") and Common Stock in
amounts per share that are consistent with past practice, 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 is
not disclosed in the Registration Statement, the General Disclosure Package, or
the Prospectus.
(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, registered pursuant to the
Registration Statement or otherwise registered by the Company under the
Securities Act, except with respect to the FIDAC Shares.
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(w) The Company (i) does not have any issued or outstanding preferred
stock, or other than the Series A 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. The Company has not filed a report
pursuant to Section 13(a) or 15(d) of the Exchange Act since the filing of its
last Annual Report on Form 10-K, indicating that it (i) has failed to pay any
dividend or sinking fund installment on preferred stock or (ii) has 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.
(x) 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) since the filing of the
Registration Statement (except pursuant to the Company's dividend reinvestment
and share purchase plan (the "DRSPP") and in accordance with the Second Amended
and Restated Sales Agency Agreement, dated May 11, 2005, between the Company and
UBS Securities LLC) (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.
(y) The shares have been approved for listing on the NYSE, subject only
to official notice of issuance.
(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
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 National Association of Securities Dealers ("NASD")) any
member firm of the NASD.
(aa) Any certificate signed by any officer of the Company delivered to
Xxxxxxx Xxxxx 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.
(bb) As of the date of this Agreement, the investment portfolio of the
Company (i) consists entirely of (a) mortgage-backed securities guaranteed, as
to payments of principal and interest, by either the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association or the Government
National Mortgage Association and (b) Federal Home Loan Bank, Federal Home Loan
Mortgage Corporation, or Federal National Mortgage Association debentures and
(ii) all of such mortgage-backed securities are REIT (as defined below) eligible
assets. As of the date of this Agreement, the Company has no plan or intention
to materially alter (i) its capital investment policy or (ii) except in
accordance with its capital investment policy, the percentage of its investment
portfolio that is invested in mortgage-backed securities which are guaranteed,
as to payments of principal and interest, by either the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association or the
Government National Mortgage Association. The Company has good and marketable
title to all of the properties and
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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 in or contemplated by
the Prospectus and the General Disclosure Package. 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 in the Prospectus or are not material and do not interfere with the
use made or proposed to be made of such property and buildings by the Company.
(cc) 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.
(dd) 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 as described in the Prospectus, 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.
(ee) 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.
(ff) 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.
-11-
(gg) 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.
(hh) 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.
(ii) The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated,
except as may otherwise exist with respect to the Underwriters pursuant to this
Agreement.
(jj) 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.
(kk) Neither the Company nor, to the knowledge of the Company, any
employee or agent of the Company, has made any payment of funds of the Company
or received or retained any funds in violation of any law, rule or regulation or
of a character required to be disclosed in the Prospectus. No relationship,
direct or indirect, exists between or among the Company, on the one hand, and
the directors, officers and stockholders of the Company, on the other hand,
which is required by the Securities Act to be described in the Registration
Statement and the Prospectus that is not so described.
(ll) The Company, since its date of inception, 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 (the "Code"), for all taxable years commencing
with its taxable year ended December 31, 1997. The 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, 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.
(mm) 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
-12-
company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(nn) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers, stockholders or directors
of the Company, on the other hand, which is required by the rules of the NASD to
be described in the Registration Statement and the Prospectus which is not so
described.
(oo) The Company has not, directly or indirectly, including through any
subsidiary, 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.
(pp) Neither the Company nor any of the subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or the subsidiaries
has made any payment of funds of the Company or the subsidiaries or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Registration Statement or the Prospectus.
(qq) 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.
(rr) The Registration Statement is not the subject of a pending
proceeding or examination under Section 8(d) or 8(e) of the Securities Act, and
the Company is not the subject of a pending proceeding under Section 8A of the
Securities Act in connection with the offering of the Shares.
4. CERTAIN COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees with each of the Underwriters that:
(a) The Company will furnish such information as may be required and
otherwise will cooperate in qualifying the Shares for offering and sale under
the securities or blue sky laws of such jurisdictions (both domestic and
foreign) as Xxxxxxx Xxxxx may designate and to maintain such qualifications in
effect so 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 jurisdiction (except
service of process with respect to the offering and sale of the Shares). The
Company will promptly advise Xxxxxxx Xxxxx of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(b) The Company will prepare the Prospectus in a form in compliance
with Rule 430(A) and approved by the Underwriters and file such Prospectus with
the Commission pursuant to Rule 424(b) under the Securities Act not later than
10:00 A.M. (New York City time), on or before the second Business Day following
the date of this Agreement or on such other day as the parties may mutually
agree and to furnish promptly (and with respect to the
-13-
initial delivery of such Prospectus, not later than 10:00 A.M. (New York City
time) on or before the second Business Day following the date of this Agreement
or on such other day as the parties may mutually agree) to the Underwriters
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) in such quantities and at such
locations as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act, which the Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
version created to be transmitted to the Commission for filing via XXXXX, except
to the extent permitted by Regulation S-T. The Company will prepare a final term
sheet (the "Final Term Sheet") reflecting the final terms of the Shares, in form
and substance satisfactory to Xxxxxxx Xxxxx, and shall file such Final Term
Sheet as an "issuer free writing prospectus" pursuant to Rule 433 as soon as
practicable following the execution of this Agreement; provided that the Company
shall xxxxxxx Xxxxxxx Xxxxx with copies of any such Final Term Sheet a
reasonable amount of time prior to such proposed filing and will not use or file
any such document to which Xxxxxxx Xxxxx or counsel to the Underwriters shall
object in writing.
