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EXHIBIT 1.3
2,400,000 Shares
XXXXXXXXX MORTGAGE ASSET CORPORATION
Series A 9.68% Cumulative Convertible Preferred Stock
UNDERWRITING AGREEMENT
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January 20, 1997
XXXXXX, XXXXXXXX & COMPANY, INCORPORATED
EVEREN SECURITIES, INC.
PRINCIPAL FINANCIAL SECURITIES, INC.
SUTRO & CO. INCORPORATED
XXXXXXXXX SECURITIES CORPORATION
As Representatives of the
several Underwriters
x/x Xxxxxx, Xxxxxxxx & Company, Incorporated
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Dear Sirs:
Xxxxxxxxx Mortgage Asset Corporation, a Maryland corporation (the
"Company") proposes to sell 2,400,000 shares (the "Firm Preferred Shares") of
the Company's Series A 9.68% Cumulative Convertible Preferred Stock, $.01 par
value per share (the "Preferred Stock"), to you and to the other underwriters
named in Schedule I (collectively, the "Underwriters"), for whom you are acting
as representatives (the "Representatives"). The Company has also agreed to
grant to you and the other Underwriters an option (the "Option") to purchase
up to an additional 360,000 shares of Preferred Stock (the "Option Preferred
Shares") on the terms and for the purposes set forth in Section 1(b). The
Firm Preferred Shares and the Option Preferred Shares are hereinafter
collectively referred to as the "Preferred Shares."
The initial public offering price per share for the Preferred Shares
and the purchase price per share for the Preferred Shares to be paid by the
several Underwriters shall be agreed upon by the Company and the
Representatives, acting on behalf of the several Underwriters, and such
agreement shall be set forth in a separate written instrument substantially in
the form of Exhibit A hereto (the "Price Determination Agreement"). The Price
Determination Agreement may take the form of an exchange of any standard form of
written telecommunication among the Company and the Representatives and shall
specify such applicable information as is indicated in Exhibit A hereto. The
offering of the Preferred Shares will be governed by this Agreement, as
supplemented by the Price Determination Agreement. From and after the date of
the execution and delivery of the Price Determination Agreement, this Agreement
shall be deemed to incorporate, and, unless the context otherwise indicates, all
references contained herein to "this Agreement" and to the phrase
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"herein" shall be deemed to include the Price Determination Agreement.
The Company confirms as follows its agreements with the Representatives
and the several other Underwriters.
1. Agreement to Sell and Purchase.
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(a) On the basis of the representations, warranties and agreements
of the Company herein contained and subject to all the terms and conditions of
this Agreement, (i) the Company agrees to sell to the several Underwriters and
(ii) each of the Underwriters, severally and not jointly, agrees to purchase
from the Company, at the purchase price per share for the Firm Preferred Shares
to be agreed upon by the Representatives and the Company in accordance with
Section 1(c) and set forth in the Price Determination Agreement, the number of
Firm Preferred Shares set forth opposite the name of such Underwriter in
Schedule I, plus such additional number of Firm Preferred Shares which such
Underwriter may become obligated to purchase pursuant to Section 8 hereof.
Schedule I may be attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the several Underwriters to purchase, severally and
not jointly, the Option Preferred Shares from the Company at the same price per
share as the Underwriters shall pay for the Firm Preferred Shares. The option
may be exercised only to cover overallotments in the sale of the Firm Preferred
Shares by the Underwriters and may be exercised in whole or in part at any time
(but not more than once) on or before the 30th day after the date of this
Agreement (or, if the Company has elected to rely on Rule 430A, on or before the
30th day after the date of the Price Determination Agreement), upon written or
telegraphic notice (the "Option Preferred Shares Notice") by the Representatives
to the Company no later than 12:00 noon, New York City time, at least two and no
more than five business days before the date specified for closing in the Option
Preferred Shares Notice (the "Option Closing Date") setting forth the aggregate
number of Option Preferred Shares to be purchased and the time and date for such
purchase. On the Option Closing Date, the Company will issue and sell to the
Underwriters the number of Option Preferred Shares set forth in the Option
Preferred Shares Notice, and each Underwriter will purchase such percentage of
the Option Preferred Shares as is equal to the percentage of Firm Preferred
Shares that such Underwriter is purchasing, as adjusted by the Representatives
in such manner as they deem advisable to avoid fractional shares.
(c) The initial public offering price per share for the Firm
Preferred Shares and the purchase price per share for the Firm Preferred Shares
to be paid by the several Underwriters shall be agreed upon and set forth in the
Price Determination Agreement. In the event such price has not been agreed upon
and the Price Determination Agreement has not been executed by the close of
business on the fourteenth business day
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following the date of this Agreement, this Agreement shall terminate forthwith,
without liability of any party to any other party except that Section 6 shall
remain in effect.
2. Delivery and Payment.
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Delivery of the Firm Preferred Shares shall be made to the
Representatives for the accounts of the Underwriters against payment of the
purchase price by federal wire transfer to the Company. Such payments shall be
made on the third business day (or, if the Firm Preferred Shares are priced as
contemplated by Rule 15c6-1(c) of the Securities Exchange Act of 1934 (the
"Exchange Act") after 4:30 p.m., New York City time, the fourth business day)
following the date of this Agreement or, if the Company has elected to rely on
Rule 430A, the third or fourth business day, as applicable, after the date on
which the first bona fide offering of the Preferred Shares to the public is made
by the Underwriters or at such time on such other date as may be agreed upon by
the Company and the Representatives, but in no event later than 10 days after
such date (such date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Preferred
Shares against payment by the Underwriters (in the manner specified above) will
take place at the offices specified above for the Closing Date at the time and
date (which may be the Closing Date) specified in the Option Preferred Shares
Notice.
