STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") dated as of October
29, 2008 is between Chimera Investment Corporation, a Maryland corporation (the
"COMPANY"), and Annaly Capital Management, Inc., a Maryland corporation (the
"PURCHASER").
RECITALS
WHEREAS, the Purchaser owns 3,621,581 issued and outstanding shares of
Common Stock (as defined below) of the Company and has a substantive,
pre-existing relationship with the Company;
WHEREAS, the Company is in the process of registering shares of its
common stock, par value $0.01 per share ("COMMON STOCK"), with the Securities
and Exchange Commission pursuant to the registration statement of the Company on
Form S-11 (File No. 333-151403) (the "REGISTRATION STATEMENT") pursuant to which
the Company intends to conduct a public offering of shares of the Company's
Common Stock (the "PUBLIC OFFERING"); and
WHEREAS, the Company desires to issue and sell shares of its Common
Stock to the Purchaser on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, and, other good and valuable
consideration, the parties hereto agree as follows:
ARTICLE 1
AUTHORIZATION, SALE AND ISSUANCE OF SHARES AND OPTIONS
Section 1.1 AUTHORIZATION. The Company shall issue 11,681,415
shares of Common Stock of the Company (the "SHARES") at a purchase price per
share equal to the Public Offering price per share (the "SHARE PRICE").
Section 1.2 SALE AND ISSUANCE OF THE SHARES. Subject to the terms
and conditions hereof, the Company shall sell and Purchaser shall purchase the
Shares at the Closing (as defined below).
ARTICLE 2
CLOSING
Section 2.1 CLOSING. The closing ("CLOSING") shall occur
immediately after the closing of the Public Offering. Upon the Closing of this
transaction, the Purchaser will deliver to the Company a wire transfer of
immediately available funds to accounts specified by the Company or certified
check in the amount equal to the Share Price multiplied by the number of Shares.
Section 2.2 DELIVERY. Subject to the terms of this Agreement,
within five (5) days of the Closing, the Company will deliver to the Purchaser
the certificates representing the Shares to be purchased by the Purchaser from
the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The
Company hereby represents and warrants to the Purchaser as of the Closing date
as follows:
(a) The Company has been duly formed and incorporated and is
existing as a corporation in good standing under the laws of the State
of Maryland, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which its ownership or
lease of property or assets or the conduct of its business requires
such qualification, except where the failure to so qualify would not
have a material adverse effect on the business, assets, properties,
prospects, financial condition or results of operation of the Company
taken as a whole (a "MATERIAL ADVERSE EFFECT"), and has full corporate
power and authority necessary to own, hold, lease and/or operate its
assets and properties, to conduct the business in which it is engaged
and to enter into and perform its obligations under this Agreement and
to consummate the transactions contemplated hereby, and the Company is
in compliance in all material respects with the laws, orders, rules,
regulations and directives issued or administered by such
jurisdictions.
(b) The authorized capital stock of the Company is 550,000,000
shares of stock, consisting of 500,000,000 shares of Common Stock, of
which 165,488,683 shares are issued and outstanding as of the date
hereof, and 50,000,000 shares of preferred stock, par value $0.01 per
share, of which none are issued and outstanding. All of the issued and
outstanding shares of capital stock have been duly and validly
authorized and issued and are fully paid and non-assessable, have been
issued in compliance with all federal and state securities laws and
were not issued in violation of any preemptive right, resale right,
right of first refusal or similar right.
(c) The Shares have been duly and validly authorized by the
Company for issuance and sale pursuant to this Agreement and, when
issued and delivered against payment therefor as provided herein, will
be duly and validly issued and fully paid and
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non-assessable, free and clear of any pledge, lien, encumbrance,
security interest or other claim.
(d) The certificates for the Shares are in due and proper form and
the holders of the Shares will not be subject to personal liability by
reason of being such holders.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company enforceable in accordance with its terms, except to the
extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other laws affecting enforcement of
creditors' rights or by general equitable principles.