(c) The Company will advise Xxxxxxx Xxxxx immediately, confirming such
advice in writing, of (i) the receipt of any comments from the Commission
relating to any filing of the Company under the Securities Act or the Exchange
Act, (ii) any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information with
respect thereto, (iii) 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 any examination pursuant to Section 8(e) of the Securities Act concerning
the Registration Statement, (iv) the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, (v) the initiation, threatening
or contemplation of any proceedings for any of such purposes and, if the
Commission or any other governmental agency or authority should issue any such
order, the Company will make every reasonable effort to obtain the lifting or
removal of such order as soon as possible. The Company will advise Xxxxxxx Xxxxx
promptly of any proposal to amend or supplement the Registration Statement or
the Prospectus including by filing any documents that would be incorporated
therein by reference, and will xxxxxxx Xxxxxxx Xxxxx with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which Xxxxxxx
Xxxxx or counsel for the Underwriters shall object in writing. The Company has
given Xxxxxxx Xxxxx notice of any filings made pursuant to the 1934 Act or 1934
Act Regulations within 48 hours prior to the Applicable Time; the Company will
give Xxxxxxx Xxxxx notice of its intention to make any such filing from the
Applicable Time to the time of purchase and, if applicable, each additional time
of purchase, and will furnish the Xxxxxxx Xxxxx with copies of any such
documents a reasonable amount of time prior to such proposed filing, as the case
may be, and will not file or use any such document to which the Xxxxxxx Xxxxx or
counsel for the Underwriters shall object in writing.
(d) The Company will advise Xxxxxxx Xxxxx promptly and, if requested by
Xxxxxxx Xxxxx, xxxx confirm such advice in writing when any post-effective
amendment to the Registration Statement becomes effective under the Securities
Act.
(e) The Company will furnish to Xxxxxxx Xxxxx and, upon request, to
each of the other Underwriters for a period of five years from the date of this
Agreement (i) copies of
-14-
any reports or other communications which the Company shall send to its
stockholders or shall from time to time publish or publicly disseminate, (ii)
copies of all annual, quarterly and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar form as may be designated by the
Commission, (iii) copies of documents or reports filed with any national
securities exchange on which any class of securities of the Company is listed,
and (iv) such other information as Xxxxxxx Xxxxx may reasonably request
regarding the Company, in each case as soon as such communications, documents or
information become available.
(f) The Company will 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
which would require the making of any change in the Prospectus then being used,
or in the information incorporated by reference therein, so that the Prospectus
would not include 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, or if it is necessary at any time to amend or supplement the
Prospectus to comply with any law. If within the time during which a Prospectus
relating to the Shares is required to be delivered under the Securities Act any
event shall occur or condition shall exist which, in the reasonable opinion of
the Company, Xxxxxxx Xxxxx or their respective counsel, would require the making
of any change in the Prospectus then being used, or in the information
incorporated by reference therein, so that the Prospectus would not include 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, or if it is
necessary at any time to amend or supplement the Prospectus to comply with any
law, the Company will promptly prepare and furnish to the Underwriters copies of
the proposed amendment or supplement before filing any such amendment or
supplement with the Commission and thereafter promptly furnish, at the Company's
own expense, to the Underwriters and to dealers copies in such quantities and at
such locations as Xxxxxxx Xxxxx may from time to time reasonably request of an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
circumstances when it is so delivered, be misleading or so that the Prospectus
will comply with the law. If at any time following issuance of an Issuer Free
Writing Prospectus there occurred or occurs an event or development as a result
of which such Issuer Free Writing Prospectus conflicted or would conflict with
the information contained in the Registration Statement relating to the Shares
or the Statutory Prospectus or any preliminary prospectus or included or would
include an untrue statement of a material fact or omitted or would omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances, prevailing at that subsequent time, not misleading, the
Company will promptly notify Xxxxxxx Xxxxx and will promptly amend or
supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or omission.
(g) The Company will make generally available to its stockholders as
soon as practicable, and in the manner contemplated by Rule 158 of the
Securities Act but in any event not later than 15 months after the end of the
Company's current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period beginning after the date upon which the
Prospectus Supplement is filed pursuant to Rule 424(b) under the Securities Act
that
-15-
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder and will advise the Underwriters in writing when such statement has
been made available.
(h) The Company will furnish to Xxxxxxx Xxxxx a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto and documents incorporated by
reference therein) and such number of conformed copies of the foregoing (other
than exhibits) as Xxxxxxx Xxxxx may reasonably request.
(i) The Company will apply the net proceeds from the sale of the Shares
in the manner set forth under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will furnish to Xxxxxxx Xxxxx, not less than two
Business Days before a filing with the Commission during the period referred to
in paragraph (f) above, a copy of any document proposed to be filed pursuant to
Section 13, 14 or 15(d) of the Exchange Act and during such period will file all
such documents in a manner and within the time periods required by the Exchange
Act.
(k) The Company will not sell, offer, contract to sell, pledge,
register, grant any option to purchase or otherwise dispose of, directly or
indirectly, any shares of capital stock, or any securities convertible into, or
exercisable, exchangeable or redeemable for shares of capital stock, except for
the registration of the Shares, the Series B cumulative convertible preferred
stock (the "Series B Preferred Stock") offered in connection with that certain
Underwriting Agreement, dated as of the date hereof, between the Company,
Xxxxxxx Xxxxx and other underwriters (the "Preferred Underwriting Agreement")
and the Common Stock that the Series B Preferred Stock is convertible into, and
the sales to the Underwriters pursuant to this Agreement and the Preferred
Underwriting Agreement and except for issuances of Common Stock upon the
exercise of outstanding options, for a period of 90 days after the date hereof,
without the prior written consent of Xxxxxxx Xxxxx. The foregoing sentence shall
not apply to (i) the Shares to be sold hereunder, (ii) any shares of Common
Stock issued by the Company upon the exercise of an option outstanding on the
date hereof and referred to in the Prospectus, (iii) shares of Common Stock
issued pursuant to the DRSPP, (iv) the grant of awards pursuant to the Company's
Long-Term Stock Incentive Plan or issuances pursuant to the exercise of employee
stock options or other awards or (v) with respect to any FIDAC Shares.
Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day
restricted period the Company issues an earnings release or material news or a
material event relating to the Company occurs or (2) prior to the expiration of
the 90-day restricted period, the Company announces that it will release
earnings results or becomes aware that material news or a material event will
occur during the 16-day period beginning on the last day of the 90-day
restricted period, the restrictions imposed in this paragraph (k) shall continue
to apply until the expiration of the 18-day period beginning on the issuance of
the earnings release or the occurrence of the material news or material event.
