EXHIBIT 1.1
Draft 9/17/97
ANNALY MORTGAGE MANAGEMENT, INC.
7,095,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
----------------------
September __, 1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
SUTRO & CO. INCORPORATED
XXXXXX XXXXXXX INCORPORATED
c/o Friedman, Billings, Xxxxxx & Co., Inc.
Potomac Tower
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
As Representatives of the Several Underwriters Named In Schedule 1 hereto
Ladies and Gentlemen:
Annaly Mortgage Management, Inc., a Maryland corporation (the
"Company"), and certain stockholders of the Company (the "Selling
Stockholders"), hereby confirm their agreement with the several underwriters
named in Schedule 1 hereto (the "Underwriters"), for whom you have been duly
authorized to act as representatives (in such capacity, the "Representatives"),
as set forth below.
1. Securities. Subject to the terms and conditions herein contained, the
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Company and the Selling Stockholders, propose to sell to the several
Underwriters an aggregate of 7,095,000 shares (the "Firm Securities") of the
Company's Common Stock, $.01 par value per share (the "Common Stock"), of which
6,250,000 shares will be sold by the Company and 845,000 shares will be sold by
the Selling Stockholders. The respective amounts of Firm Securities to be sold
by the Selling Stockholders are set forth opposite their names in Schedule II
hereto. The Company and the Selling Stockholders are sometimes referred to
herein collectively as the "Sellers". The Company also proposes to issue and
sell to the several Underwriters not more than 1,064,250 additional shares of
Common Stock if requested by the Representatives as provided in Section 3 of
this Agreement. Any and all shares of Common Stock to be purchased by the
Underwriters pursuant to such option are referred to herein as the "Option
Securities". The Firm Securities and any Option Securities are collectively
referred to herein as the
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/1/ Plus an option from the Company to purchase up to 1,064,250 additional
shares to cover over-allotments.
"Securities".
2. Representations and Warranties of the Company and the Selling
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Stockholders.
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(a) The Company represents and warrants to, and agrees with, each of
the several Underwriters that:
(i) A registration statement on Form S-11 (File No. 333-32913)
with respect to the Securities, including a prospectus subject to
completion, has been filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Act"), and one or more amendments to such registration statement may
have been so filed. After the execution of this Agreement, the Company
will file with the Commission either (i) if such registration statement, as
it may have been amended, has been declared by the Commission to be
effective under the Act, either (A) if the Company relies on Rule 434 under
the Act, a Term Sheet (as hereinafter defined) relating to the Securities,
that shall identify the Preliminary Prospectus (as hereinafter defined)
that it supplements containing such information as is required or permitted
by Rules 434, 430A and 424(b) under the Act or (B) if the Company does not
rely on Rule 434 under the Act, a prospectus in the form most recently
included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or
permitted by Rule 424(b) under the Act, and in the case of either clause
(i)(A) or (i)(B) of this sentence, as have been provided to and approved by
the Representatives prior to the execution of this Agreement, or (ii) if
such registration statement, as it may have been amended, has not been
declared by the Commission to be effective under the Act, an amendment to
such registration statement, including a form of prospectus, a copy of
which amendment has been furnished to and approved by the Representatives
prior to the execution of this Agreement. The Company may also file a
related registration statement with the Commission pursuant to Rule 462(b)
under the Act for the purpose of registering certain additional Securities,
which registration statement shall be effective upon filing with the
Commission. As used in this Agreement, the term "Original Registration
Statement" means the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "Rule 462(b)
Registration Statement" means any registration statement filed with the
Commission pursuant to Rule 462(b) under the Act (including the
Registration Statement and any Preliminary Prospectus or Prospectus
incorporated therein at the time such Registration Statement becomes
effective); the term "Registration Statement" includes both the Original
Registration Statement and any Rule 462(b) Registration Statement; the term
"Preliminary Prospectus" means each prospectus subject to completion filed
with such Registration Statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration
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Statement or any amendment thereto at the time it was or is declared
effective); the term "Prospectus" means: (A) if the Company relies on Rule
434 under the Act, the Term Sheet relating to the Securities that is first
filed pursuant to Rule 424(b)(7) under the Act, together with the
Preliminary Prospectus identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the prospectus
first filed with the Commission pursuant to Rule 424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the Act,
the prospectus included in the Registration Statement; and the term "Term
Sheet" means any term sheet that satisfies the requirements of Rule 434
under the Act. Any reference herein to the "date" of a Prospectus that
includes a Term Sheet shall mean the date of such Term Sheet.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any Preliminary
Prospectus was filed with the Commission it (A) contained all statements
required to be stated therein in accordance with, and complied in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (B) did not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. When the Registration
Statement or any amendment thereto was or is declared effective, it (A)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with
the requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading. When the Prospectus or any
Term Sheet that is a part thereof or any amendment or supplement to the
Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or any part thereof or such amendment or supplement is not
required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective) and on the Firm Closing Date and any Option Closing
Date (both as hereinafter defined), the Prospectus, as amended or
supplemented at any such time, (A) contained or will contain all statements
required to be stated therein in accordance with, and complied or will
comply in all material respects with the requirements of, the Act and the
rules and regulations of the Commission thereunder and (B) did not or will
not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (ii) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement or
any amendment thereto or the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein.
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(iii) If the Company has elected to rely on Rule 462(b) and the
Rule 462(b) Registration Statement has not been declared effective (i) the
Company has filed a Rule 462(b) Registration Statement in compliance with
and that is effective upon filing pursuant to Rule 462(b) and has received
confirmation of its receipt and (ii) the Company has given irrevocable
instructions for transmission of the applicable filing fee in connection
with the filing of the Rule 462(b) Registration Statement, in compliance
with Rule 111 promulgated under the Act or the Commission has received
payment of such filing fee.
(iv) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Maryland
and is duly qualified to transact business as a foreign corporation and is
in good standing under the laws of all other jurisdictions 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
does not or would not result in a material adverse change in the condition
(financial or otherwise), management, business, prospects, net worth or
results of operations of the Company (a "Material Adverse Effect").