(f) The management agreement (the "MANAGEMENT AGREEMENT"), dated
as of November 21, 2007, between the Company and Fixed Income Discount
Advisory Company (the "MANAGER"), as amended on October 13, 2008, and
October 19, 2008, has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the
Company enforceable in accordance with its terms, except to the extent
that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other laws affecting enforcement of creditors' rights
or by general equitable principles.
(g) The Company has no "significant subsidiaries" (as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the Securities
Act of 1933, as amended (the "SECURITIES ACT")) and, except for the
equity of Chimera Securities Holdings, LLC, does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. Complete and
correct copies of the articles of incorporation and of the bylaws of
the Company and all amendments thereto have been delivered to the
Purchaser and, except as set forth in the forms of documents delivered
to the Purchaser, no changes therein will be made subsequent to the
date hereof and prior to the time of purchase.
(h) The financial statements of the Company, together with the
related schedules and notes thereto, delivered to the Purchaser are
accurate in all material respects and fairly present the financial
condition of the Company as of the dates indicated and the results of
operations, changes in financial position, stockholders' equity and
cash flows for the periods therein specified are in conformity with
generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein).
The selected financial and statistical data delivered to the Purchaser
present fairly the information shown therein and, to the extent based
upon or derived from the financial statements, have been compiled on a
basis consistent with the financial statements presented therein.
(i) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the business in which it is engaged. The
Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
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obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect.
(j) The Company is not in breach of, or in default under (nor has
any event occurred which with notice, lapse of time, or both would
result in any breach of, or constitute a default under), (i) its
articles of incorporation or bylaws or (ii) any obligation, agreement,
covenant or condition contained in any contract, license, repurchase
agreement, indenture, mortgage, deed of trust, bank loan or credit
agreement, note, lease or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company is a
party or by which it or any of its assets or properties may be bound or
affected, the effect of which breach or default under clause (ii) above
could have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the issuance and sale of the Shares and
the consummation of the transactions contemplated hereby will not
conflict with, or result in any breach of, constitute a default under
or a Repayment Event (as defined below) under (nor constitute any event
which with notice, lapse of time, or both would result in any breach
of, constitute a default under or a Repayment Event under), (i) any
provision of the articles of incorporation or bylaws of the Company,
(ii) any provision of any contract, license, repurchase agreement,
indenture, mortgage, deed of trust, bank loan or credit agreement,
note, lease or other evidence of indebtedness, or any lease, contract
or other agreement or instrument to which the Company is a party or by
which the Company or any of its assets or properties may be bound or
affected, the effect of which could have a Material Adverse Effect, or
(iii) under any federal, state, local or foreign law, regulation or
rule or any decree, judgment or order applicable to the Company. As
used herein, a "REPAYMENT EVENT" means any event or condition which
gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries.
(k) There are no actions, suits, claims, investigations, inquiries
or proceedings pending or, to the best of the Company's knowledge,
threatened to which the Company or any of its officers or directors is
a party or of which any of its properties or other assets is subject at
law or in equity, or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency
which could result in a judgment, decree or order having a Material
Adverse Effect.
(l) No approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission,
board, body, authority or agency is required in connection with the
issuance and sale of the Shares or the consummation by the Company of
the transaction contemplated hereby other than any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Company.
(m) The Company has all necessary licenses, authorizations,
consents and approvals and has made all necessary filings required
under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary permits, authorizations, consents and
approvals from other Persons (as defined below), in order to conduct
its
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business, except as such as could not have a Material Adverse Effect.
The Company is not required by any applicable law to obtain
accreditation or certification from any governmental agency or
authority in order to provide the products and services which it
currently provides or which it proposes to provide except as such as
could not have a Material Adverse Effect. The Company is not in
violation of, or in default under, any such license, permit,
authorization, consent or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment
applicable to the Company, the effect of which could have a Material
Adverse Effect.