(l) The Company will use its best efforts to cause each officer and
director of the Company to furnish to Xxxxxxx Xxxxx, prior to the time of
purchase, a letter or letters, substantially in the form of Exhibit C hereto,
pursuant to which each such person shall agree, subject to certain exceptions
set forth therein, not to sell, offer, contract to sell, pledge, grant any
option to purchase or otherwise dispose of, directly or indirectly, any shares
of capital stock, or
-16-
any securities convertible into, or exercisable, exchangeable or redeemable for
shares of capital stock of the Company for a period of 90 days after the date
hereof, without the prior written consent of Xxxxxxx Xxxxx.
(m) The Company will use its best efforts to cause the Shares to be
listed on the NYSE and to maintain such listing and to file with the NYSE all
documents and notices required by the NYSE of companies that have securities
that are listed on the NYSE.
(n) The Company will maintain and keep accurate books and records
reflecting their assets and maintain internal accounting controls which provide
reasonable assurance that (i) transactions are executed in accordance with
management's authorization, (ii) transactions are recorded as necessary to
permit the preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company, (iii) access to the
assets of the Company is permitted only in accordance with management's
authorization and (iv) the recorded accounts of the assets of the Company are
compared with existing assets at reasonable intervals.
(o) The Company will engage and maintain, at its expense, a registrar
and transfer agent for the Shares.
(p) The Company will pay all expenses, fees and taxes (other than any
transfer taxes and fees and disbursements of counsel for the Underwriters,
except as set forth under Section 5 hereof or (iii) or (iv) below) in connection
with (i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, any Permitted Free Writing 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 issuance, sale and delivery of the Shares by the
Company, (iii) the word processing and/or printing of this Agreement, any
Agreement among the Underwriters, any dealer agreements, and the reproduction
and/or printing and furnishing of copies of each thereof to the Underwriters and
to dealers (including costs of mailing and shipment), (iv) the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the Shares, including without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of aircraft and
other transportation chartered in connection with the road show, except that the
lodging, airfare (except if the Company charters a flight in which case
employees of the Underwriters ride on such charter without charge), and
incidental expenses of employees of the Underwriters shall be the responsibility
of the Underwriters, (v) the qualification of the Shares for offering and sale
under state laws 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 to 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, (vi) any listing of the Shares on the NYSE and any
registration thereof under the Exchange Act, (vii) the filing, if any, for
review of the public offering of the Shares by the NASD, (viii) the performance
of the Company's other obligations hereunder, and (ix) the costs and expenses
(including without limitation any damages or other amounts payable in connection
with legal or contractual liability) associated with the
-17-
reforming of any contracts for sale of the Shares made by the Underwriters
caused by a breach of the representation contained in the first paragraph of
Section 3(c).
(q) The Company will not (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 any Person (other than as
contemplated by the provisions hereof) 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.
(r) The Company will not invest in futures contracts, options on
futures contracts or options on commodities unless the Company is exempt from
the registration requirements of the Commodity Exchange Act, as amended, or
otherwise complies with the Commodity Exchange Act, as amended. In addition, the
Company will not engage in any activities which might be subject to the
Commodity Exchange Act, as amended, unless such activities are exempt from that
Act or otherwise comply with that Act or with an applicable no-action letter to
the Company from the Commodities Futures Trading Commission.
(s) The Company will comply with all of the provisions of any
undertakings in the Registration Statement.
(t) The Company has been organized and operated in conformity with the
requirements for qualification and taxation of the Company as a REIT under the
Code, and the Company's proposed methods of operation will enable the Company to
continue to meet the requirements for qualification and taxation as a REIT under
the Code for subsequent taxable years.
(u) The Company will not be or become, at any time prior to the
expiration of three years after the date of the Agreement, an "investment
company," as such term is defined in the Investment Company Act.
(v) The Company has retained the Accountants as its qualified
accountants and qualified tax experts (i) to test procedures and conduct annual
compliance reviews designed to determine compliance with the REIT provisions of
the Code and the Company's exempt status under the Investment Company Act and
(ii) to otherwise assist the Company in monitoring appropriate accounting
systems and procedures designed to determine compliance with the REIT provisions
of the Code and the Company's exempt status under the Investment Company Act.
(w) The Company will comply with all requirements imposed upon it by
the Securities Act and the Exchange Act as from time to time in force, so far as
necessary to permit the continuance of sales of, or dealings in, the Shares as
contemplated by the provisions hereof and the Prospectus.
(x) The Company will maintain such controls and other procedures,
including, without limitation, those required by Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act, and the
-18-
applicable regulations thereunder that are designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission's rules and forms, including,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company's
management, including its chief executive officer and chief financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure and to ensure that material information
relating to the Company is made known to them by others within those entities,
particularly during the period in which such periodic reports are being
prepared.
(y) The Company will comply with all effective applicable provisions of
the Xxxxxxxx-Xxxxx Act.
(z) The Company represents and agrees that, unless it obtains the prior
consent of Xxxxxxx Xxxxx, and each Underwriter represents and agrees that,
unless it obtains the prior consent of the Company and Xxxxxxx Xxxxx, it has not
made and will not make any offer relating to the Shares that would constitute an
"issuer free writing prospectus," as defined in Rule 433, or that would
otherwise constitute a "free writing prospectus," as defined in Rule 405,
required to be filed with the Commission or, in the case of the Company, whether
or not required to be filed with the Commission; provided, however, that prior
to the preparation of the Final Term Sheet in accordance with Section 4(b), the
Underwriters are authorized to use the information with respect to the final
terms of the Shares in communications conveying information relating to the
offering to investors. Any such free writing prospectus consented to by the
Company and Xxxxxxx Xxxxx is hereinafter referred to as a "Permitted Free
Writing Prospectus." The Company represents that it has treated or agrees that
it will treat each Permitted Free Writing Prospectus as an "issuer free writing
prospectus," as defined in Rule 433, and has complied and will comply with the
requirements of Rule 433 applicable to any Permitted Free Writing Prospectus,
including timely filing with the Commission where required, legending and record
keeping.
5. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the default by one or more of the Underwriters in its or their respective
obligations hereunder, the Company shall, in addition to paying the amounts
described in Section 4(p) hereof, reimburse the Underwriters for all of their
out-of-pocket expenses, including the fees and disbursements of their counsel.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof, at the Applicable
Time and at the time of purchase (and the several obligations of the
Underwriters at each additional time of purchase are subject to the accuracy of
the representations and warranties on the part of the Company on the date
hereof, at the Applicable Time and at the time of purchase (unless previously
waived) and at each additional time of purchase, as the case may be), the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
-19-
(a) The Company shall furnish to Xxxxxxx Xxxxx at the time of purchase
and at each additional time of purchase, as the case may be, opinions of
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP and XxXxx Xxxxxx LLP, each counsel
for the Company, addressed to the Underwriters, and dated the time of purchase
or each additional time of purchase, as the case may be, with reproduced copies
for each of the other Underwriters and in form satisfactory to Fried Xxxxx
Xxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters, substantially in
the form of Exhibit A and Exhibit B, respectively attached hereto.
(b) Xxxxxxx Xxxxx shall have received from the Accountants, letters
dated, respectively, the date of this Agreement and the time of purchase and
each additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by Xxxxxxx Xxxxx 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 a
registered public offering.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (i) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless
Xxxxxxx Xxxxx xxxx such explanation unnecessary, and (ii) such changes,
decreases or increases do not, in the sole judgment of Xxxxxxx Xxxxx, make it
impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement and the Prospectus.
(c) Xxxxxxx Xxxxx shall have received at the time of purchase and at
each additional time of purchase, as the case may be, the favorable opinion of
Fried Xxxxx Xxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters, dated
the time of purchase or each additional time of purchase, as the case may be.
(d) No amendment or supplement to the Registration Statement or the
Prospectus, including documents deemed to be incorporated by reference therein,
or Issuer Free Writing Prospectus shall be filed to which the Underwriters
object in writing.
(e) Prior to the time of purchase or each additional time of purchase,
as the case may be, (i) no stop order with respect to the effectiveness of any
one of the Registration Statement shall have been issued under the Securities
Act or proceedings initiated under Section 8(d) or 8(e) of the Securities Act;
(ii) the Registration Statement and all amendments thereto, or modifications
thereof, if any, shall not 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 not misleading; and (iii) the Prospectus and all
amendments or supplements thereto, or modifications thereof, if any, and the
General Disclosure Package shall not 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 are made, not misleading.
(f) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the time of purchase or each additional
time of purchase, as the case may be, shall have been made within the applicable
time period prescribed for such filing by
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Rule 424 (without reliance on Rule 424(b)(8)). A prospectus containing the Rule
430(A) information shall have been filed with the Commission in accordance with
Rule 424(b) (or a post effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements of Rule
430(A)).
(g) Between the time of execution of this Agreement and the time of
purchase or each additional time of purchase, as the case may be, (i) no
material and unfavorable change, financial or otherwise (other than as referred
to in the Registration Statement, and the Prospectus and the General Disclosure
Package, in each case as of the Applicable Time), in the business, condition,
net worth or prospects of the Company shall occur or become known and (ii) no
transaction which is material and unfavorable to the Company shall have been
entered into by the Company.
(h) The Company will, at the time of purchase or each additional time
of purchase, as the case may be, deliver to Xxxxxxx Xxxxx a certificate of two
of its executive officers to the effect that the representations and warranties
of the Company as set forth in this Agreement are true and correct as of each
such date, that the Company shall perform such of its obligations under this
Agreement as are to be performed at or before the time of purchase and at or
before each additional time of purchase, as the case may be, and that the
conditions set forth in paragraphs (e) and (g) of this Section 6 have been met.
(i) The Company shall have furnished to Xxxxxxx Xxxxx such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus as of the time of purchase and
each additional time of purchase, as the case may be, as Xxxxxxx Xxxxx may
reasonably request.
(j) The Shares shall have been approved for listing on the NYSE,
subject only to notice of issuance at or prior to the time of purchase or each
additional time of purchase, as the case may be.
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) Xxxxxxx Xxxxx shall have received lock-up agreements from the
Company and its officers and directors, in the form of Exhibit C attached
hereto, and such letter agreements shall be in full force and effect.
(m) Between the time of execution of this Agreement and the time of
purchase or each additional time of purchase, as the case may be, there shall
not have occurred any downgrading, nor shall any notice or announcement have
been given or made of (i) any intended or potential downgrading or (ii) any
review or possible change that does not indicate an improvement, in the rating
accorded any securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization," as that term is defined in Rule
436(g)(2) under the Securities Act.
7. TERMINATION. The obligations of the several Underwriters hereunder
shall be subject to termination in the absolute discretion of Xxxxxxx Xxxxx, at
any time prior to the time of purchase or, if applicable, each additional time
of purchase, (i) if any of the conditions
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specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, (ii) if any material adverse and unfavorable
change occurs (financial or otherwise), or any development involving a material
adverse and unfavorable change occurs (financial or otherwise) (in each case,
other than as disclosed in, or incorporated by reference into, the Registration
Statement, the General Disclosure Package, and the Prospectus as of the
Applicable Time (exclusive of any supplement thereto)), in the operations,
business, net worth, condition or prospects of the Company, or a material change
in management of the Company occurs, whether or not arising in the ordinary
course of business, which would, in the sole judgment of Xxxxxxx Xxxxx, make it
impracticable to market the Shares, (iii) if (a) the United States shall have
declared war in accordance with its constitutional processes or there has
occurred an outbreak or escalation of hostilities or other national or
international calamity or crisis or change or development in economic, political
or other conditions the effect of which on, or (b) any material adverse change
in the financial markets of the United States or the international financial
markets is such as to make it, in the sole judgment of Xxxxxxx Xxxxx,
impracticable or inadvisable 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 or materially limited by the Commission or by the NYSE, or if trading
generally on the NYSE, American Stock Exchange or in the Nasdaq National Market
has been suspended, materially limited, (including an automatic halt in trading
pursuant to market-decline triggers other than those in which solely program
trading is temporarily halted), or limitations on or minimum prices for trading
(other than limitations on hours or numbers of days of trading) shall have been
fixed, or maximum ranges for prices for securities have been required, by such
exchange or the NASD or Nasdaq or by order of the Commission or any other
governmental authority, (v) if a banking moratorium shall have been declared by
New York or United States authorities or a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, (vi) if there shall have occurred any downgrading, or any notice or
announcement shall have been given or made of (a) any intended or potential
downgrading or (b) any review or possible change that does not indicate an
improvement, in the rating accorded any securities of or guaranteed by the
Company by any "nationally recognized statistical rating organization," as that
term is defined in Rule 436(g)(2) under the Securities Act, (vii) 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 Xxxxxxx Xxxxx, materially adversely affects or will
materially adversely affect the business or operations of the Company, or (viii)
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
Xxxxxxx Xxxxx, has a material adverse effect on the securities markets in the
United States.