(v) The Company has full power (corporate and other) to own or
lease its properties and conduct its business as currently conducted or as
described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) and
the Company has full power (corporate and other) to enter into this
Agreement and to carry out all the terms and provisions hereof to be
carried out by it.
(vi) The Company has no subsidiaries and does not own, directly
or indirectly, any shares of stock or other equity securities of any
corporations or any equity interest in any firm, partnership, joint
venture, association or other entity.
(vii) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus). All of the
issued shares of capital stock of the Company, including all shares to be
sold by the Selling Stockholders, have been duly authorized and validly
issued and are fully paid and nonassessable. The portion of the Firm
Securities to be sold by the Company and the Option Securities have been
duly authorized and at the Firm Closing Date or the related Option Closing
Date (as the case may be), after payment therefor in accordance herewith,
will be validly issued, fully paid and nonassessable and will be registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). At the Firm Closing Date or the Option Closing Date,
no holders of outstanding shares of capital stock of the Company will be
entitled as such to any preemptive or other rights to subscribe for any of
the Securities, and, other than as described in the Prospectus, no holder
of securities of the Company has any right to require the Company to
register the offer or sale of any
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securities owned by such holder under the Act.
(viii) The capital stock of the Company conforms to the
description thereof contained in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(ix) Except as disclosed in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there are no
outstanding (A) securities or obligations of the Company convertible into
or exchangeable for any capital stock of the Company, (B) warrants, rights
or options to subscribe for or purchase from the Company any such capital
stock or any such convertible or exchangeable securities or obligations, or
(C) obligations of the Company to issue any shares of capital stock, any
such convertible or exchangeable securities or obligations, or any such
warrants, rights or options, and the description of the Company's stock
option, stock bonus and other stock plans or arrangements and the options
or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(x) The financial statements and schedules of the Company
included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus)
fairly present in all material respects the financial position of the
Company and its results of operations and cash flows as of the dates and
periods therein specified. Such financial statements and schedules have
been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved. No other
financial statements or schedules are required to be included in the
Registration Statement. The selected financial data set forth under the
captions "Capitalization" and "Selected Financial Data" in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present in all material respects, in accordance with
GAAP on the basis stated in the Prospectus (or such Preliminary
Prospectus), the information included therein.
(xi) Deloitte & Touche LLP, who have audited the financial
statements of the Company included in the Registration Statement and
Prospectus and delivered their report with respect to the audited financial
statements included in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus), are independent public accountants as required by the Act and
the applicable rules and regulations thereunder.
(xii) The execution and delivery of this Agreement have been
duly authorized by the Company and this Agreement has been duly executed
and delivered by the Company, and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium and other
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similar laws relating to rights and remedies of creditors or by general
equitable principles..
(xiii) No legal or governmental proceedings are pending to which
the Company is a party or to which the property of the Company is subject
that are required to be described in the Registration Statement or the
Prospectus and are not described therein (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and, to the Company's
knowledge, no such proceedings have been threatened against the Company or
with respect to any of its properties; and no contract or other document is
required to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement that is not
described therein (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) or filed as required.
(xiv) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except such as have been obtained,
such as may be required under state securities or blue sky laws and such as
may be required by the National Association of Securities Dealers, Inc.
(the "NASD") and, if the registration statement filed with respect to the
Securities (as amended) is not effective under the Act as of the time of
execution hereof, such as may be required (and shall be obtained as
provided in this Agreement) under the Act, or (B) conflict with or result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, credit agreement, mortgage, deed
of trust, lease or other agreement or instrument to which the Company is a
party or by which the Company or any of its properties is bound, or the
articles of incorporation or bylaws or other organizational documents of
the Company, or any statute or any judgment, decree, order, rule or
regulation of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company.
(xv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
and except as described in or specifically contemplated by the Prospectus,
(i) the Company has not incurred any material liabilities or obligations,
direct or indirect, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of
business or which could result in a material reduction in the future
earnings of the Company; (ii) the Company has not sustained any material
loss or interference with its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance,
or from any labor dispute or any legal or governmental proceeding; (iii)
the Company has not paid or declared any dividends or other distributions
with respect to its capital stock, and the Company is not in default in the
payment of principal or interest on any outstanding debt
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obligations; (iv) there has not been any change in the capital stock (other
than the sale of the Securities hereunder), or indebtedness material to the
Company (other than in the ordinary course of business); and (v) there has
not been any event, circumstance, or development that results in, or that
the Company believes would result in, a Material Adverse Effect, except in
each case as described in or contemplated by the Prospectus
(xvi) The Company 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 or
resale of the Securities or (ii) since the filing of the Registration
Statement (A) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company.
(xvii) Neither the Company nor any employee of the Company has
made any payment of funds of the Company prohibited by law and no funds of
the Company have been set aside to be used for any payment prohibited by
law.
(xviii) (a) The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities material to the conduct its business, all of
which are valid and in full force and effect, and (b) the Company has not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
(xix) The Company is not in violation of any provision of its
articles of incorporation or bylaws.
(xx) The Company is conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including without limitation, all applicable local,
state and federal environmental laws and regulations, except where the
failure to be in compliance would not have a Material Adverse Effect.
(xxi) The Company has not conducted its business in a manner
such that it would become an "investment company" or an entity "controlled"
by an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), and the sale of the
Securities will not cause the Company to become an "investment company" or
an entity "controlled" by an "investment company" under the 0000 Xxx.
(xxii) The Company has filed all necessary foreign, federal,
state and local tax returns that are required to be filed on or before the
date hereof and has paid all taxes and any other assessment, fine or
penalty levied against it required to be paid by it on or before the date
hereof; and the Company has no knowledge of any tax deficiency
7
which has been or might be asserted or threatened against the Company which
could have a Material Adverse Effect.
(xxiii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions
are executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability; (C) access to assets is permitted only in accordance
with management's general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxiv) No default exists, and no event has occurred that, with
notice or lapse of time or both, would constitute a default, in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company is a party or by which the Company or any of its
properties is bound or may be affected, in any respect that would have a
Material Adverse Effect.