If the Representatives request that the Preferred Shares be delivered in
certificated form, then certificates representing the Preferred Shares shall be
in definitive form and shall be registered in such names and in such
denominations as the Representatives shall request at least two business days
prior to the Closing Date or the Option Closing Date, as the case may be, by
written notice to the Company. For the purpose of expediting the checking and
packaging of certificates for the Preferred Shares, the Company agrees to make
such certificates available for inspection at least 24 hours prior to the
Closing Date or the Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Preferred Shares and Option Preferred Shares
by the Company to the respective Underwriters shall be borne by the Company. The
Company will pay and save each Underwriter and any subsequent holder of the
Preferred Shares harmless from any and all liabilities with respect to or
resulting from any failure or delay in paying Federal and state stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance or sale to such Underwriter of the Firm
Preferred Shares and Option Preferred Shares.
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3. Representations and Warranties of the Company and the Manager.
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The Company and, where applicable, the Manager (as such term is defined
below), represents, warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-16799) on Form S-3 relating to the
Preferred Shares, including a preliminary prospectus (the "Base Prospectus") and
such amendments to such registration statement as may have been required to the
date of this Agreement, has been prepared by the Company under the provisions of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (collectively referred to as the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and has been
filed with the Commission and has become effective. Copies of such registration
statement and amendments and of each related Base Prospectus have been delivered
to the Representatives. The term "Registration Statement" means the
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed to be included by Rule 430 or Rule 430A of the Rules and
Regulations ("Rule 430A") or Rule 434 of the Rules and Regulations. The term
"Prospectus" means collectively the Base Prospectus together with any
preliminary prospectus supplement or prospectus supplement (the "Prospectus
Supplement") as first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations. Any reference herein to the Registration Statement, the
Base Prospectus, any prospectus supplement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Exchange Act on or before the
Effective Date or the date of such Base Prospectus, any prospectus supplement or
the Prospectus, as the case may be. Any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement, the Base
Prospectus, any prospectus supplement or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date, or the date of any Base Prospectus, any prospectus supplement or
the Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
(b) On the Effective Date, the date the Prospectus is first filed
with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto), including the financial statements included or
incorporated by reference in the Prospectus, did or will comply with all
applicable provisions of the Act, the Exchange Act, the rules and regulations
thereunder (the "Exchange Act
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Rules and Regulations") and the Rules and Regulations and will contain all
statements required to be stated therein in accordance with the Act, the
Exchange Act, the Exchange Act Rules and Regulations and the Rules and
Regulations. On the Effective Date and when any post-effective amendment to
the Registration Statement becomes effective, no part of the Registration
Statement or any such amendment did or will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading. At the
Effective Date, the date the Prospectus or any amendment or supplement to the
Prospectus is filed with the Commission and at the Closing Date and, if later,
the Option Closing Date, the Prospectus did not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in this
Section 3(b) do not apply to any statements or omissions made in reliance on
and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representatives specifically for inclusion in the
Registration Statement or Prospectus or any amendment or supplement thereto.
For all purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by the
Representatives specifically for inclusion in the Prospectus Supplement or the
Registration Statement. The Company has not distributed any offering material
in connection with the offering or sale of the Preferred Shares other than the
Registration Statement, the Prospectus, the prospectus supplement or any other
materials, if any, permitted by the Act and the Rules and Regulations.
(c) The documents which are incorporated by reference in the
preliminary prospectus and the Prospectus or from which information is so
incorporated by reference, when they become effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Act or the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations; and any documents so filed
and incorporated by reference subsequent to the Effective Date shall, when they
are filed with the Commission, conform in all material respects with the
requirements of the Act and the Exchange Act, as applicable, the Exchange Act
Rules and Regulations and the Rules and Regulations.
(d) The Company and Xxxxxxxxx Mortgage Advisory Corporation (the
"Manager") are, and at the Closing Date will be, corporations duly organized,
validly existing and in good standing under the laws of their jurisdiction of
incorporation. The Company and the Manager have, and at the Closing Date will
have, full power and authority to conduct all the activities conducted by them,
to own or lease all the assets owned or leased by them and to conduct their
businesses as described in the
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Registration Statement and the Prospectus. The Company and the Manager are,
and at the Closing Date will be, duly licensed or qualified to do business and
in good standing as foreign corporations in all jurisdictions in which the
nature of the activities conducted by them or the character of the assets owned
or leased by them make such licensing or qualification necessary. Except as
disclosed in the Registration Statement, the Company and the Manager have no
subsidiaries and do not own, and at the Closing Date will 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 certificates of incorporation and of the by-laws of the Company
and the Manager and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date or, if later, the Option Closing Date.
(e) The Company has authorized and outstanding Capital Stock as set
forth under the heading "Capitalization" in the Prospectus. The issued and
outstanding shares of Capital Stock have been duly authorized and validly
issued, are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and conform to the description thereof contained in the Prospectus.
Except as disclosed or contemplated by the Prospectus, the Company has no
outstanding options to purchase, or preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its Capital Stock or
any such options, rights, convertible securities or obligations.
(f) The Preferred Shares to be issued and sold by the Company upon
such issuance will be, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar right. The
description of the Preferred Stock in the Registration Statement and the
Prospectus is, and at the Closing Date will be, complete and accurate in all
respects. Except as set forth in the Prospectus, the Company does not have
outstanding, and at the Closing Date will not have outstanding, any options to
purchase, or any rights or warrants to subscribe for, or any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
any shares of Preferred Stock, any shares of capital stock of any Subsidiary or
any such warrants, convertible securities or obligations. No shareholder of the
Company has any right which has not been waived to require the Company to
register the sale of any shares owned by such shareholder under the Act in the
public offering contemplated by this Agreement. No further approval or
authority of the shareholders or the Board of Directors of the Company will be
required for the issuance and sale of the Preferred Shares to be sold by the
Company as contemplated herein. The description of the Company's share
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option, share bonus and other share 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. The shares of
underlying Common Stock into which the Preferred Shares are convertible or for
which they may be redeemed have been duly and validly authorized and reserved
for issuance upon the conversion or redemption of the Preferred Shares as
described in the Prospectus.