If Xxxxxxx Xxxxx elects to terminate this Agreement as provided in this
Section 7, the Company and each other Underwriter shall be notified promptly by
telephone, which shall be 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 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 3, 4(p), 5 and 9 hereof), and the Underwriters shall be
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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 in its obligation under this Agreement to take up and pay for the Shares
to be purchased by it under this Agreement (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 7 hereof), Xxxxxxx Xxxxx shall have the right, within 36 hours after
such default, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Shares which such Underwriter shall have agreed but failed to take up and
pay for (the "Defaulted Shares"). Absent the completion of such arrangements
within such 36 hour period, (i) if the total number of Defaulted Shares does not
exceed 10% of the total number of Shares to be purchased at the time of purchase
or each additional time of purchase, as the case may be, 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 number of Shares agreed to be purchased by all such defaulting Underwriters
in such amount or amounts as Xxxxxxx Xxxxx may designate with the consent of
each Underwriter so designated or, in the event no such designation is made,
such Shares shall be taken up and paid for by all non-defaulting Underwriters
pro rata in proportion to the aggregate number of Firm Shares set opposite the
names of such non-defaulting Underwriters in Schedule A; and (ii) if the total
number of Defaulted Shares exceeds 10% of such total number of Shares to be
purchased at the time of purchase or each additional time of purchase, as the
case may be, and if neither the non-defaulting Underwriters nor the Company
shall make arrangements within the five Business Day period from the date of
default for the purchase of such Defaulted Shares, Xxxxxxx Xxxxx may terminate
this Agreement by notice to the Company, without liability of any party to any
other party except that the provisions of Sections 3 4(p), 5 and 9 shall at all
times be effective and shall survive such termination. Nothing in this
paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that they
will not sell any Shares hereunder unless all of the Shares are purchased by the
Underwriters (or by substituted Underwriters selected by Xxxxxxx Xxxxx with the
approval of the Company or selected by the Company with Xxxxxxx Xxxxx'
approval).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter or Underwriters in accordance with the foregoing provisions, the
Company or Xxxxxxx Xxxxx shall have the right to postpone the time of purchase
or each additional time of purchase, as the case may be, for a period not
exceeding seven Business Days from the date of substitution in order that any
necessary changes in the Registration Statement and the 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 like effect as if
such substituted Underwriter had originally been named in Schedule A.
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9. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any Person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing Persons from and against any loss, damage, expense, liability or claim
(including, but not limited to, the reasonable cost of investigation) which,
jointly or severally, any such Underwriter or any such Person may incur under
the Securities Act, the Exchange Act, federal or state statutory law or
regulation, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon (i) 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 and including the Rule 430A Information) 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 in any Issuer Free Writing
Prospectus, or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission, (ii) upon any omission or alleged omission to state in any such
document a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading or (iii) any act or failure to act or any alleged act or
failure to act by the Underwriters in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, damage, expense, liability, claim or action
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable under this clause (iii) to the
extent it is finally judicially determined by a court of competent jurisdiction
that such loss, damage, expense, liability, claim or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by the
Underwriters through their gross negligence or willful misconduct), except
insofar as any such loss, damage, expense, liability or claim arises out of or
is based upon any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in writing by or
on behalf of any Underwriter through Xxxxxxx Xxxxx to the Company expressly for
use with reference to such Underwriter in the Prospectus or any Issuer Free
Writing Prospectus or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in the Prospectus or necessary to make such information not
misleading.
If any action, suit or proceeding (together, a "Proceeding") is brought
against an Underwriter or any such Person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such Underwriter
or such Person shall promptly notify the Company in writing of the institution
of such Proceeding; provided, however, that the omission to so notify the
Company shall not relieve the Company from any liability which the Company may
have to any Underwriter or any such Person or otherwise. Xxxxxxx Xxxxx shall
have the right to employ counsel for such indemnified parties and the Company
shall indemnify the Underwriter or any such Person in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, against
any and all expense whatsoever, as
-24-
incurred (including the fees and disbursements of counsel), reasonably incurred
in investigating, preparing or defending against any Proceeding. The Company may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the Company shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event shall
the Company be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from its own counsel for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances. The Company shall not be liable for any settlement of any such
Proceeding effected without its written consent (which shall not be unreasonably
withheld) but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such Person from
and against any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 Business Days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, any Person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
director of the Company and each officer of the Company who signed the
Registration Statement from and against any loss, damage, expense, liability or
claim (including, but not limited to, the reasonable cost of investigation)
which, jointly or severally, the Company or any such Person may incur under the
Securities Act, the Exchange Act, federal or state statutory law or regulation,
the common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any (i) untrue statement or alleged untrue
statement of a material fact contained in, and in conformity with information
furnished in writing by or on behalf of such Underwriter through Xxxxxxx Xxxxx
to the Company expressly for use with reference to such Underwriter in, the
Registration Statement (or in the Registration Statement as amended by or on
behalf of any post-effective amendment thereof by the Company) or in a
Prospectus, or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus or in any Issuer Free Writing
Prospectus, or in any application or other document executed by or on behalf of
the Company or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under the
securities or blue sky laws thereof or filed with the Commission or (ii)
omission or alleged omission to state in any such document a material fact in
connection with such information required to be stated therein
-25-
or necessary to make the statement therein, in the light of the circumstances
under which they were made, not misleading.