(xxv) The Company has not distributed and, prior to the later of
(A) the Firm Closing Date or any Option Closing Date and (B) the completion
of the distribution of the Securities, will not distribute any offering
material in connection with the offering and sale of the Securities other
than the Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or Term Sheet or any amendment or supplement
thereto, or other materials, if any, permitted by the Act.
(xxvi) The Company owns no real property. The Company has good
and marketable title to all the properties and assets owned by it, in each
case free and clear of any security interests, liens, encumbrances,
equities, claims and other defects, except 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 by the Company, and except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus). The Company holds its leased
properties under valid, subsisting and enforceable leases, with such
exceptions as are not materially significant to the business of the
Company.
(xxvii) No labor dispute with the employees of the Company
exists or, to the Company's knowledge, is threatened or imminent that could
result in a Material Adverse Effect.
(xxviii) The Company owns or possesses, or can acquire on
reasonable terms, all necessary trademarks, service marks, trade names,
licenses, patents, copyrights and proprietary or other confidential
information to conduct its business; and the Company has not received any
notice of infringement of or conflict with asserted
8
rights of any third party with respect to any of the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect.
(xxix) 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; and
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.
(xxx) Neither the Company nor any affiliate has incurred
any liability for a fee, commission or other compensation on account of
the employment of a broker or finder in connection with the transactions
contemplated by this Agreement.
(xxxi) As of the Firm Closing Date, the Company will be
organized and will operate in a manner so as to qualify as a "real estate
investment trust" ("REIT") under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code"), and will elect to, will use
its best efforts to and intends to remain qualified to, be taxed as a REIT
under the Code and pursuant to any applicable state tax laws. The Company
does not know of any event which would cause or is likely to cause the
Company to fail to qualify as a REIT.
(xxxii) The description set forth under the heading "ERISA
Considerations" is true and correct in all material respects.
(b) Any certificate signed by any officer of the Company or any of its
affiliates and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
(c) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, each of the several Underwriters as follows:
(i) Such Selling Stockholder now has and at the Firm Closing
Date will have good and marketable title to the Firm Securities to be
sold by such Selling Stockholder, free and clear of any liens,
encumbrances, equities and claims, and full right, power and authority to
effect the sale and delivery of such Firm Securities; and after payment
therefor in accordance herewith, the Underwriters will acquire good and
marketable title to such Firm Securities, free and clear of any liens,
encumbrances, equities and claims.
(ii) Such Selling Stockholder has full right, power and authority
to execute and deliver this Agreement, the Letter of Transmittal and
Custody Agreement (the "Custodian Agreement") referred to below and to
perform its obligations under such Agreements. The execution and delivery
of this Agreement by such Selling Stockholder and the consummation by such
Selling
9
Stockholder of the transactions herein contemplated and the fulfillment by
such Selling Stockholder of the terms hereof will not require any consent,
approval, authorization, registration or qualification of or with
governmental authority (except as may be required under the Act, state
securities laws or Blue Sky laws) and will not result in a breach of any of
the terms and provisions of, or constitute a default under, organizational
documents of such Selling Stockholder, if not an individual, or any
indenture, credit agreement, mortgage, deed of trust, lease or other
agreement or instrument to which such Selling Stockholder is a party, or of
any statute, or any judgement, decree, order, rule or regulation of any
court or of any regulatory body or administrative agency or other
governmental body or arbitrator having jurisdiction over the Selling
Stockholder.
(iii) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or result in
the stabilization or manipulation of the price of the Common Stock and,
other than as permitted by the Act, the Selling Stockholder will not
distribute any prospectus or other offering material in connection with the
offering of the Shares.
(iv) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of
the Company contained herein or the information contained in the
Registration Statement, such Selling Stockholder has no reason to believe
that the representations and warranties of the Company contained in this
Section 2(a) are not true and correct, is familiar with the Registration
Statement and has no knowledge of any material fact, condition or
information not disclosed in the Registration Statement which has adversely
affected or may adversely affect the business of the Company; and the sale
of the Firm Securities by such Selling Stockholder pursuant hereto is not
prompted by any information concerning the Company which is not set forth
in the Registration Statement. The information pertaining to such Selling
Stockholder under the caption "Principal and Selling Stockholders" in the
Prospectus is complete and accurate in all material respects.
(d) Any certificate signed by any Selling Stockholder and delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by such Selling Stockholder to each Underwriter as
to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities.
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(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Sellers agree to sell to each of the Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Sellers, at
a purchase price of $____ per share sold by the Company, and at a
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purchase price of $______ per share, sold by the Selling Stockholders, the
number of Firm Securities set forth opposite the name of such Underwriter in
Schedule 1 hereto. The number of Firm Securities to be purchased by each
Underwriter from each Seller shall be as nearly as practicable in the same
proportion to the total number of Firm Securities being sold by each Seller as
the number of Firm Securities being purchased by each Underwriter bears to the
total number of Firm Securities to be sold hereunder. The obligations of the
Company and of each of the Selling Stockholders shall be several and not joint.
(b) Certificates in negotiable form for the total number of the
Securities to be sold hereunder by the Selling Stockholders have been placed in
custody with the Company or its designee as custodian (the "Custodian") pursuant
to the Custodian Agreement executed by each Selling Stockholder for delivery of
all Firm Securities to be sold hereunder by the Selling Stockholders. Each of
the Selling Stockholders specifically agrees that the Firm Securities
represented by the certificates held in custody for the Selling Stockholders
under the Custodian Agreement are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Stockholders of such
custody are to that extent irrevocable, and that the obligations of the Selling
Stockholders hereunder shall not be terminable by any act or deed of the Selling
Stockholders (or by any other person, firm or corporation including the Company,
the Custodian or the Underwriters) or by operation of law (including the death
of an individual Selling Stockholder or the dissolution of a corporate Selling
Stockholder) or by the occurrence of any other event or events, except as set
forth in the Custodian Agreement. If any such event should occur prior to the
delivery to the Underwriters of the Firm Securities hereunder, certificates for
the Firm Securities shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such event has not occurred. The
Custodian is authorized to receive and acknowledge receipt of the proceeds of
the sale of the Firm Securities held by it against delivery of such Firm
Securities.