(n) The Company has not incurred any liability for any finder's
fees or similar payments in connection with the transactions herein
contemplated.
(o) The Company owns or possesses adequate license or other rights
to use all patents, trademarks, service marks, trade names, copyrights,
software and design licenses, trade secrets, manufacturing processes,
other intangible property rights and know-how (collectively,
"INTANGIBLES") necessary to entitle the Company to conduct its
business, and the Company has not received notice of infringement of or
conflict with (and the Company knows of no such infringement of or
conflict with) asserted rights of others with respect to any
Intangibles which could have a Material Adverse Effect.
(p) The Company has filed all federal, state and foreign income
and franchise tax returns required to be filed on or prior to the date
hereof and has paid taxes shown as due thereon (or that are otherwise
due and payable), other than taxes which are being contested in good
faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles. The Company
has no knowledge, after due inquiry, of any tax deficiency which has
been asserted or threatened against the Company. To the knowledge of
the Company, there are no tax returns of the Company that are currently
being audited by federal, state or local taxing authorities or agencies
which would have a Material Adverse Effect.
(q) The Company is not in violation, and has not received notice
of any violation with respect to, any applicable environmental, safety
or similar law applicable to the business of the Company. The Company
has received all permits, licenses or other approvals required of them
under applicable federal and state occupational safety and health and
environmental laws and regulations to conduct its business, and the
Company is in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which could not, singly or in the
aggregate, have a Material Adverse Effect.
(r) There are no existing or threatened labor disputes with the
employees of the Company which are likely to have individually or in
the aggregate a Material Adverse Effect.
(s) Neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or its
subsidiaries has made any
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payment of funds of the Company or its subsidiaries or received or
retained any funds in violation of any law, rule or regulation, except
as disclosed to the Purchaser.
(t) Subsequent to the respective dates as of which information is
delivered to the Purchaser, there has not been (i) any material adverse
change, or any development which would reasonably be expected to cause
a material adverse change, in the business, properties or assets, or
the results of operations, condition (financial or otherwise), net
worth, business, prospects or operations of the Company taken as a
whole, (ii) any transaction which is material to the Company, except
transactions in the ordinary course of business, (iii) any obligation,
direct or contingent, which is material to the Company taken as a
whole, incurred by the Company, except obligations incurred in the
ordinary course of business, (iv) other than the Public Offering, any
change in the capital stock or, except in the ordinary course of
business, outstanding indebtedness of the Company, or (v) any dividend
or distribution of any kind declared, paid or made by the Company on
any class of its capital stock. The Company has no material contingent
obligation which has not been disclosed to the Purchaser.
(u) The descriptions provided to the Purchaser of the legal or
governmental proceedings, contracts, leases and other legal documents
therein described present fairly the information shown, and there are
no other legal or governmental proceedings, contracts, leases, or other
documents. All agreements between the Company and third parties
delivered to the Purchaser are legal, valid and binding obligations of
the Company enforceable in accordance with their respective terms,
except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and by general equitable principles.
(v) There are no Persons with registration or other similar rights
to have any equity or debt securities, including securities which are
convertible into or exchangeable for equity securities, of the Company
registered by the Company under the Securities Act.
(w) No person, as such term is defined in Rule 1-02 of Regulation
S-X promulgated under the Securities Act (each, a "PERSON"), has the
right, contractual or otherwise, to cause the Company to issue to it
any shares of capital stock or other securities of the Company upon the
issue and sale of the Shares hereunder, nor does any Person have
preemptive rights, co-sale rights, rights of first refusal or other
rights to purchase or subscribe for any of the Shares or any securities
or obligations convertible into or exchangeable for, or any contracts
or commitments to issue or sell any of, the Shares or any options,
rights or convertible securities or obligations, other than those that
have been expressly waived prior to the date hereof.
(x) The Company (i) does not have any issued or outstanding
preferred stock or (ii) has not defaulted on any installment on
indebtedness for borrowed money or on any rental on one or more long
term leases, which defaults would have a Material Adverse Effect on the
financial position of the Company.