(g) The financial statements and schedules included or incorporated
by reference in the Registration Statement or the Prospectus present fairly the
financial condition of the Company as of the respective dates thereof and the
results of operations and cash flows of the Company for the respective periods
covered thereby, all in conformity with generally accepted accounting principles
applied on a consistent basis throughout the entire period involved, except as
otherwise disclosed in the Prospectus. Any pro forma financial statements and
any other pro forma financial information included in the Registration Statement
or the Prospectus (i) present fairly in all material respects the information
shown therein, (ii) have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and (iii) have
been properly computed on the bases described therein. The assumptions used in
the preparation of the pro forma financial statements and other pro forma
financial information incorporated by reference in the Registration Statement or
the Prospectus are reasonable and the adjustments used therein are appropriate
to give effect to the transactions or circumstances referred to therein. No
other financial statements or schedules of the Company are required by the Act,
the Exchange Act or the Rules and Regulations to be incorporated by reference in
the Registration Statement or the Prospectus. McGladrey & Xxxxxx, LLP (the
"Accountants) who have reported on such financial statements and schedules, are
independent accountants with respect to the Company as required by the Act and
the Rules and Regulations. The statements included in the Registration Statement
with respect to the Accountants pursuant to Rule 509 of Regulation S-K of the
Rules and Regulations are true and correct in all material respects. The
selected financial data set forth in the Prospectus under the captions
"Capitalization," and "Selected Financial Data" fairly present the information
set forth therein on the basis stated in the Registration Statement.
(h) The Company and the Manager maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the
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recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus: (i) there has not been and will not have been any change in the
capitalization of the Company or the Manager, or in the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company or the Manager, arising for any reason whatsoever; (ii) the
Company and the Manger have not incurred nor will they incur any material
liabilities or obligations, direct or contingent, nor have they entered into nor
will they enter into any material verbal or written agreements or other
transactions other than pursuant to this Agreement and the transactions referred
to herein; (iii) the Company and the Manager have not and will not have paid or
declared any dividends or other distributions of any kind on any class of
capital stock, and the Company and the Manager are not in default in the payment
of principal or interest on any outstanding debt obligations; (iv) the Company
and the Manager have not sustained any material loss or interference with its
business or properties from fire, flood, windstorm, accident or other calamity,
whether or not covered by insurance; and (v) there have not been any material
adverse changes in the condition (financial or otherwise), business, properties,
results of operations or prospects of the Company or the Manager.
(j) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(k) Except as set forth in the Registration Statement and the
Prospectus, there are no legal or governmental actions, suits or proceedings
pending or threatened against or affecting the Company, the Manager or the
officers of the Company or the Manager in their capacity as such, or of which
property owned or leased by the Company or the Manager is or may be the subject,
or related to environmental or discrimination matters, which actions, suits or
proceedings might, individually or in the aggregate, prevent or adversely affect
the transactions contemplated by this Agreement or result in a material adverse
change in the condition (financial or otherwise), properties, business, results
of operations or prospects of the Company or the Manager; and no labor
disturbance by the employees of the Company or the Manager exists or is imminent
which might be expected to affect adversely such condition, properties,
business, results of operations or prospects. The Company and the Manager are
not a party or subject to the provisions of any material injunction, judgment,
decree or order of any court, regulatory body, administrative agency or other
governmental body.
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(l) The Company and the Manager have, and at the Closing Date will
have, (i) all governmental licenses, permits, consents, orders, approvals and
other authorizations necessary to carry on their business as contemplated in the
Prospectus, (ii) complied in all respects with all laws, regulations and orders
applicable to it or its business and (iii) performed all its obligations
required to be performed by it, and is not, and at the Closing Date will not be,
in default, under any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement, lease, contract or
other agreement or instrument (collectively, a "contract or other agreement") to
which it is a party or by which its property is bound or affected. To the best
knowledge of the Company and the Manager, no other party under any contract or
other agreement to which they are a party is in default in any respect
thereunder. The Company and the Manager are not, nor at the Closing Date will
be, in violation of any provision of their certificate of incorporation or
by-laws.
(m) The Company and the Manager are in compliance with all
applicable laws, rules and regulations of the jurisdictions in which they are
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance would not materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the Company or the
Manager.
(n) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Preferred Shares by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except such as have been obtained
under the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the underwriters of the Preferred Shares to be sold
by the Company.
(o) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof. The performance of this Agreement and the consummation of the
transactions contemplated hereby and the application of the net proceeds from
the offering and sale of the Preferred Shares to be sold by the Company in the
manner set forth in the Prospectus under "Use of Proceeds" will not result in
the creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Company pursuant to the terms or provisions of, or result in a
breach or violation of any of the
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terms or provisions of, or constitute a default under, or give any other party
a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, the certificate of incorporation or
by-laws of the Company, any contract or other agreement to which the Company is
a party or by which the Company or any of its properties is bound or affected,
or violate or conflict with any judgment, ruling, decree, order, statute, rule
or regulation of any court or other governmental agency or body applicable to
the business or properties of the Company.
(p) The Company owns no real property. The Company has good and
marketable title to all the properties and assets reflected as owned in the
financial statements hereinabove described (or elsewhere in the Prospectus),
subject to no lien, mortgage, pledge, charge or encumbrance of any kind except
(i) those, if any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not adversely
affect the use made and proposed to be made of such property by the Company.
The Company holds its leased properties under valid and binding leases, with
such exceptions as are not materially significant in relation to the business of
the Company. Except as disclosed in the Prospectus, the Company owns or leases
all such properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(q) There is no document or contract of a character required to be
described or incorporated by reference in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which is
not described, filed or incorporated by reference as required. All such
contracts to which the Company or the Manager is a party have been duly
authorized, executed and delivered by the Company or the Manager, constitute
valid and binding agreements of the Company or the Manager and are enforceable
against the Company or the Manager in accordance with the terms thereof.
(r) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect.
(s) Neither the Company, the Manager nor any of their directors,
officers or controlling persons have taken, directly or indirectly, any action
intended, or which might reasonably be expected, to cause or result, under the
Act or otherwise, in, or which has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Preferred Shares.
(t) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
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(u) Prior to the Closing Date, the Preferred Shares will be duly
authorized for listing, upon official notice of issuance, on the New York Stock
Exchange.