If any Proceeding is brought against the Company or any such Person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such Person shall promptly notify such
Underwriter in writing of the institution of such Proceeding; provided, however,
that the omission to so notify such Underwriter shall not relieve such
Underwriter, from any liability which such Underwriter may have to the Company
or any such Person or otherwise. The Company shall have the right to employ its
own counsel in any such case and such Underwriter shall indemnify the Company or
any such Person in respect of which indemnity may be sought against such
Underwriter pursuant to the foregoing paragraph, against any and all expense
whatsoever, as incurred (including the fees and disbursements of counsel chosen
by the Company), reasonably incurred in investigating, preparing or defending
against any Proceeding. Such Underwriter may participate at its own expense in
the defense of any such action; provided, however, that counsel to such
Underwriter shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall such Underwriter be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from its own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the written
consent of such Underwriter, such Underwriter agrees to indemnify and hold
harmless the Company and any such Person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then the indemnifying party agrees
that it shall be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more than 60 Business
Days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then in order to provide just and equitable contribution in
such circumstance, 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, damages, expenses, liabilities or
claims (i) in such proportion
-26-
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other hand from the offering of the
Shares or (ii) if, but only if, the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, damages, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
respective proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the total underwriting discounts and commissions received by
the Underwriters, bear to the aggregate public offering price of the shares. The
relative fault of the Company on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating, preparing to defend or defending any claim or
Proceeding.
(d) 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 allocation that does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be liable or responsible
for, or be required to contribute, any amount pursuant to this Section 9 in
excess of the amount of the underwriting discounts and commissions applicable to
the Shares purchased by such Underwriter. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this Section
9 and the covenants, warranties and representations of the Company contained in
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, its directors and
officers or any Person (including each partner, officer or director of such
Person) who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors or officers or any Person who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and shall survive any termination of this Agreement or the issuance and
delivery of the Shares. The Company and each Underwriter agree promptly to
notify each other upon the commencement of any Proceeding against it and, in the
case of the Company, against any of the Company's officers or directors in
connection with the issuance and sale of the Shares, or in connection with the
Registration Statement or the Prospectus.
10. NOTICES. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be
-27-
sufficient in all respects if delivered or sent to Xxxxxxx Xxxxx & Co., 0 Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxx Xxxxxx, with a copy
for information purposes to Xxxxxxx Xxxx Xxxxx, Esq. at Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx LLP, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, XX 00000 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 1211 Avenue of the Americas, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.X. Xxxxxxx with a copy for
information purposes to Xxxxxxx Xxxxxx, Esq. at Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx
Xxxxxx, 0000 X Xxxxxx XX, Xxxxxxxxxx, X.X. 00000.
11. GOVERNING LAW; CONSTRUCTION. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement (a "Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. SUBMISSION TO JURISDICTION. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the non-exclusive jurisdiction of such courts and personal service
with respect thereto. The Company hereby consents to personal jurisdiction,
service and venue in any court in which any Claim arising out of or in any way
relating to this Agreement is brought by any third party against Xxxxxxx Xxxxx
or any indemnified party. Each of Xxxxxxx Xxxxx and the Company (on its behalf
and, to the extent permitted by applicable law, on behalf of its stockholders
and affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company agrees that a final judgment
in any such action, proceeding or counterclaim brought in any such court shall
be conclusive and binding upon the Company and may be enforced in any other
courts in the jurisdiction of which the Company is or may be subject, by suit
upon such judgment.
13. PARTIES AT INTEREST. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company and to the extent
provided in Section 9 hereof the controlling Persons, directors and officers
referred to in such Section, and their respective successors, assigns, heirs,
pursuant representatives and executors and administrators. No other Person,
partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
14. NO ADVISORY OR FIDUCIARY RELATIONSHIP. The Company acknowledges and
agrees that (a) the purchase and sale of the Shares pursuant to this Agreement,
including the determination of the public offering price of the Shares and any
related discounts and commissions, is an arm's-length commercial transaction
between the Company, on the one hand, and the several Underwriters, on the other
hand, (b) in connection with the offering contemplated hereby and the process
leading to such transaction each Underwriter is and has been acting solely as a
principal and is not the agent or fiduciary of the Company, or its respective
stockholders, creditors, employees or any other party, (c) no Underwriter has
assumed or will assume an
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advisory or fiduciary responsibility in favor of the Company with respect to the
offering contemplated hereby or the process leading thereto (irrespective of
whether such Underwriter has advised or is currently advising the Company on
other matters) and no Underwriter has any obligation to the Company with respect
to the offering contemplated hereby except the obligations expressly set forth
in this Agreement, (d) the Underwriters and their respective affiliates may be
engaged in a broad range of transactions that involve interests that differ from
those of each of the Company, and (e) the Underwriters have not provided any
legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company has consulted its own respective legal,
accounting, regulatory and tax advisors to the extent it deemed appropriate.
15. TAX DISCLOSURE. Notwithstanding any other provision of this
Agreement, immediately upon commencement of discussions with respect to the
transactions contemplated hereby, the Company (and each employee, representative
or other agent of the Company) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to the Company relating to such tax
treatment and tax structure. For purposes of the foregoing, the term "tax
treatment" is the purported or claimed federal income tax treatment of the
transactions contemplated hereby, and the term "tax structure" includes any fact
that may be relevant to understanding the purported or claimed federal income
tax treatment of the transactions contemplated hereby.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Underwriter or its
Affiliates or selling agents, any person controlling any Underwriter, its
officers or directors or any person controlling the Company, and (ii) delivery
of and payment for the Shares.
17. INTEGRATION. This Agreement supersedes all prior agreements and
understandings (whether written or oral) between the Company and the
Underwriters, or any of them, with respect to the subject matter hereof.