(c) One or more certificates in definitive form for the Firm
Securities that the several Underwriters have agreed to purchase hereunder, and
in such denomination or denominations and registered in such name or names as
the Representatives request upon notice to the Company at least 48 hours prior
to the Firm Closing Date, shall be delivered by or on behalf of the Sellers to
the Representatives for the respective accounts of the Underwriters, against
payment by or on behalf of the Underwriters of the aggregate purchase price
therefor by wire transfer of same-day funds. Such delivery of and payment for
the Firm Securities shall be made at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP,
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., eastern
time, on September ___, 1997, or at such other place, time or date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 9 hereof, such time and date of delivery against
payment being herein referred to as the "Firm Closing Date." The Company will
make the certificates for the Firm Securities available for checking and
packaging by the Representatives at least 24 hours prior to the Firm Closing
Date.
(d) For the sole purpose of covering any over-allotments in connection
with
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the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The purchase price
to be paid for any Option Securities shall be the same price per share as the
price per share for the Firm Securities sold by the Company set forth above in
paragraph (a) of this Section 3. The option granted hereby may be exercised as
to all or any part of the Option Securities from time to time within thirty days
after the date of the Prospectus (or, if such 30th day shall be a Saturday or
Sunday or a holiday, on the next business day thereafter). The Underwriters
shall not be under any obligation to purchase any of the Option Securities prior
to the exercise of such option. The Representatives may from time to time
exercise the option granted hereby by giving notice in writing or by telephone
(confirmed within 24 hours in writing) to the Company setting forth the
aggregate number of Option Securities as to which the several Underwriters are
then exercising the option and the date and time for delivery of and payment for
such Option Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two business days or later than
five business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the Representative and the
Company may agree upon or as the Representatives may determine pursuant to
Section 9 hereof, is herein called the "Option Closing Date" with respect to
such Option Securities. Upon exercise of the option as provided herein, the
Company shall become obligated to sell to each of the several Underwriters, and,
subject to the terms and conditions herein set forth, each of the Underwriters
(severally and not jointly) shall become obligated to purchase from the Company,
the same percentage of the total number of the Option Securities as to which the
several Underwriters are then exercising the option as such Underwriter is
obligated to purchase of the aggregate number of Firm Securities, as adjusted by
the Representatives in such manner as they deem advisable to avoid fractional
shares. If the option is exercised as to all or any portion of the Option
Securities, one or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (a) of this Section 3, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph 3(b), to refer to such Option Securities and Option Closing Date,
respectively.
(e) It is understood that you, individually and not as the
Representatives, may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such
Underwriter or Underwriters from any of its or their obligations hereunder.
(f) If on the Firm Closing Date any Selling Stockholder fails to sell
the Firm Securities which such Selling Stockholder has agreed to sell on such
date as set forth in Schedule II hereto, the Company agrees that it will sell or
-----------
arrange for the sale of that number of shares of Common Stock to the
Underwriters which represents Firm Securities which such Selling Stockholder has
failed to so sell, as set forth in Schedule II hereto, or such lesser number as
-----------
may be requested by the Representatives.
12
4. Offering by the Underwriters. Upon your authorization of the release
----------------------------
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
5. Covenants of the Company and the Selling Stockholders.
-----------------------------------------------------
(a) The Company covenants and agrees with each of the Underwriters
that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, to become effective as promptly as possible. If required, the
Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and 424(b) under
the Act. During any time when a prospectus relating to the Securities is
required to be delivered under the Act, the Company (i) will comply with
all requirements imposed upon it by the Act and the rules and regulations
of the Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities in accordance with
the provisions hereof and of the Prospectus, as then amended or
supplemented, and (ii) will not file with the Commission the Prospectus,
Term Sheet or the amendment referred to in the second sentence of Section
2(a) hereof, any amendment or supplement to such Prospectus, Term Sheet or
any amendment to the Registration Statement or any Rule 462(b) Registration
Statement of which the Representatives shall not previously have been
advised and furnished with a copy for a reasonable period of time prior to
the proposed filing and as to which filing the Representatives shall not
have given their consent. The Company will prepare and file with the
Commission, in accordance with the rules and regulations of the Commission,
promptly upon request by the Representatives or counsel for the
Underwriters, any amendments to the Registration Statement or amendments or
supplements to the Prospectus that may be necessary or advisable in
connection with the distribution of the Securities by the several
Underwriters, and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective by the Commission as
promptly as possible. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective or
the Prospectus or any amendment or supplement thereto has been filed and
will provide to the Representatives copies of each such filing.
(ii) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose, or (iv) any request
made by the Commission for amending the Original Registration Statement or
any Rule 462(b) Registration Statement, for amending or supplementing the
Prospectus or for additional information. The Company will use its best
efforts to prevent the issuance of
13
any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(iii) The Company will furnish such information as may be
requested and otherwise cooperate in qualifying the Securities for
offering and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(iv) If, at any time prior to the later of (i) the final date
when a prospectus relating to the Securities is required to be delivered
under the Act or (ii) the Option Closing Date, any event occurs as a result
of which the Prospectus, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any
other reason it is necessary at any time to amend or supplement the
Prospectus to comply with the Act or the rules or regulations of the
Commission thereunder, the Company will promptly notify the Representatives
thereof and, subject to Section 5(a) hereof, will prepare and file with the
Commission, at the Company's expense, an amendment to the Registration
Statement or an amendment or supplement to the Prospectus that corrects
such statement or omission or effects such compliance.