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(y) Each of the Company and its officers, directors and
controlling Persons has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale of
the Shares, or (ii) except with respect to the Public Offering (A)
sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Shares or (B) paid or agreed to pay to any
Person any compensation for soliciting another to purchase any other
securities of the Company.
(z) Neither the Company nor any of its affiliates (i) is required
to register as a "broker" or "dealer" in accordance with the provisions
of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")
or (ii) directly or indirectly through one or more intermediaries,
controls or has any other association with (within the meaning of
Article I of the Bylaws of the Financial Industry Regulatory Authority
("FINRA")) any member firm of the FINRA.
(aa) Any certificate signed by any officer of the Company
delivered to the Purchaser pursuant to or in connection with this
Agreement shall be deemed a representation and warranty by the Company
to the Purchaser as to the matters covered thereby.
(bb) As of the date of this Agreement, the Company has no plan or
intention to materially alter its capital investment policy or
investment allocation strategy, both as described to the Purchaser. The
Company has good and marketable title to all of the properties and
assets owned by it, in each case free and clear of any security
interests, liens, encumbrances, equities, claims and other defects
(except for any security interest, lien, encumbrance or claim that may
otherwise exist under any applicable repurchase agreement), except such
as do not have a Material Adverse Effect and do not interfere with the
use made or proposed to be made of such property or asset by the
Company, and except as described to the Purchaser. The Company owns no
real property. Any real property and buildings held under lease by the
Company are held under valid, existing and enforceable leases, with
such exceptions as are disclosed to the Purchaser or are not material
and do not interfere with the use made or proposed to be made of such
property and buildings by the Company.
(cc) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles as applied in the United States and to
maintain asset accountability, (iii) access to assets is permitted only
in accordance with management's general or specific authorization, and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(dd) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-14 and 15d-14 under
the Exchange Act);
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such disclosure controls and procedures are designed to ensure that
material information relating to the Company is made known to the
Company's Chief Executive Officer and its Chief Financial Officer, and
such disclosure controls and procedures are effective to perform the
functions for which they were established; any significant material
weaknesses in internal controls have been identified for the Company's
Chief Executive Officer and its Chief Financial Officer; and since the
date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls
or in other factors that could significantly affect internal controls.
(ee) The Company has not, directly or indirectly, including
through any of its subsidiaries, extended credit, arranged to extend
credit, or renewed any extension of credit, in the form of a personal
loan, to or for any director or executive officer of the Company, or to
or for any family member or affiliate of any director or executive
officer of the Company.
(ff) The Company is in compliance with all presently applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated thereunder (the "XXXXXXXX-XXXXX ACT") and is
actively taking steps to ensure that it will be in compliance with
other applicable provisions of the Xxxxxxxx-Xxxxx Act upon the
effectiveness of such provisions.
(gg) Deloitte & Touche LLP, are and, during the periods covered by
their reports, were our independent public accountants.
(hh) The Company, since its date of inception, has been, and upon
the sale of the Shares will continue to be, organized and operated in
conformity with the requirements for qualification and taxation as a
"real estate investment trust" (a "REIT") under Sections 856 through
860 of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (collectively, the
"CODE"), for all taxable years commencing with its taxable year ended
December 31, 2007. The proposed method of operation of the Company as
described to the Purchaser will enable the Company to continue to meet
the requirements for qualification and taxation as a REIT under the
Code, and no actions have been taken (or not taken which are required
to be taken) which would cause such qualification to be lost. The
Company intends to continue to operate in a manner which would permit
it to qualify as a REIT under the Code. The Company has no intention of
changing its operations or engaging in activities which would cause it
to fail to qualify, or make economically undesirable its continued
qualification, as a REIT.
(ii) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
(jj) The Company has a substantive, pre-existing relationship with
the Purchaser and was directly contacted by the Purchaser or its agents
outside of the Public Offering effort. The Company (i) did not identify
or contact the Purchaser through the
8
marketing of the Public Offering and (ii) was not independently
contacted by the Purchaser as a result of the general solicitation by
means of the Registration Statement.