(v) The Company has all necessary trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted or proposed to be
conducted; the expiration of any trademarks, trade names, patent rights, mask
works, copyrights, licenses, approvals or governmental authorizations would not
have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company; and the Company has
no knowledge of any material infringement by it of trademark, trade name rights,
patent rights, mask works, copyrights, licenses, trade secret or other similar
rights of others, and there is no claim being made against the Company regarding
trademark, trade name, patent, mask work, copyright, license, trade secret or
other infringement which could have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects of the
Company.
(w) Neither the Company, the Manager nor, to the Company's or
Manager's knowledge, any employee or agent of the Company or Manager have made
any payment of funds of the Company or Manager or received or retained any funds
in violation of any law, rule or regulation or of a character required to be
disclosed in the Prospectus.
(x) Neither the Company nor its officers, directors, employees and
agents have distributed or will distribute prior to the Closing Date any
offering material in connection with the offering and sale of the Preferred
Shares other than the Prospectus, the Registration Statement and the other
materials permitted by the Act.
(y) The Company and the Manager have filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes shown
as due thereon; and the Company and the Manager have no knowledge of any tax
deficiency which has been or might be asserted or threatened against the Company
or the Manager which could materially and adversely affect the business,
operations or properties of the Company or the Manager.
(z) Neither the Company, the Manager nor to the knowledge of the
Company or the Manager any officers, directors, employees or agents acting on
behalf of the Company has at any time (i) made any contributions to any
candidate for political office in violation of law, or failed to disclose fully
any contributions to any candidate for political office in accordance with any
applicable statute, rule, regulation or ordinance requiring such disclosure,
(ii) made any payment to any local, state, federal or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties,
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other than payments required or allowed by applicable law, (iii) made any
payment outside the ordinary course of business to any purchasing or selling
agent or person charged with similar duties of any entity to which the Company
sells or from which the Company buys products for the purpose of influencing
such agent or person to buy products from or sell products to the Company, or
(iv) except as described in the Prospectus, engaged in any transaction,
maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Company.
(aa) As of the Closing Date and, if later, the Option Closing Date,
the Company and the Manager shall be 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 they propose to engage as described in
the Prospectus; the Company and the Manager have not been refused any insurance
coverage sought or applied for; and the Company and the Manager have no reason
to believe that they will not be able to renew their existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue their proposed business at a cost that
would not result in a material adverse effect.
(bb) As of the Closing Date and, if later, the Option Closing Date,
the Company shall be qualified as a real estate investment trust ("REIT") under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, and
intends to operate in a manner so as to continue to remain so qualified.
(cc) Neither the Company nor the Manager will be a "broker" within
the meaning of Section 3(a)(4) of the Exchange Act or a "dealer" within the
meaning of Section 3(a)(5) of the Exchange Act or required to be registered
pursuant to Section 15(a) of the Exchange Act.
(dd) 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 other than as disclosed in the Registration
Statement.
4. Covenants and Agreements of the Company.
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The Company covenants and agrees with the several Underwriters as
follows:
(a) The Company will cause the Prospectus to be filed as required
by Section 3(a) hereof (but only if the Representatives have not reasonably
objected thereto by notice to the Company after having been furnished a copy a
reasonable time prior to filing) and will notify the Representatives promptly of
such filing; it will notify the Representatives promptly of the time when any
subsequent amendment to the Registration Statement
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has become effective or any supplement to the Prospectus has been filed and of
any request by the Commission for any amendment or supplement to the
Registration Statement or Prospectus or for additional information; it will
prepare and file with the Commission, promptly upon the Representatives'
request, any amendments or supplements to the Registration Statement or
Prospectus that, in the Representatives' opinion, may be necessary or advisable
in connection with the distribution of the Preferred Shares by the
Underwriters; and it will file no amendment or supplement to the Registration
Statement or Prospectus to which the Representatives shall reasonably object by
notice to the Company after having been furnished a copy at a reasonable time
prior to the filing.
(b) The Company will advise the Representatives, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Preferred Shares for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceeding for any purpose; and it will promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such a stop order
should be issued.
(c) Within the time during which a Prospectus relating to the
Preferred Shares is required to be delivered under the Act, the Company will
comply with all requirements imposed upon it by the Act and by the Rules and
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Preferred Shares as contemplated by
the provisions hereof and the Prospectus. If during such period any event
occurs as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend or
supplement the Registration Statement or Prospectus to comply with the Act, the
Company will promptly notify the Representatives and will amend or supplement
the Registration Statement or Prospectus (at the expense of the Company) so as
to correct such statement or omission or effect such compliance.
(d) The Company will furnish to the Representatives, without
charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto (including any document filed under the Exchange Act
and deemed to be incorporated by reference into the Prospectus), and will
furnish to the Representatives, without charge, for transmittal to each of the
other Underwriters, a copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules but without
exhibits.
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(e) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time, the Company will deliver to each of
the Underwriters, without charge, as many copies of the Prospectus or any
amendment or supplement thereto as the Representatives may reasonably request.
The Company consents to the use of the Prospectus or any amendment or supplement
thereto by the several Underwriters and by all dealers to whom the Preferred
Shares may be sold, both in connection with the offering or sale of the
Preferred Shares and for any period of time thereafter during which the
Prospectus is required by law to be delivered in connection therewith. If at any
time within the nine-month period referred to in Section 10(a)(3) of the Act
during which a prospectus relating to the Preferred Shares is required to be
delivered under the Act any event shall occur which in the judgment of the
Company or counsel to the Underwriters should be set forth in the Prospectus in
order to make any statement therein, in the light of the circumstances under
which it was made, not misleading, or if it is necessary to supplement or amend
the Prospectus to comply with law, the Company will promptly advise the
Representatives thereof and will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies thereof as the
Representatives may reasonably request. In the event that any Underwriter is
required to deliver a Prospectus after such nine-month period, the Company upon
request, but at the expense of such Underwriter, will promptly prepare such
amendment or amendments to the Registration Statement and such Prospectus or
Prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act. The Company shall not file any document under the
Exchange Act before the termination of the offering of the Preferred Shares by
the Underwriters if such document would be deemed to be incorporated by
reference into the Prospectus which is not approved by the Representatives after
reasonable notice thereof.