(v) The Company will, without charge, provide (i) to each of the
Representatives and to counsel for the Underwriters a signed copy of the
registration statement originally filed with respect to the Securities and
each amendment thereto (in each case including exhibits thereto) and any
Rule 462(b) Registration Statement, (ii) to each other Underwriter, a
conformed copy of such registration statement and any Rule 462(b)
Registration Statement and each amendment thereto (in each case without
exhibits thereto) and (iii) so long as a prospectus relating to the
Securities is required to be delivered under the Act, as many copies of
each Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto as the Representatives may reasonably request; without
limiting the application of clause (iii) of this sentence, the Company, not
later than (A) 8:00 P.M., New York City time, on the date of determination
of the public offering price, if such determination occurred at or prior to
10:00 A.M., New York City time, on such date or (B) 2:00 P.M., New York
City time, on the business day following the date of determination of the
public offering price, if such determination occurred after 10:00 A.M., New
York City time, on such date, will deliver to the Underwriters, without
charge, as many copies of the Prospectus and any amendment or supplement
thereto as the Representatives may reasonably request for purposes of
confirming orders that are expected to settle on the Firm Closing Date.
The Company will provide or cause to be provided to each of the
Representatives, and to each
14
Underwriter that so requests in writing, a copy of each report on Form SR
filed by the Company as required by Rule 463 under the Act.
(vi) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 promulgated under the Act by the earlier of (i) 10:00 P.M.,
Eastern time on the date of this Agreement and (ii) the time confirmations
are sent or given, as specified by Rule 462(b)(2).
(vii) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representatives an earnings
statement of the Company that satisfies the provisions of Section 11(a) of
the Act and Rule 158 thereunder.
(viii) The Company will apply the net proceeds from the sale
of the Securities as set forth under "Use of Proceeds" in the Prospectus.
(ix) The Company will not, directly or indirectly, without the
prior written consent of the Representatives, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, pledge, grant
any option to purchase or otherwise sell or dispose (or announce any offer,
sale, offer of sale, contract of sale, pledge, grant of any option to
purchase or other sale or disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock for a period of 180 days after the date hereof, except
pursuant to this Agreement, a direct purchase plan, dividend reinvestment
plan or similar plan which may be adopted by the Company, the grant of
awards under the Company's Long-Term Stock Incentive Plan, or issuances
pursuant to the exercise of employee stock options or other awards.
(x) The Company will not, directly or indirectly, (i) take 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 any security of the Company to facilitate the
sale or resale of the Securities or (ii)(A) sell, bid for, purchase, or pay
anyone any compensation for soliciting purchases of, the Securities or (B)
pay or agree to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
(xi) The Company will obtain the lockup agreements described in
Section 7(e) hereof prior to the Firm Closing Date.
(xii) If at any time during the 25-day period after the
Registration Statement becomes effective or the period prior to the Option
Closing Date, any rumor, publication or event relating to or affecting the
Company shall occur as a result of which in your reasonable opinion the
market price of the Common Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company
will, after written notice from you advising the Company to the effect set
forth above, forthwith prepare, consult with you concerning the substance
of, and disseminate a press release or other public statement, reasonably
satisfactory to you, your counsel and counsel to the
15
Company responding to or commenting on such rumor, publication or event.
(xiii) The Company will cause the Securities to be duly
authorized for listing on the New York Stock Exchange ("NYSE") upon
official notice of issuance prior to the Firm Closing Date. The Company
will use its best efforts to ensure that the Securities remain listed on
the NYSE following the Firm Closing Date.
(xiv) During the period of 5 years hereafter, the Company will
furnish to each of the Underwriters (i) as soon as practicable after the
end of each fiscal year and the filing of the Company's Annual Report on
Form 10-K, copies of the Annual Report of the Company; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form
8-K or other report filed by the Company with the Commission, the NASD or
any securities exchange; and, (iii) as soon as available, copies of any
report or communication of the Company mailed generally to holders of its
Common Stock.
(xv) The Company will elect to qualify as a REIT under the Code
and will use its best efforts to meet the requirements to qualify as a
REIT.
(xvi) The Company will retain Deloitte & Touche LLP or a
comparable qualified independent accountant from a "big six" accounting
firm, as its qualified accountants and such qualified tax experts as the
Company may identify for a period of not less than 2 years beginning on the
Firm Closing Date to assist the Company in developing appropriate
accounting systems and testing procedures and to conduct quarterly
compliance reviews designed to determine compliance with the REIT
provisions of the Code and the Company's exempt status under the 1940 Act.
(xvii) 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.
(b) Each of the Selling Stockholders covenants and agrees with each of
the Underwriters that:
(i) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act
of 1983 with respect to the transactions herein contemplated, each of the
Selling Stockholders agrees to deliver to you prior to or at the Firm
Closing Date a properly completed and executed United
16
States Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof).
(ii) Such Selling Stockholders will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company.
6. Expenses. The Company will pay all costs and expenses incident to the
--------
performance of the obligations of the Sellers under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the Registration Statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this Agreement and any blue
sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) the qualification of the Securities under
state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission and the NASD relating to the Securities, (vii) the
listing of the Securities on the NYSE and (viii) the fees and disbursements of
counsel for the Underwriters in an amount not to exceed 75% of the total
disbursements to such counsel (based upon a maximum fee for FBR's legal counsel
of $100,000, excluding fees and expenses related to the qualification of the
Securities under state securities and blue sky laws). To the extent, if at all,
the Selling Stockholders engage special legal counsel to represent them in
connection with the offering, the fees and expenses of such counsel shall be
borne by such Selling Stockholder. Any transfer taxes imposed on the sale of
the Securities to the several Underwriters shall be paid by the Sellers pro
rata. If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 7 hereof is not satisfied, because this Agreement is terminated pursuant
to Section 11(a)(i) hereof or because of any failure, refusal or inability on
the part of the Company to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder other than by reason of a
default by any of the Underwriters, the Company will reimburse the
Representatives and the Underwriters upon demand for all reasonable out-of-
pocket expenses (including counsel fees and disbursements) that shall have been
incurred by it and them in connection with the proposed purchase and sale of the
Securities. The Company shall not in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions covered
by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of the
-------------------------------------------
several Underwriters to purchase and pay for the Firm Securities shall be
subject to the accuracy of the representations and warranties of the Company and
the Selling Stockholders contained herein as of the date hereof and as of the
Firm Closing Date, as if made on and as of the Firm Closing Date, to the
accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their covenants and agreements hereunder required to be
performed on or before such date and to the following
17
additional conditions:
(a) If the Original Registration Statement or any amendment thereto
filed prior to the Firm Closing Date has not been declared effective as of the
time of execution hereof, the Registration Statement or such amendment, and if
the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement, shall have been declared effective not later than the earlier of (i)
11:00 A.M., New York City time, on the date on which the amendment to the
Registration Statement originally filed with respect to the Securities or to the
Registration Statement, as the case may be, containing information regarding the
initial public offering price of the Securities has been filed with the
Commission, and (ii) the time confirmations are sent or given as specified by
Rule 462(b) or, with respect to the Original Registration Statement, such later
time and date as shall have been consented to by the Representatives; if
required, the Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto shall have been filed with the Commission in
the manner and within the time period required by Rules 434 and 424(b) under the
Act; no stop order suspending the effectiveness of the Registration Statement or
any amendment thereto shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of the
Company or the Representatives, shall be contemplated by the Commission; and the
Company shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for the Company [and the
Selling Stockholders], in the form of Exhibit A.