(kk) No representation or warranty made by the Company in this
Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make any such representation or
warranty, in light of the circumstances in which it was made, not
misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
RESTRICTIONS ON TRANSFER IMPOSED BY THE SECURITIES ACT
Section 4.1 REPRESENTATIONS AND WARRANTIES BY THE PURCHASER. The
Purchaser represents and warrants to the Company as of the day of Closing as
follows:
(a) INVESTMENT INTENT. The Purchaser is acquiring the Shares for
investment for the Purchaser's own account, not as nominee or agent,
and not with a view to or for resale in connection with, any
distribution or public offering thereof within the meaning of the
Securities Act and applicable law. The Purchaser has the requisite
corporate power and authority to enter into and perform this Agreement.
(b) SHARES NOT REGISTERED. The Purchaser understands and
acknowledges that the offering of the Shares pursuant to this Agreement
will not be registered under the Securities Act on the grounds that the
offering and sale of securities contemplated by this Agreement are
exempt from registration under the Securities Act pursuant to Section
4(2) thereof and exempt from registration pursuant to applicable state
securities or blue sky laws, and that the Company's reliance upon such
exemptions is predicated upon such Purchaser's representations set
forth in this Agreement. The Purchaser acknowledges and understands
that the Shares must be held indefinitely unless the Shares are
subsequently registered under the Securities Act and qualified under
state law or unless an exemption from such registration and such
qualification is available.
(c) NO TRANSFER. Subject to the provisions of Section 5.2, the
Purchaser covenants that in no event will the Purchaser dispose of any
of the Shares (other than in conjunction with an effective registration
statement for the Shares under the Securities Act) unless and until (i)
the Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, the Purchaser shall have furnished
the Company with an opinion of counsel satisfactory in form and
substance to the Company to the effect that (x) such disposition will
not require registration under the Securities Act, and (y) appropriate
action necessary for compliance with the Securities Act and any other
applicable state, local, or foreign law has been taken, and (iii) the
Company has consented, which consent shall not be unreasonably delayed
or withheld.
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(d) AUTHORITY. This Agreement has been duly authorized, executed
and delivered by the Purchaser and constitutes a valid and binding
agreement of the Purchaser enforceable in accordance with its terms,
except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization or other laws affecting
enforcement of creditors' rights or by general equitable principles.
(e) NO BREACH. The execution, delivery and performance of this
Agreement by the Purchaser and the consummation of the transactions by
the Purchaser contemplated hereby will not conflict with, or result in
any breach of, constitute a default under (nor constitute any event
which with notice, lapse of time, or both would result in any breach
of, or constitute a default under), (i) any provision of the articles
of incorporation or bylaws of the Purchaser, (ii) any provision of any
contract, license, repurchase agreement, indenture, mortgage, deed of
trust, bank loan or credit agreement, note, lease or other evidence of
indebtedness, or any lease, contract or other agreement or instrument
to which the Purchaser is a party or by which the Purchaser or any of
its assets or properties may be bound or affected, the effect of which
could have a Material Adverse Effect, or (iii) under any federal,
state, local or foreign law, regulation or rule or any decree, judgment
or order applicable to the Purchaser.
(f) KNOWLEDGE AND EXPERIENCE. The Purchaser (i) has such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of the Purchaser's prospective
investment in the Shares; (ii) has the ability to bear the economic
risks of the Purchaser's prospective investment; and (iii) has not been
offered the Shares by any form of advertisement, article, notice, or
other communication published in any newspaper, magazine, or similar
medium; or broadcast over television or radio; or any seminar or
meeting whose attendees have been invited by any such medium.