(g) Prior to any public offering of the Preferred Shares by the
Underwriters, the Company shall cooperate with the Representatives and their
counsel in order to qualify or register the Preferred Shares for sale under (or
obtain exemptions from the application of) the Blue Sky laws of such
jurisdictions as the representatives designate, will comply with such laws and
will continue such qualifications, registrations and exemptions in effect so
long as reasonably required for the distribution of the Preferred Shares. The
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise the Representatives promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Preferred Shares for
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offering; sale or trading in any jurisdiction or any initiation or threat of
any proceeding for any such purpose, and in the event of the issuance of any
order suspending such qualification, registration or exemption, the Company,
with the cooperation of the Representatives, will use its best efforts to
obtain the withdrawal thereof.
(h) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request of the Representatives, to each
of the other Underwriters: (i) as soon as practicable after the end of each
fiscal year, copies of the Annual Report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public accountants; (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 Preferred Stock.
(i) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
effective date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
effective date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations). "Effective date" for
purposes of this Section 4(i) shall be as defined in Section 158 of the Rules
and Regulations.
(j) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay, or
reimburse if paid by the Representatives, all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including
but not limited to costs and expenses of or relating to (1) the preparation,
printing and filing of the Registration Statement and exhibits to it, each
preliminary prospectus, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (2) the preparation and delivery of
certificates representing the Preferred Shares, (3) the printing of this
Agreement, the Agreement Among Underwriters, any Dealer Agreements and any
Underwriters Questionnaire, (4) furnishing (including costs of shipping, mailing
and courier) such copies of the Registration Statement, the Prospectus and any
preliminary prospectus, and all amendments and supplements thereto, as may be
requested for use in connection with the offering and sale of the Preferred
Shares by the Underwriters or by dealers to whom Preferred Shares may be sold,
(5) the listing for quotation of the Preferred Shares on the New York Stock
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Exchange, (6) any filings required to be made by the Underwriters with the
NASD, and the fees, disbursements and other charges of counsel for the
Underwriters in connection therewith, (7) the registration or qualification of
the Preferred Shares for offer and sale under the securities or Blue Sky laws
of such jurisdictions designated pursuant to Section 4(f), including the fees,
disbursements and other charges of counsel to the Underwriters in connection
therewith, and the preparation and printing of preliminary, supplemental and
final Blue Sky memoranda, (8) counsel to the Company, (9) the transfer agent
for the Preferred Shares and (10) the Accountants.
(k) If this Agreement shall be terminated by the Company pursuant
to any of the provisions hereof (other than pursuant to Section 8) or if for any
reason the Company shall be unable to perform its obligations hereunder, the
Company will reimburse the several Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of counsel to the
Underwriters) reasonably incurred by them in connection herewith.
(l) The Company will not at any time, directly or indirectly, take
any action intended, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the shares of
Preferred Stock to facilitate the sale or resale of any of the Preferred Shares.
(m) The Company will apply the net proceeds from the offering and
sale of the Preferred Shares to be sold by the Company in the manner set forth
in the Prospectus under "Use of Proceeds". The Company will not use the
proceeds of the sale of the Preferred Shares in such a manner as to require the
Company to be registered under the Investment Company Act.
(n) The Company will not, and will cause each of its executive
officers to enter into agreements with the Representatives in the form set forth
in Exhibit B hereto to the effect that they will not, for a period of 90 days
after the commencement of the public offering of the Preferred Shares, without
the prior written consent of Xxxxxx, Xxxxxxxx & Company, Incorporated, sell,
contract to sell or otherwise dispose of any shares of the Company's equity
securities or any other securities convertible into or exchangeable with its
Preferred Stock or any other equity security (other than pursuant to employee
stock option plans or in connection with other employee incentive compensation
arrangements).
(o) The Company will use its best efforts to list, upon official
notice of issuance, on the New York Stock Exchange, the Preferred Shares to be
issued and sold by the Company.
(p) The Company intends to continue to meet the requirements to
qualify as a REIT and will not revoke its
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election to be a REIT unless the Board determines that such revocation is
advantageous to the Company.
(q) The Company will not invest in futures contracts, options on
futures contracts or options on commodities unless the Company and Manager (as
defined in the Prospectus) are exempt from the registration requirements of the
Commodity Exchange Act, as amended, or otherwise comply with the Commodity
Exchange Act, as amended. Additionally, neither the Company nor the Manager
will engage in any activities bearing on the Commodity Exchange Act, as amended,
except as described in the Lord Day & Lord, Xxxxxxx Xxxxx opinion dated June 21,
1993, unless such activities are exempt from the Commodity Exchange Act, as
amended, or otherwise comply with the Commodity Exchange Act, as amended.
(r) The Company will not permit Manager (for so long as it is the
Manager) to engage in any activity which would cause Manager to register as an
investment advisor under the Investment Advisors Act or 1940. Without
limitation, the Company will not permit Manager to (i) render investment advice
to more than fifteen clients, (ii) hold itself out generally to the public as an
investment advisor, or (iii) act as an investment advisor to any investment
company that is registered under the Investment Company Act.
The Representatives, on behalf of the Underwriters, may, in the
Representatives sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
5. Conditions of the Obligations of the Underwriters.
-------------------------------------------------
In addition to the execution and delivery of the Price Determination
Agreement, the obligations of each Underwriter hereunder are subject to the
following conditions:
(a) The Prospectus shall have been filed as required by Section
3(a) hereof and (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Preferred Shares under the securities or Blue Sky laws of
any jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to Xxxxxx, Xxxxxxxx & Company, Incorporated and
Stifel,
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Nicolaus & Company, Incorporated did not object thereto in good faith, and
Xxxxxx, Xxxxxxxx & Company, Incorporated shall have received certificates dated
the Closing Date and the Option Closing Date and signed by the Chairman of the
Board of Directors or President of the Company and the Chief Financial Officer
of the Company (who may, as to proceedings threatened, rely upon the best of
their information and belief), to the effect of clauses (i), (ii) and (iii).