(c) The Representatives shall have received from Deloitte & Touche LLP
a letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representative, to the effect
that:
(i) they are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable
rules and regulations thereunder;
(ii) in their opinion, the financial statements audited by them
and included in the Registration Statement and the Prospectus comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iii) on the basis of carrying out certain specified procedures
set forth in detail in such letter, including a reading of the minute books
of the stockholders, the board of directors and any committees thereof of
the Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters, nothing came to their
attention that caused them to believe that (A) the unaudited financial
information with respect to the results of operations of the Company
included in the Registration Statement under the caption "Selected
Financial Data" do not comply as
18
to form in all material respects with the applicable accounting
requirements of the Act and the rules and regulations thereunder or are not
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included in the Registration Statement, or do not
agree with the corresponding amounts in the audited financial statements,
or (B) at a specified date not more than three business days prior to the
date of such letter, there were any changes in the capital stock or total
debt of the Company or any decreases in net current assets or stockholders'
equity of the Company, in each case compared with amounts shown on the June
30, 1997 balance sheet included in the Registration Statement and the
Prospectus; and, except in all instances for changes, decreases or
increases set forth in such letter; and
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records
of the Company and are included in the Registration Statement and the
Prospectus, and have compared such amounts, percentages and financial
information with such records of the Company and with information derived
from such records and have found them to be in agreement, excluding any
questions of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases which, in the reasonable discretion of the
Representatives, are likely to result in a Material Adverse Effect, it shall be
a further condition to the obligations of the Underwriters that such letters
shall be accompanied by a written explanation of the Company as to the
significance thereof, unless the Representatives deem such explanation
unnecessary.
References to the Registration Statement and the Prospectus in this
paragraph (c) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(d) The Representatives shall have received a certificate, dated the
Firm Closing Date, of Xxxxxxx X.X. Xxxxxxx and Xxxxxxx Xxxxx in their capacities
as the principal executive officer and the principal financial or accounting
officer, respectively, of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company has performed
all covenants and agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Firm Closing Date;
19
(ii) the Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus filed as
part of the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto has been issued, and no proceedings for that purpose have been
instituted or threatened or, to the best of the knowledge of the respective
signers, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, (i) the Company
has not incurred any material liabilities or obligations, direct or
indirect, or entered into any material verbal or written agreement or other
transaction which is not in the ordinary course of business or which could
result in a material reduction in the future earnings of the Company; (ii)
the Company has not sustained any material loss or interference with its
business or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or
any legal or governmental proceeding; (iii) the Company has not paid or
declared any dividends or other distributions with respect to its capital
stock, and the Company is not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any
change in the capital stock (other than the sale of the Securities
hereunder), or indebtedness material to the Company (other than in the
ordinary course of business); and (v) there has not been any event,
circumstance, or development that results in, or that the respective
signers believe would result in, a Material Adverse Effect, except in each
case as described in or contemplated by the Prospectus.
(e) The Representatives shall have received from each officer and
director an agreement to the effect that such person will not, directly or
indirectly, without the prior written consent of the Representatives, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer of sale, contract
of sale, pledge, grant of an option to purchase or other sale or disposition) of
any shares of Common Stock or any securities convertible into, or exchangeable
or exercisable for, shares of Common Stock for a period of 180 days after the
date of this Agreement.
(f) Prior to the commencement of the offering of the Securities, the
Securities shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(g) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Xxxxxxx & Xxxxx L.L.P., counsel for the Underwriters, with
respect to the issuance and sale of the Firm Securities, the Registration
Statement and Prospectus, and such other related matters as the Representatives
may reasonably require, and the Company shall have furnished to such counsel
such documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
(h) On or before the Firm Closing Date, the Representative and counsel
for the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company and the
Selling Stockholders.
20
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company and the Selling Stockholders shall
furnish to the Representatives such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Representatives
and counsel for the Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
8. Indemnification and Contribution.
--------------------------------
(a) The Company and the Selling Stockholders, jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or the Selling
Stockholders or based upon written information furnished by or on behalf of
the Company or the Selling Stockholders filed in any jurisdiction in order
to qualify the Securities under the securities or blue sky laws thereof or
filed with the Commission or any securities association or securities
exchange (each, an "Application"),
(ii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto, or any
Application, a material fact required to be stated therein or necessary to
make the statements therein not misleading; or
(iii) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials prepared in
cooperation with the Company and used in connection with the marketing of
the Securities, including without limitation, slides, videos, films, tape
recordings, and, such party or parties, as the case may be, will reimburse,
as incurred, each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in
21
connection with investigating, defending against or appearing as a third-
party witness in connection with any such loss, claim, damage, liability or
action;
provided, however, that the Company and the Selling Stockholders will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein; and provided, further,
that the Company and the Selling Stockholders will not be liable to any
Underwriter or any person controlling such Underwriter with respect to any such
untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented) at or prior to the written confirmation of the sale of
such Securities to such person in any case where such delivery of the Prospectus
(as amended or supplemented) is required by the Act, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 5(a)(iv) and (v) of this Agreement.