18. COUNTERPARTS. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
20. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
-29-
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 letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
ANNALY MORTGAGE MANAGEMENT, INC.
By: /s/ Xxxxxxx X.X. Xxxxxxx
------------------------
Name: Xxxxxxx X.X. Xxxxxxx
Title: Chairman of the Board, Chief Executive
Officer and President
-30-
Accepted and agreed to as of the date first
above written, on behalf of itself and the other
several Underwriters named in Schedule A
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
CITIGROUP GLOBAL MARKETS INC.
UBS SECURITIES LLC
BY: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By /s/ Xxxxxxx Xxxx
----------------
Authorized Signatory
For themselves and as Representative(s) of the other Underwriters named in
Schedule A hereto.
-31-
SCHEDULE A
NUMBER OF
UNDERWRITER FIRM SHARES
----------- -----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated............... 15,345,000
Citigroup Global Markets Inc. ................................... 5,967,500
UBS Securities LLC .............................................. 5,967,500
Deutsche Bank Securities Inc. ................................... 3,410,000
Xxxxx, Xxxxxxxx & Xxxxx, Inc..................................... 1,705,000
RBC Capital Markets Corporation ................................. 1,705,000
----------
Total................................................... 34,100,000
==========
SCHEDULE B
Issuer General Use Free Writing Prospectus
(attached hereto)
Final Term Sheet
Sch-A
EXHIBIT A
OPINION OF XXXXXXXXXXX & XXXXXX XXXXXXXXX XXXXXX LLP
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Maryland, with the corporate
power and authority to own, lease and operate its properties and conduct its
business as described in the Prospectus and to enter into and perform its
obligations under or as contemplated by the Underwriting Agreement.
2. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good standing
would not have a Material Adverse Effect (with your permission, we have relied
in respect of matters of fact related to the opinion in this paragraph upon a
certificate of an officer of the Company).
3. The Underwriting Agreement has been duly authorized, executed, and
delivered by the Company.
4. The Shares have been duly authorized by the Company for issuance and
sale to the Underwriters pursuant to the Underwriting Agreement and, when issued
and delivered by the Company pursuant to the Underwriting Agreement against
payment of the consideration set forth therein, will be validly issued, fully
paid and non-assessable and no holder of the Shares is or will be subject to
personal liability, under the General Corporation Law of the State of Maryland
(the "MGCL") or the Charter or By-laws of the Company, by reason of being a
holder.
5. The Company has an authorized capitalization as of December 31, 2005
as set forth in the Prospectus Supplement under the caption "Capitalization."
All issued and outstanding shares of capital stock of the Company are validly
issued, fully paid, and non-assessable, and conform in all material respects
with the description thereof contained in the Prospectus. The Shares when issued
and outstanding will conform in all material respects with the description
thereof contained in the Prospectus.
6. The issuance of the Shares is not subject to preemptive or other
similar rights of any stockholder of the Company arising by operation of the
MGCL or under the Charter or By-laws of the Company, or, to our knowledge, any
contractual preemptive rights, resale rights, rights of first refusal or similar
rights. To our knowledge, except as disclosed in the Registration Statement and
the Prospectus, there is no outstanding option, warrant or other right calling
for the issuance of, and no commitment, plan or arrangement to issue, any shares
of capital stock of the Company or any security convertible into, exercisable
for, or exchangeable for shares of capital stock of the Company. To our
knowledge, no holder of any security of the Company has the right to have any
security owned by such holder included for registration in the Registration
Statement.
Exh-A
7. The forms of certificate used by the Company to represent shares of
Common Stock comply in all material respects with any applicable requirement of
the MGCL, the Company's Charter and By-laws, and the New York Stock Exchange.
8. The information incorporated by reference into the Prospectus from
the Company's Form 10-K for the Company's fiscal year ending December 31, 2005
under the captions "Risk Factors - Risks of Ownership of Our Common Stock -
Maryland Business Combination Act", "Risk Factors - Risks of Ownership of Our
Common Stock - Maryland Control Share Acquisition Act", and the information in
the Prospectus under the caption "Description of Common Stock and Preferred
Stock" and in the Prospectus Supplement under the caption "Risk Factors - Our
operations may be adversely affected if we are subject to the Investment Company
Act" to the extent that such information constitutes a summary of legal matters
under the MGCL or of provisions of the Company's Charter or By-laws or the 1940
Act (as defined below), has been reviewed by us and is correct in all material
respects.
9. The Registration Statement and the Prospectus (in each case other
than (A) the financial statements and supporting schedules and other financial
and accounting data included or incorporated by reference therein or omitted
therefrom as to which we express no opinion and (B) except as expressed in our
opinion in paragraph 10 below, the documents incorporated therein), as of their
respective effective dates, as the case may be, each complied, and as of the
date hereof each comply, as to form in all material respects to the applicable
requirements of the 1933 Act.
10. The annual report on Form 10-K for the year ended December 31, 2005
and the definitive proxy statement filed with the Commission on April 5, 2006,
incorporated by reference in the Registration Statement (other than the
financial statements and supporting schedules and other financial and accounting
data included therein, as to which we express no opinion), when they were filed
with the Commission (or, if later, upon filing of an amendment thereto) complied
as to form in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission promulgated thereunder (collectively, the "1934 Act").
11. The Registration Statement has been declared effective under the
1933 Act; the Prospectus has been filed pursuant to Rule 424(b) of the 1933 Act
Regulations in the manner and within the time period required by Rule 424(b);
and, to our knowledge, based solely on a telephone conversation with a member of
the staff of the Commission, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been initiated or threatened by the Commission.
12. To our knowledge, no consent, approval, authorization, or other
order of any federal regulatory body, federal administrative agency or other
federal governmental body of the United States of America or any state
regulatory body, state administrative agency or other state governmental body of
the State of Maryland is required under the Applicable Laws for the Company to
issue and sell the Shares to the Underwriters as contemplated by the
Underwriting Agreement and to consummate the transactions contemplated thereby.