(g) INVESTIGATION. The Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement, and
has made detailed inquiry concerning the Company, its business and its
personnel; the officers of the Company have made available to the
Purchaser any and all written information which it has requested and
have answered to the Purchaser's satisfaction all inquiries made by the
Purchaser; and the Purchaser has sufficient business and financial
knowledge and experience so as to be capable of evaluating the merits
and risks of its investment in the Company. The Purchaser has received
a copy of the Company's articles of incorporation, as amended, the
Company's bylaws, as amended, and this Agreement and has read and
understands the respective contents thereof. The Purchaser has had the
opportunity to ask questions of the Company and has received answers to
such questions from the Company. The Purchaser has carefully reviewed
and evaluated these documents and understands the risks and other
considerations relating to the investment.
(h) QUALIFIED INSTITUTIONAL BUYER. The Purchaser is a "qualified
institutional buyer" as defined in Rule 144A, promulgated under the
Securities Act.
(i) ACCREDITED INVESTOR. The Purchaser is an "accredited investor"
as defined in Rule 501(a)(8) of Regulation D, promulgated under the
Securities Act.
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(j) PRE-EXISTING RELATIONSHIP. The Purchaser has a substantive,
pre-existing relationship with the Company and was directly contacted
by the Company or its agents outside of the Public Offering effort. The
Purchaser (i) was not identified or contacted through the marketing of
the Public Offering and (ii) did not independently contact the Company
as a result of the general solicitation by means of the Registration
Statement.
(k) FINDER'S FEES. The Purchaser has not incurred any liability
for any finder's fees or similar payments in connection with the
transactions herein contemplated.
Section 4.2 LEGENDS. Each certificate representing the Shares shall be
endorsed with the following legends:
(a) FEDERAL LEGEND. The securities represented by this certificate
have not been registered under the Securities Act of 1933, as amended,
and are "restricted securities" as defined in Rule 144 promulgated
under the Securities Act. The securities may not be sold or offered for
sale or otherwise distributed except (i) in conjunction with an
effective registration statement for the shares under the Securities
Act of 1933, as amended, or (ii) pursuant to an opinion of counsel,
satisfactory to the company, that such registration or compliance is
not required as to said sale, offer, or distribution.
(b) REIT LEGEND. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND
TRANSFER. SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS
EXPRESSLY PROVIDED IN THE CORPORATION'S CHARTER, DURING THE PERIOD
COMMENCING ON THE INITIAL DATE AND PRIOR TO THE RESTRICTION TERMINATION
DATE (I) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF ANY
CLASS OR SERIES OF THE CAPITAL STOCK OF THE CORPORATION IN EXCESS OF
NINE AND EIGHT-TENTHS PERCENT (9.8%) IN VALUE OR IN NUMBER OF SHARES,
WHICHEVER IS MORE RESTRICTIVE, OF ANY CLASS OR SERIES OF CAPITAL STOCK
OF THE CORPORATION UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH
CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) NO PERSON MAY
BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK THAT WOULD
RESULT IN THE CORPORATION BEING "CLOSELY HELD" UNDER SECTION 856(H) OF
THE CODE; (III) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK THAT
WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING BENEFICIALLY
OWNED BY LESS THAN ONE HUNDRED (100) PERSONS (DETERMINED WITHOUT
REFERENCE TO ANY RULES OF ATTRIBUTION); (IV) NO PERSON MAY BENEFICIALLY
OWN SHARES OF CAPITAL STOCK THAT WOULD RESULT IN 25% OR MORE OF ANY
CLASS OF CAPITAL STOCK BEING BENEFICIALLY OWNED BY ONE OR MORE BENEFIT
PLAN INVESTORS, DISREGARDING CAPITAL STOCK OWNED BY CONTROLLING PERSONS
(OTHER THAN CONTROLLING PERSONS WHICH ARE BENEFIT PLAN INVESTORS); AND
(V) DURING THE PERIOD COMMENCING ON THE INITIAL DATE AND PRIOR TO THE
DATE THE COMMON STOCK QUALIFIES AS A CLASS OF PUBLICLY-OFFERED