In no event shall the liability of any Selling Stockholder for indemnification
under this Section 8(a) exceed the proceeds received by such Selling Stockholder
from the Underwriters in the offering. This indemnity agreement will be in
addition to any liability that the Company or the Selling Stockholders may
otherwise have. Neither the Company, nor the Selling Stockholders will, without
the prior written consent of the Representatives, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not any Underwriter or any person who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of all of the
Underwriters and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, the Selling Stockholders and each person, if
any, who controls the Company or the Selling Stockholders within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company or any such director,
officer of the Company, the Selling Stockholders or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application or (ii) the omission or the alleged omission to state therein
a material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
22
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company or any such director, officer,
Selling Stockholder or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability which
such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8, except to the extent the indemnifiying party is prejudiced as a
result of such failure. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded or shall have been advised by
its counsel that there may be one or more legal defenses available to it and/or
other indemnified parties that conflict with those available to the indemnifying
party, the indemnifying party shall not have the right to direct the defense of
such action on behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel to defend such
action on behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this Section
8, representing the indemnified parties under such paragraph (a) who are parties
to such action or actions) or (ii) the indemnifying party does not promptly
retain counsel satisfactory to the indemnified party or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party.
23
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders or the Underwriters, the
parties' relative intents, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. The Company, the Selling
Stockholders and the Underwriters agree that it would not be equitable if the
amount of such contribution were determined by pro rata or per capita allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), (i) no Underwriter shall be obligated to
make contributions hereunder that in the aggregate exceed the total public
offering price of the Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation and (iii) no
Selling Stockholder shall be required to contribute an amount in excess of the
lesser of (A) that proportion of the total of such losses, claims, damages or
liabilities indemnified or contributed against equal to the proportion of the
total Securities sold hereunder which is being sold by such Selling Stockholder
or (B) the proceeds received by such Selling Stockholder from the Underwriters
in the offering. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Representatives' Agreement Among Underwriters. For the purposes of this
paragraph 8(d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement and
each person,
24
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company.
9. Default of Underwriters. If one or more Underwriters default in their
-----------------------
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, then the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Stockholders other than as provided in Section 10 hereof. In the event of any
default by one or more Underwriters as described in this Section 9, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 3
hereof for not more than seven business days in order that any necessary changes
may be made in the arrangements or documents for the purchase and delivery of
the Firm Securities or Option Securities, as the case may be. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 9. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
10. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company, its officers, the
Selling Stockholders and the several Underwriters set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company, any of its officers or directors, the Selling
Stockholders, any Underwriter or any controlling person referred to in Section 8
hereof and (ii) delivery of and payment for the Securities. The respective
agreements, covenants, indemnities and other statements set forth in Sections 6
and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
11. Termination.
-----------
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Sellers given
25
prior to the Firm Closing Date or the related Option Closing Date, respectively,
in the event that the Company or the Selling Stockholders shall have failed,
refused or been unable to perform all obligations and satisfy all conditions on
their respective parts to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Firm Closing Date or such Option Closing Date,
respectively,
(i) the Company shall have, in the sole judgment of the
Representatives, sustained any loss or interference with its business or
properties having or resulting in a Material Adverse Effect from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any event, circumstance or development
that results in, or that the Representatives believe would result in, a
Material Adverse Effect, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or supplement
thereto);
(ii) trading in the Common Stock shall have been suspended by the
Commission or the NYSE or trading in securities generally on the NYSE or
the American Stock Exchange shall have been suspended or minimum or maximum
prices shall have been established on either such exchange;
(iii) a banking moratorium shall have been declared by New York
or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or material
adverse change in general economic, political or financial conditions
having an effect on the U.S. financial markets that, in the sole judgment
of the Representatives, makes it impractical or inadvisable to proceed with
the public offering or the delivery of the Securities as contemplated by
the Registration Statement, as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except for the expenses to be
paid by the Company pursuant to Section 6 and except as provided in Section 8
hereof.
12. Information Supplied by Underwriters. The statements set forth in (i)
------------------------------------
the first sentence in the last paragraph on the front cover page, (ii) under the
______ and ______ paragraphs under the heading "Underwriting" in any Preliminary
Prospectus or the Prospectus and (iii) on page 2 in any Preliminary Prospectus
or the Prospectus pertaining to stabilization (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(a)(ii) and 8 hereof.
13. Notices. All communications hereunder shall be in writing and, if
-------
sent to any of
26
the Underwriters, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to Friedman, Billings, Xxxxxx & Co., Inc.,
Potomac Tower, 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxx Xxxxxxxxx; and if sent to the Company or the Selling
Stockholders, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to the Company at 0000 Xxxxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000, Attention: Chief Executive Officer.
14. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Underwriters, the Company and the Selling Stockholders
and their respective successors and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Sellers contained in Section 8 of this Agreement
shall also be for the benefit of any person or persons who control any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Underwriters contained in Section 8
of this Agreement shall also be for the benefit of the directors of the Company,
the officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation of this Agreement,
--------------
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding among the Company,
the Selling Stockholders and each of the several Underwriters.
27
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Stockholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
ANNALY MORTGAGE MANAGEMENT, INC.
By: __________________________________
Xxxxxxx X.X. Xxxxxxx
President and Chief Executive Officer
SELLING STOCKHOLDERS listed on Schedule II
By: ____________________________________
_______________________Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
SUTRO & CO. INCORPORATED
XXXXXX XXXXXXX INCORPORATED
By: FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: ____________________________________
Name: ______________________________
Title: ______________________________
For themselves and as the Representatives of the Several Underwriters Named in
Schedule I hereto.
28
Schedule I
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- ------------
////
Friedman, Billings, Xxxxxx & Co., Inc
Sutro & Co. Incorporated
Xxxxxx Xxxxxxx Incorporated
Total.....................................