(b) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii) the
Company has not sustained any material loss or interference with its business or
properties from fire, explosion, flood or other casualty, whether or not covered
by insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree, which is not set forth in the Registration
Statement and the Prospectus, if in the judgment of Xxxxxx, Xxxxxxxx & Company,
Incorporated any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Preferred Shares by the Underwriters at
the initial public offering price.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
respective officers or directors in their capacities as such, before or by any
Federal, state or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company.
(d) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date and, with respect to the Option Preferred Shares at the Option
Closing Date, as if made at the Closing Date and, with respect to the Option
Preferred Shares, at the Option Closing Date, and all covenants and agreements
herein contained to be performed on the part of the Company and all conditions
herein contained to be fulfilled or complied with by the Company at or prior to
the Closing Date and, with respect to the Option Preferred Shares, at or prior
to the Option Closing Date, shall have been duly performed, fulfilled or
complied with.
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(e) Xxxxxx, Xxxxxxxx & Company, Incorporated shall have received an
opinion, dated the Closing Date and the Option Closing Date, and satisfactory in
form and substance to counsel for the Underwriters, from Xxxxxxx, Xxxxxx &
Xxxxx, LLP, counsel to the Company, to the effect set forth in Exhibit C hereto.
(f) Xxxxxx, Xxxxxxxx & Company, Incorporated shall have received an
opinion of O'Melveny & Xxxxx, counsel for the Underwriters, dated the Closing
Date and the Option Closing Date, as the case may be, with respect to the
Registration Statement, the Prospectus and this Agreement, which opinion shall
be satisfactory in all respects to Xxxxxx, Xxxxxxxx & Company, Incorporated.
(g) Xxxxxx, Xxxxxxxx & Company, Incorporated shall have received on
the date before this Agreement is executed and also on the Closing Date and the
Option Closing Date a letter from the Accountants, the first one to be dated the
day before the date of this Agreement, the second one to be dated the Closing
Date and the third one (in the event of an Option Closing) to be dated the
Option Closing Date, to the effect that:
(1) They are independent accountants with respect to the
Company within the meaning of the Act and the applicable rules and
regulations thereunder;
(2) In their opinion, the financial statements examined by
them and contained in the Registration Statement or incorporated by
reference therein and the Prospectus comply in form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations;
(3) On the basis of a reading of the latest available interim
unaudited financial statement of the Company, carrying out certain
specified procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would
not necessarily reveal matters of significance with respect to the
comments set forth in this paragraph (3), 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 as of a date not more than five days prior to the date of such
letter, there were any changes in the capital stock or long-term
debt of the Company or any decreases in net current assets or
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stockholders' equity of the Company in each case compared with
amounts shown on the balance sheet included in the Registration
Statement and the Prospectus; and
(4) they have carried out certain specified procedures, not
constituting an audit, with respect to any pro forma financial
information, amounts, percentages and other financial information
that are derived from the general accounting records of the Company
and are included in the Registration Statement and the Prospectus as
marked on the copy of the Prospectus attached to such letter, 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.
(h) At the Closing Date and, as to the Option Preferred Shares, the
Option Closing Date, there shall be furnished to Xxxxxx, Xxxxxxxx & Company,
Incorporated an accurate certificate, dated the date of its delivery, signed by
each of the Chairman of the Board or President and the Chief Financial Officer
of the Company, in form and substance satisfactory to Xxxxxx, Xxxxxxxx &
Company, Incorporated, to the effect that:
(1) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus
(including any documents filed under the Exchange Act and deemed to
be incorporated by reference into the Prospectus); in his opinion
and to the best of his knowledge, such documents and any amendments
or supplements thereto contain all statements required to be stated
therein regarding the Company; and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading;
(2) Each of the representations and warranties of the Company
contained in this Agreement are true and correct as of the date of
this Agreement and as of the Closing Date or the Option Closing
Date, as the case may be;
(3) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any preliminary prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending
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the effectiveness of the Registration Statement has been issued; and
to the best of the knowledge of the respective signers, no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act;
(4) Since the initial date on which the Registration Statement
was filed, no agreement, written or oral, transaction or event has
occurred which should have been set forth in an amendment to the
Registration Statement or in a supplement to or amendment of any
prospectus which has not been disclosed in such a supplement or
amendment;
(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except
as disclosed in or contemplated by the Prospectus, there has not
been any material adverse change or a development involving a
material adverse change in the condition (financial or otherwise),
business, properties, results of operations, management or prospects
of the Company; and no legal or governmental action, suit or
proceeding is pending or threatened against the Company which is
material to the Company, whether or not arising from transactions in
the ordinary course of business, or which may adversely affect the
transactions contemplated by this Agreement; since such dates and
except as so disclosed, the Company has not entered into any 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 or incurred any
material liability or obligation, direct, contingent or indirect,
made any change in its capital stock, made any material change in
its short-term debt or funded debt or repurchased or otherwise
acquired any of the Company's capital stock; and the Company has not
declared or paid any dividend, or made any other distribution, upon
its outstanding capital stock payable to stockholders of record on a
date prior to the Closing Date or the Option Closing Date; and
(6) Each of the covenants required herein to be performed by
the Company on or prior to the date of such certificate has been
duly, timely and fully performed and each condition herein required
to be complied with by the Company on or prior to the delivery of
such certificate has been duly, timely and fully complied with.
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(i) On or prior to the Closing Date, Xxxxxx, Xxxxxxxx & Company,
Incorporated shall have received the executed agreements referred to in Section
4(n) hereof.
(j) The Preferred Shares shall be qualified for sale in such states
as Xxxxxx, Xxxxxxxx & Company, Incorporated may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
(k) Prior to the Closing Date, the Preferred Shares shall have been
duly authorized for listing by the New York Stock Exchange upon official notice
of issuance.