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SECURITIES, NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK WITHOUT
OBTAINING FROM ITS TRANSFEREE A REPRESENTATION AND AGREEMENT THAT (A)
ITS TRANSFEREE IS NOT (AND WILL NOT BE), AND IS NOT ACTING ON BEHALF
OF, A BENEFIT PLAN INVESTOR OR A CONTROLLING PERSON AND (B) SUCH
TRANSFEREE WILL OBTAIN FROM ITS TRANSFEREE THE REPRESENTATION AND
AGREEMENT SET FORTH IN THIS CLAUSE (V) (INCLUDING WITHOUT LIMITATION
CLAUSES (A) AND (B)). ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY
OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF
CAPITAL STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR
CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF
THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY
OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP IN (I), (II) AND (III)
ABOVE ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL
BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A CHARITABLE TRUST FOR THE
BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IF, NOTWITHSTANDING
THE FOREGOING SENTENCE, A TRANSFER TO THE CHARITABLE TRUST IS NOT
EFFECTIVE FOR ANY REASON TO PREVENT A VIOLATION OF THE RESTRICTIONS ON
TRANSFER AND OWNERSHIP IN (I), (II) AND (III) ABOVE, THEN THE ATTEMPTED
TRANSFER OF THAT NUMBER OF SHARES OF CAPITAL STOCK THAT OTHERWISE WOULD
CAUSE ANY PERSON TO VIOLATE SUCH RESTRICTIONS SHALL BE VOID AB INITIO.
IF ANY OF THE RESTRICTIONS ON TRANSFER AND OWNERSHIP IN (IV) AND (V)
ABOVE ARE VIOLATED, THEN THE ATTEMPTED TRANSFER OF THAT NUMBER OF
SHARES OF CAPITAL STOCK THAT OTHERWISE WOULD CAUSE ANY PERSON TO
VIOLATE SUCH RESTRICTIONS SHALL BE VOID AB INITIO. IF, NOTWITHSTANDING
THE FOREGOING SENTENCE, A PURPORTED TRANSFER IS NOT TREATED AS BEING
VOID AB INITIO FOR ANY REASON, THEN THE SHARES TRANSFERRED IN SUCH
VIOLATION SHALL AUTOMATICALLY BE TRANSFERRED TO A CHARITABLE TRUST FOR
THE BENEFIT OF A CHARITABLE BENEFICIARY, AND THE PURPORTED OWNER OR
TRANSFEREE WILL ACQUIRE NO RIGHTS IN SUCH SHARES. IN ADDITION, THE
CORPORATION MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS SPECIFIED
BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF
DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY
VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. ALL CAPITALIZED TERMS IN THIS
LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS
THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING
THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH
HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND WITHOUT
CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF
THE CORPORATION AT ITS PRINCIPAL OFFICE.
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(c) OTHER LEGENDS. With respect to any other legends required by
applicable law, the Company need not register a transfer of legended
Shares, and may also instruct its transfer agent not to register the
transfer of the Shares, unless the conditions specified in such legend
is satisfied.
Section 4.3 RULE 144. The Purchaser is aware of the adoption of
Rule 144 by the SEC promulgated under the Securities Act, which permits limited
public resale of securities acquired in a nonpublic offering, subject to the
satisfaction of certain conditions. The Purchaser understands that under Rule
144, the conditions include, among other things: the availability of certain,
current public information about the issuer and the resale occurring not less
than one year after the party has purchased and paid for the securities to be
sold.
ARTICLE 5
AFFIRMATIVE COVENANTS OF THE PARTIES
Section 5.1 REPORTS. The Company hereby covenants and agrees as
follows: The Company will furnish to the holders of the Shares copies of all
annual or quarterly financial statements the Company regularly provides to the
banks or other lenders extending credit to the Company as requested by the
holders of the Shares as would be required for a the holder of the Shares to
make any resales of Shares under Rule 144(b) of the Securities Act. In addition,
the Company will furnish to the holders of the Shares such other information as
may reasonably be required by any holder of the Shares to furnish information
required by any governmental authority.