////
Schedule II
SELLING STOCKHOLDERS
S-I
////
Selling Stockholder Number of Firm Securities to be Sold
--------------------- ------------------------------------
////
S-II
EXHIBIT A
FORM OF OPINION OF COUNSEL TO COMPANY AND
THE SELLING STOCKHOLDERS
[Letterhead of Xxxxxx, Xxxxx & Bockius LLP]
(i) the Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Maryland
and is duly qualified to transact business as a foreign corporation and is
in good standing under the laws of all other jurisdictions 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
does not or would not have a Material Adverse Effect;
(ii) the Company has corporate power to own or lease its
properties and conduct its business as described in the Registration
Statement and the Prospectus, and the Company has corporate power to enter
into the Underwriting Agreement and to carry out all the terms and
provisions thereof to be carried out by it;
(iii) the Company has no subsidiaries and does not own,
directly or indirectly, any shares of stock or other equity securities of
any corporation or any equity interest in any firm, partnership, joint
venture, association or other entity.
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued shares of
capital stock of the Company, including the shares to be sold by the
Selling Stockholders, have been duly authorized and validly issued and are
fully paid and nonassessable, and were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or
purchase securities; the Securities to be sold by the Company pursuant to
the Underwriting Agreement have been duly authorized by all necessary
corporate action of the Company and, when issued and delivered to and paid
for by the Underwriters pursuant to the Underwriting Agreement, will be
validly issued, fully paid and nonassessable; no holders of outstanding
shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the Securities; and,
other than as described in the Prospectus, no holders of securities of the
Company are entitled to have such securities registered under the Act.
(v) the statements set forth under the headings "Description of
Capital Stock," "ERISA Considerations,""Common Stock Available for Future
Sale," and "Certain Federal Income Tax Considerations" in the Prospectus,
insofar as such statements constitute matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, have been reviewed
by such counsel and are correct in all material respects;
(vi) the execution and delivery of the Underwriting Agreement
have been duly and validly authorized by all necessary corporate action of
the Company and the Underwriting Agreement has been duly executed and
delivered by the Company and
A-1
is the valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by the effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to rights and remedies of creditors or by
general equitable principles, and except as to those provisions relating to
indemnity or contribution for liabilities arising under the Act as to which
no opinion need be expressed;
(vii) to the best knowledge of such counsel, (A) no legal or
governmental proceedings are pending to which the Company is a party or to
which the property of the Company is subject that are required to be
described in the Registration Statement or the Prospectus and are not
described therein, and no such proceedings have been threatened against the
Company or with respect to any of its properties and (B) no contract or
other document is required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required;
(viii) to the best knowledge of such counsel, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, (A) the Company has not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; and (B) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock, except in each case as described in or contemplated
by the Prospectus.
(ix) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to the Underwriting Agreement, the
compliance by the Company with the other provisions of the Underwriting
Agreement and the consummation of the other transactions therein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained and such as may be required under state
securities or blue sky laws and by the NASD, or (B) conflict with or result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, lease
or other agreement or instrument known to such counsel to which the Company
is a party or by which the Company or any of its properties is bound, or
the articles of incorporation or bylaws or other organizational documents
of the Company, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
having jurisdiction over the Company;
(x) the Registration Statement is effective under the Act; any
required filing of the Prospectus, or any Term Sheet that constitutes a
part thereof, pursuant to Rules 434 and 424(b) has been made in the manner
and within the time period required by Rules 434 and 424(b); and, to the
best knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any amendment thereto has been issued, and
no proceedings for that purpose have been instituted or threatened or are
contemplated by the Commission;
A-2
(xi) the Registration Statement originally filed and each
amendment thereto, any Rule 462(b) Registration Statement and the
Prospectus (in each case, other than the financial statements and other
financial and statistical information contained therein, as to which such
counsel need express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the rules and regulations
of the Commission thereunder;
(xii) if the Company elects to rely on Rule 434, the Prospectus
is not "materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time of its
effectiveness or an effective post-effective amendment thereto (including
such information that is permitted to be omitted pursuant to Rule 430A);
(xiii) 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;
(xiv) the specimen stock certificate of the Company filed as an
exhibit to the Registration Statement is in due and proper form under
Maryland law to evidence shares of Common Stock, has been duly authorized
and approved by the Board of Directors of the Company and complies with all
legal requirements; and the Common Stock conforms in all material respects
to the description contained in the Registration Statement;
(xv) the Company is not in violation of its articles of
incorporation or bylaws or other organizational documents, or, to the best
of such counsel's knowledge, in breach of or default under any provision of
any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument known to such counsel to which the
Company is a party or by which it or its properties may be bound or
affected, except where such default would not have a Material Adverse
Effect; and, to the best of such counsel's knowledge, the Company is in
compliance with all laws, rules, regulations, judgments, decrees, orders
and statutes of any court or jurisdiction to which it is subject, except
where such noncompliance would not have a Material Adverse Effect;
(xvi) commencing with the Company's taxable year ending
December 31, 1997, the Company has been organized and operated in
conformity with the requirements for qualification as a REIT under the Code
and the Company's current and contemplated method of operation will enable
it to continue to satisfy the requirements for qualification and taxation
as a REIT under the Code.
(xvii) The Company is not required to be registered as a
commodity pool operator under the Commodity Exchange Act, as amended.
(xviii) This Agreement has been duly authorized, executed and
delivered on behalf of the Selling Stockholders.
(xix) Each Selling Stockholder has fully legal right, power
and authority, and any approval required by law (other than as required
by State securities and
A-3
Blue Sky laws as to which such counsel need express no opinion), to sell,
assign, transfer and deliver the portion of the Firm Securities to be sold
by such Selling Stockholder.
(xx) The Custodian Agreement and the Power of Attorney executed
and delivered by each Selling Stockholder is valid and binding.
(xxi) The Underwriters (assuming that they are bona fide
purchasers within the meaning of the Uniform Commercial Code) have
acquired good and marketable title to the Firm Securities being sold by
each Selling Stockholder on the Firm Closing Date, free and clear of all
liens, encumbrances, equities and claims.
Such counsel shall also state that they have no reason to believe that
the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date or the date of such opinion, included or
includes any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (except such
counsel need express no view as to the financial statements and notes thereto,
schedules and reports thereon, and other financial and statistical data included
in the Registration Statement or Prospectus).
A-4