(l) The Company shall have furnished to Xxxxxx, Xxxxxxxx & Company,
Incorporated such certificates, in addition to those specifically mentioned
herein, as Xxxxxx, Xxxxxxxx & Company, Incorporated may have reasonably
requested as to the accuracy and completeness at the Closing Date and the Option
Closing Date of any statement in the Registration Statement or the Prospectus or
any documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus, as to the accuracy at the Closing Date and the
Option Closing Date of the representations and warranties of the Company herein,
as to the performance by the Company of its respective obligations hereunder, or
as to the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of Xxxxxx, Xxxxxxxx & Company, Incorporated.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to Xxxxxx,
Xxxxxxxx & Company, Incorporated and to O'Melveny & Xxxxx, counsel for the
Underwriters. The Company shall furnish the Representatives with such manually
signed or conformed copies of such opinions, certificates, letters and
documents as you request. Any certificate signed by any officer of the Company
and delivered to the Representatives or to counsel for the Underwriters shall
be deemed to be a representation and warranty by the Company to the
Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the Closing Date is not so satisfied, this Agreement
at your election will terminate upon notification by you as Representatives to
the Company without liability on the part of any Underwriter or the Company
except for the expenses to be paid or reimbursed by the Company pursuant to
Sections 4(j) and 4(k) hereof and except to the extent provided in Section 6
hereof.
6. Indemnification.
---------------
(a) The Company will indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and each
person, if any, who controls each
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Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any and all losses, claims, liabilities, expenses
and damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of any
action, suit or proceeding between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third party, or
otherwise, or any claim asserted), to which they, or any of them, may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or in
any documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus or the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading, provided that the Company will not be
liable to the extent that such loss, claim, liability, expense or damage arises
from the sale of the Preferred Shares in the public offering to any person by an
Underwriter and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by Xxxxxx,
Xxxxxxxx & Company, Incorporated on behalf of any underwriter expressly for
inclusion in the Registration Statement, any preliminary prospectus or the
Prospectus. This indemnity agreement will be in addition to any liability that
the company might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, each director of the Company and
each officer of the Company who signs the Registration Statement to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
insofar as losses, claims, liabilities, expenses or damages arise out of or are
based on any untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by Xxxxxx, Xxxxxxxx & Company,
Incorporated on behalf of such Underwriter expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus. This indemnity will be
in addition to any liability that each Underwriter might otherwise have.
(c) Any party that proposes to assert the right to be indemnified
under this Section 6 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 6, notify each
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such indemnifying party of the commencement of such action, enclosing a copy of
all papers served, but the omission so to notify such indemnifying party will
not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 6 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party. If any such action is brought against any
indemnified party and it notifies the indemnifying party of its commencement,
the indemnifying party will be entitled to participate in and, to the extent
that it elects by delivering written notice to the indemnified party promptly
after receiving notice of the commencement of the action from the indemnified
party, jointly with any other indemnifying party similarly notified, to assume
the defense of the action, with counsel satisfactory to the indemnified party,
and after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to
the indemnified party for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred by
the indemnified party in connection with the defense. The indemnified party
will have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. All fees, disbursements and other charges not reimbursed as they are
incurred shall accrue interest, compounded daily, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Bank of America NT&SA, San
Francisco, California. An indemnifying party will not be liable for any
settlement of any action or claim effected without its written consent (which
consent will not be
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unreasonably withheld). No indemnifying party shall, without the prior written
consent of each indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated by this Section 6 (whether or not any
indemnified party is a party thereto), unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising or that may arise out of such claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Underwriters, the
Company and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company
and any one or more of the Underwriters may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company 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. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company on the one hand,
and the Underwriters, on the other, with respect to the statements or omissions
which resulted in such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable considerations with
respect to such offering. Such relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company or Xxxxxx, Xxxxxxxx & Company, Incorporated on behalf of the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 6(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose)
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or by any other method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, liability, expense or damage,
or action in respect thereof, referred to above in this Section 6(d) shall be
deemed to include, for purpose of this Section 6(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no Underwriter shall be required to contribute
any amount in excess of the underwriting discounts received by it, and no
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 6(d) are several in
proportion to their respective underwriting obligations and not joint. For
purposes of this Section 6(d), any person who controls a party to this
Agreement within the meaning of the Act will have the same rights to
contribution as that party, and each officer of the Company who signed the
Registration Statement will have the same rights to contribution as the
Company, subject in each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 6(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of the Underwriters, (ii) acceptance
of any of the Preferred Shares and payment therefor or (iii) any termination of
this Agreement.
7. Termination.
-----------
Without limiting the right to terminate this Agreement pursuant to
any other provision hereof, the obligations of the several Underwriters under
this Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Preferred Shares, on or prior to the Option Closing Date),
by notice to the Company from Xxxxxx, Xxxxxxxx & Company, Incorporated, without
liability on the part of any Underwriter to the Company if, prior to delivery
and payment for the Firm Preferred Shares (or the Option Preferred Shares, as
the case may be), in the sole judgment of Xxxxxx, Xxxxxxxx & Company,
Incorporated, (i) trading in any of the equity securities of the
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Company shall have been suspended by the Commission, by an exchange that lists
the Preferred Shares or by the New York Stock Market, (ii) trading in
securities generally on the New York Stock Exchange shall have been suspended
or limited or minimum or maximum prices shall have been generally established
on such exchange, or additional material governmental restrictions, not in
force on the date of this Agreement, shall have been imposed upon trading in
securities generally by such exchange or by order of the Commission or any
court or other governmental authority, (iii) a general banking moratorium shall
have been declared by either Federal or New York State authorities or (iv) any
material adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United States
or any outbreak or material escalation of hostilities or declaration by the
United States of a national emergency or war or other calamity or crisis shall
have occurred, the effect of any of which is such as to make it, in the sole
judgment of Xxxxxx, Xxxxxxxx & Company, Incorporated, impracticable or
inadvisable to market the Preferred Shares on the terms and in the manner
contemplated by the Prospectus.