Section 5.2 LOCK-UP. The Purchaser hereby covenants and agrees as
follows: The Purchaser will not until the earlier of (i) the date which is three
(3) years after the date of this Agreement or (ii) the termination of the
Management Agreement, without the prior written consent of the Company, offer,
sell, contract to sell, pledge, grant any option to purchase or otherwise
dispose of, directly or indirectly, any shares of capital stock, or any
securities convertible into, or exercisable, exchangeable or redeemable for,
shares of capital stock of the Company.
ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The
obligations of the Purchaser to purchase the Shares at the Closing are subject
to the fulfillment to its satisfaction, on or prior to the Closing, of the
following conditions, any of which may be waived:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the Company in Article 3 hereof shall be true
and correct when made and at the Closing. The Company's business and
assets shall not have been adversely affected in any material way prior
to the Closing. The Company shall have performed in all material
respects all obligations and conditions herein required to be performed
or observed by it on or prior to the Closing.
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(b) PUBLIC OFFERING. The Company shall simultaneously complete the
Public Offering.
Section 6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
Company's obligation to sell the Shares at the Closing is subject to the
condition that the representations and warranties made by the Purchaser in
Article 4 hereof shall be true and correct when made, and on the Closing.
ARTICLE 7
REGISTRATION RIGHTS
The Purchaser is not entitled to any registration rights under this Agreement or
associated with the purchase of the Shares. The purchase shall be subject to
such private restrictions on the transfer of the Shares as are designated from
time to time by the Company or its investment bankers or underwriters.
ARTICLE 8
MISCELLANEOUS
Section 8.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York without regard to conflicts of law
principles contrary (with references to Section 5-1401 of the New York General
Obligation Law which by its terms applies to the this Agreement).
Section 8.2 SURVIVAL. The representations, warranties, covenants
and agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by the Purchaser.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder as of the date of such
certificate or instrument.
Section 8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto.
Section 8.4 ENTIRE AGREEMENT. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and thereof
and they supersede, merge, and render void every other prior written and/or oral
understanding or agreement among or between the parties hereto.
Section 8.5 NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be delivered
personally, mailed by first class mail, postage prepaid, or delivered by courier
or overnight delivery, addressed (a) if to the Purchaser, at such Purchaser's
address as Purchaser shall have furnished to the Company in
14
writing, or (b) if to the Company, at such other address as the Company shall
have furnished to the Purchaser in writing. Notices that are mailed shall be
deemed received five (5) days after deposit in the United States mail. Notices
sent by courier or overnight delivery shall be deemed received two (2) days
after they have been so sent.
Section 8.6 SEVERABILITY. In case any provision of this Agreement
shall be found by a court of law to be invalid, illegal, or unenforceable, the
validity, legality, and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
Section 8.7 EXPENSES. The Company and the Purchaser shall each
bear their own expenses and legal fees in connection with the consummation of
this transaction.
Section 8.8 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference and are not to be
considered in construing this Agreement.
Section 8.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
Section 8.10 DELAYS OR OMISSIONS. No delay or omission to exercise
any right, power, or remedy accruing to the Company or to any holder of any
securities issued or to be issued hereunder shall impair any such right, power,
or remedy of the Company or such holder, nor shall it be construed to be a
waiver of any breach or default under this Agreement, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any failure to exercise any right, power, or remedy or any waiver of any
single breach or a waiver of any other right, power, or remedy or breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement, or by law or otherwise afforded to the Company or any holder, shall
be cumulative and not alternative.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CHIMERA INVESTMENT CORPORATION ANNALY CAPITAL MANAGEMENT, INC.
By:/s/ A. Xxxxxxxxx Xxxxxxx By:/s/ Xxxxxxx X. Xxxxx
---------------------------- ------------------------------------------
Name: A. Xxxxxxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer and Treasurer