Exh-A
13. The execution, delivery and performance of the Underwriting
Agreement by the Company, the issuance and sale of the Shares to the
Underwriters as contemplated by the Underwriting Agreement and consummation of
the transactions contemplated thereby do not and will not conflict with or
result in a breach or violation of any of the terms and provisions of,
constitute a default under, or cause a Repayment Event under (A) any indenture,
mortgage, deed of trust, lease, repurchase agreement or other agreement, known
to us, to which the Company is a party or is bound, except for such for such
violations, conflicts, breaches, defaults, liens, charges, or encumbrances that
would not result in a Material Adverse Effect, (B) the Charter or By-laws of the
Company, (C) Applicable Laws, (D) the Investment Company Act of 1940, as amended
(the "1940 Act"), or (E) or, to our knowledge, any judgment, decree, order,
rule, or regulation, of any court, other governmental authority, or arbitrator
having jurisdiction over the Company, except for such for such violations,
conflicts, breaches, defaults, liens, charges, or encumbrances that would not
result in a Material Adverse Effect. 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 subsidiary.
14. The Company is not in violation of its Charter or By-laws, and, to
our knowledge, no default by the Company exists in the due performance or
observance of any material obligation, agreement, covenant, or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease,
repurchase agreement, other agreement, or instrument that is described or
referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement, except,
in each case above, for such for such violations, conflicts, breaches, defaults,
liens, charges, or encumbrances that would not result in a Material Adverse
Effect.
15. To our knowledge, there are no actions, suits, claims,
investigations or proceedings pending or threatened to which the Company is or
would be a party or to which any of their respective properties is subject which
are required to be described in the Registration Statement or Prospectus but are
not so described.
16. The Company is not, and the transactions contemplated by the
Underwriting Agreement will not cause the Company to become an "investment
company" or an entity "controlled" by an "investment company" under the 1940
Act.
In acting as counsel to the Company, we have participated in conferences with
officers and other representatives of the Company, the independent public
accountants for the Company, and your representatives, at which conferences the
contents of the Registration Statement and the Prospectus, and related matters
were discussed. Although we are not passing upon or assuming responsibility for
the accuracy, completeness or fairness of the statements included or
incorporated by reference in the Registration Statement, the Prospectus, the
General Disclosure Package, or the Incorporated Documents (as defined below) and
have made no independent check or verification thereof (except as set forth in
paragraph eight above), on the basis of the foregoing, nothing has come to our
attention which has led us to believe that (i) the Registration Statement, at
the time the Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or
Exh-A
necessary to make the statements therein not misleading, (ii) the documents
included in the General Disclosure Package, as of the Applicable Time, contained
any untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of circumstances
under which they were made, not misleading, or (iii) the Prospectus Supplement,
as of its date or on the date hereof, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except in each case that we express no belief
and make no statement with respect to financial statements and supporting
schedules and other financial and accounting data included or incorporated by
reference in or omitted from the Registration Statement, the Prospectus, the
General Disclosure Package, or the Incorporated Documents. With respect to
statements contained in the General Disclosure Package, any statement contained
in any of the constituent documents shall be deemed to be modified or superseded
to the extent that any information contained in subsequent constituent documents
modifies or replaces such statement. As used herein, the term "Incorporated
Documents," when used with respect to the Registration Statement or the
Prospectus as of any date, means the documents incorporated or deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be, as of such date pursuant to Item 12 of Form S-3.
Exh-A
EXHIBIT B
OPINION OF XXXXX XXXXXX LLP
For all taxable years commencing with its taxable year ended December
31, 1997, the Company has been, and upon the sale of 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 Section 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). The
Company's proposed method of operation 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 disclosure contained in the
Prospectus under the captions "Federal Income Tax Considerations", "Risk Factors
- We and Our Shareholders Are Subject To Certain Tax Risks" and in the
Prospectus Supplement under the caption "Federal Income Tax Considerations" to
the extent such information constitutes a summary of the United States federal
income tax laws and legal conclusions referred to therein, is accurate in all
material respects and fairly summarizes the federal income tax laws referred to
therein.
Ex. X-0
XXXXXXX X
Xxxxx 0, 0000
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Citigroup Global Markets Inc.
UBS Securities LLC
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED,
As representatives of the several Underwriters,
c/o Merrill Xxxxx & Co.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In consideration of the agreement of Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), and certain other
underwriters to underwrite a proposed public offering (the "Offering") of Common
Stock, par value $0.01 per share (the "Common Stock"), of Annaly Mortgage
Management, Inc., a Maryland corporation (the "Company"), as contemplated by a
registration statement on Form S-3 (File No. 333-120920), as amended, including
a prospectus (the "Registration Statement"), the undersigned hereby agrees that
the undersigned will not, for a period of 90 days after the commencement of the
Offering, without the prior written consent of Xxxxxxx Xxxxx, offer, sell,
contract to sell, pledge, grant any option to purchase or otherwise dispose of,
directly or indirectly, any shares of capital stock, or any securities
convertible into, or exercisable, exchangeable or redeemable for, shares of
capital stock.
Notwithstanding the foregoing, if (1) during the last 17 days of the
90-day restricted period the Company issues an earnings release or material news
or a material event relating to the Company occurs or (2) prior to the
expiration of the 90-day restricted period, the Company announces that it will
release earnings results or becomes aware that material news or a material event
will occur during the 16-day period beginning on the last day of the 90-day
restricted period, the restrictions imposed in this agreement shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event.
The undersigned hereby acknowledges and agrees that written notice of
any extension of the lock-up period pursuant to the previous paragraph will be
delivered by Xxxxxxx Xxxxx, to the Company and that any such notice properly
delivered will be deemed to have been given to, and received by, the
undersigned. The undersigned further agrees that, prior to engaging in any
transaction or taking any other action that is subject to the terms of this
lock-up agreement during the period from the date of this lock-up agreement to
and including the 34th
day following the expiration of the initial lock-up period, it will give notice
thereof to the Company and will not consummate such transaction or take any such
action unless it has received written confirmation from the Company that the
lock-up period (as may have been extended pursuant to the previous paragraph)
has expired.
Very truly yours,
By:
--------------------------------
Name:
Title:
Ex. B-2