8. Substitution of Underwriter; Representations of Underwriters.
------------------------------------------------------------
(a) If any one or more of the Underwriters shall fail or refuse to
purchase any of the Firm Preferred Shares which it or they have agreed to
purchase hereunder, and the aggregate number of Firm Preferred Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of Firm Preferred Shares, the
other Underwriters shall be obligated, severally, to purchase the Firm Preferred
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Firm Preferred
Shares which they have respectively agreed to purchase pursuant to Section 1
hereof bears to the aggregate number of Firm Preferred Shares which all such
non-defaulting Underwriters have so agreed to purchase, or in such other
proportions as Xxxxxx, Xxxxxxxx & Company, Incorporated may specify; provided
that in no event shall the maximum number of Firm Preferred Shares which any
Underwriter has become obligated to purchase pursuant to Section 1 hereof be
increased pursuant to this Section 8 by more than one-ninth of the number of
Firm Preferred Shares agreed to be purchased by such Underwriter without the
prior written consent of such Underwriter. If any Underwriter or Underwriters
shall fail or refuse to purchase any Firm Preferred Shares and the aggregate
number of Firm Preferred Shares which such defaulting underwriter or
Underwriters agreed but failed or refused to purchase exceeds one-tenth of the
aggregate number of the Firm Preferred Shares and arrangements satisfactory to
Xxxxxx, Xxxxxxxx & Company, Incorporated, the Company and the Committees for the
purchase of such Firm Preferred Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter
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or the Company for the purchase or sale of any Preferred Shares under this
Agreement. In any such case either Xxxxxx, Xxxxxxxx & Company, Incorporated or
the Company and the Committee shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken pursuant to
this Section 8 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
(b) The Representatives, on behalf of the several Underwriters,
represent and warrant to the Company that the information set forth (i) on the
cover page of the Prospectus Supplement with respect to price, underwriting
discounts and commissions and terms of offering and (ii) under "Underwriting" in
the Prospectus Supplement was furnished to the Company by and on behalf of the
Underwriters for use in connection with the preparation of the Prospectus
Supplement and is correct in all material respects. The Representatives
represent and warrant that they have been authorized by each of the other
Underwriters as the Representatives to enter into this Agreement on its behalf
and to act for it in the manner herein provided.
9. Miscellaneous.
-------------
(a) Notice given pursuant to any of the provisions of this
Agreement shall be in writing and unless otherwise specified, shall be mailed or
delivered (a) if to the Company, at the office of the Company, 000 Xxxx Xxxxx
Xxxxxx, Xxxxx 000, Xxxxx Xx, Xxx Xxxxxx 00000, Attention: Xxxxx X. Xxxxxxxxx, or
(b) if to the Underwriters, to Xxxxxx, Xxxxxxxx & Company, Incorporated at the
offices of Xxxxxx, Xxxxxxxx & Company, Incorporated, 000 Xxxxx Xxxxxxxx, Xxxxx
0000, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Corporate Finance Department. Any
such notice shall be effective only upon receipt. Any notice under Section 6 or
8 may be made by telex or telephone, but if so made shall be subsequently
confirmed in writing.
(b) This Agreement has been and is made solely for the benefit of
the several Underwriters, the Company and of the controlling persons, directors
and officers referred to in Section 6 hereof, and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" as used in this
Agreement shall not include a purchaser, as such purchaser, of Preferred Shares
from any of the several Underwriters.
(c) The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such
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minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
(d) Any action required or permitted to be taken by the
Representatives under this Agreement may be taken by them jointly or by Xxxxxx,
Xxxxxxxx & Company, Incorporated.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF LAWS) OF THE
STATE OF CALIFORNIA.
(f) The Company and the Underwriters each hereby irrevocably waive
any right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
(g) This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by Xxxxxx,
Xxxxxxxx & Company, Incorporated and the Company.
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(h) This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
(i) In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement between the Company and the several Underwriters
including you, all in accordance with its terms.
Very truly yours,
XXXXXXXXX MORTGAGE ASSET
CORPORATION
By: /s/ XXXXX X. XXXXXXXXX
----------------------------
Xxxxx X. Xxxxxxxxx
President
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Confirmed as of the date first above mentioned:
XXXXXX, XXXXXXXX & COMPANY, INCORPORATED
EVEREN SECURITIES, INC.
PRINCIPAL FINANCIAL SECURITIES, INC.
SUTRO & CO. INCORPORATED
XXXXXXXXX SECURITIES CORPORATION
Acting on behalf of itself and as the
Representatives of the
other several Underwriters
By: Xxxxxx, Xxxxxxxx & Company, Incorporated
By: /s/ XXXXXXX X. XXXXX
------------------------------
Xxxxxxx X. Xxxxx
Its: Vice President
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SCHEDULE I
UNDERWRITERS
Number of
Firm Preferred
Names of Shares
Underwriters to be Purchased
------------ ---------------
Xxxxxx, Xxxxxxxx & Company, Incorporated 475,000
EVEREN Securities, Inc. 475,000
Principal Financial Securities, Inc. 475,000
Sutro & Co. Incorporated 475,000
Xxxxxxxxx Securities Corporation 140,000
Advest, Inc. 24,000
X.X. Xxxxxxxx & Co. 24,000
Xxxxx & Co. 24,000
Xxxx Xxxxxxxx Incorporated 24,000
Friedman, Billings, Xxxxxx & Co., Inc. 24,000
XxXxxxxx & Company Securities, Inc. 24,000
Mesirow Financial, Inc. 24,000
Xxxxxx Xxxxxx & Company, Inc. 24,000
Xxxxx Xxxxxxx Inc. 24,000
Xxxxxxxx Xxxxxx Refsnes, Inc. 24,000
The Xxxxxxxx-Xxxxxxxx Company, Inc. 24,000
Xxxxx & Xxxxxxxxxxxx, Inc. 24,000
Xxxxxxxx Inc. 24,000
Xxxxxx Xxxxxxx Incorporated 24,000
Wedbush Xxxxxx Securities 24,000
---------
Total 2,400,000
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