EXHIBIT 1.14
EXECUTION COPY
XXXXXXXXX MORTGAGE, INC.
3,500,000 Shares
Common Stock
($0.01 Par Value)
UNDERWRITING AGREEMENT
February 18, 2004
February 18, 2004
X.X. XXXXXXX & SONS, INC.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Ladies and Gentlemen:
Xxxxxxxxx Mortgage, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to X.X. Xxxxxxx & Sons, Inc. (the "Lead Manager"),
Xxxxx Xxxxxxx & Co., Wachovia Capital Markets, LLC, Xxxxxxxxx & Company, Inc.
and Flagstone Securities LLC (collectively, the "Underwriters"), an aggregate of
3,500,000 shares (the "Firm Shares") of common stock, $0.01 par value (the
"Common Stock"), of the Company. In addition, solely for the purpose of covering
over-allotments, the Company proposes to grant to the Underwriters the option to
purchase from the Company up to an additional 525,000 shares of Common Stock
(the "Additional Shares"). The Firm Shares and the Additional Shares are
hereinafter collectively sometimes referred to as the "Shares." The Shares are
described in the Prospectus which is referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Securities Act"), with the Securities and Exchange
Commission (the "Commission") a registration statement (No. 333-111784),
including a base prospectus, relating to the Shares being sold by the Company
and incorporating by reference documents which the Company has filed or will
file in accordance with the provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (collectively, the
"Exchange Act"). The Company has prepared a prospectus supplement (the
"Prospectus Supplement") to the base prospectus included as part of such
registration statement setting forth the terms of the offering, sale and plan of
distribution of the Shares and additional information concerning the Company and
its business. Except where the context otherwise requires, such registration
statement, as amended when it became effective, including all documents filed as
part thereof or incorporated by reference therein, and including any information
contained in a Prospectus (as defined below) subsequently filed with the
Commission pursuant to Rule 424(b) under the Securities Act, is herein called
the "Registration Statement" and the base prospectus, including all documents
incorporated therein by reference, included in the Registration Statement, as
supplemented by the Prospectus Supplement, in the form filed by the Company with
the Commission pursuant to Rule 424(b) under the Securities Act on or before the
second Business Day (as defined below) following the date of this Underwriting
Agreement (the "Agreement") (or on such other day as the parties may mutually
agree), is herein called the "Prospectus." Any reference herein to the
Registration Statement, the Prospectus or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement and the Prospectus shall
be deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein. For
purposes of this Agreement, all references to the Registration Statement, the
Prospectus or to any amendment or supplement thereto shall be deemed to include
any copy filed with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System ("XXXXX"), and such copy shall be identical in
content to any Prospectus delivered to the Underwriters for use in connection
with the offering of the Shares.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell the Firm Shares to the several Underwriters,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the
Company the respective number of Firm Shares (subject to such adjustment as the
Lead Manager may determine to avoid fractional shares) set forth opposite the
name of such Underwriter in Schedule A annexed hereto at a purchase price of
$27.55 per Share. The Company is advised by the Lead Manager that the
Underwriters intend (i) to make a public offering of the Shares as soon as the
Underwriters deem advisable after this Agreement has been executed and delivered
and (ii) initially to offer the Firm Shares upon the terms set forth in the
Prospectus. The Underwriters may from time to time increase or decrease the
public offering price after the initial public offering to such extent as they
may determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company ratably
in accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as the Lead Manager shall determine to avoid
fractional shares), all or a portion of the Additional Shares as may be
necessary to cover over-allotments made in connection with the offering of the
Firm Shares, at the same purchase price per share to be paid by the Underwriters
to the Company for the Firm Shares. This option may be exercised by the Lead
Manager on behalf of the several Underwriters at any time (but not more than
once) on or before the thirtieth day following the date hereof, by written
notice to the Company. Such notice shall set forth the aggregate number of
Additional Shares as to which the option is being exercised and the date and
time when the Additional Shares are to be delivered (such date and time being
herein referred to as the "additional time of purchase"); provided, however,
that the additional time of purchase shall not be (i) earlier than the time of
purchase (as defined below) or (ii) later than the tenth Business Day after the
date on which the option shall have been exercised. The number of Additional
Shares to be sold to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the aggregate number of Firm Shares (subject, in each
case, to such adjustment as the Lead Manager may determine to eliminate
fractional shares). As used herein "Business Day" shall mean a day on which the
New York Stock Exchange (the "NYSE") is open for trading or commercial banks in
the City of New York are open for business.
2. Payment and Delivery. Payment of the purchase price for the
Firm Shares shall be made to the Company by federal funds wire transfer against
delivery of the certificates for the Firm Shares to the Lead Manager through the
facilities of the Depository Trust Company ("DTC") for the respective accounts
of the Underwriters. Such payment and delivery shall be made at 10:00 A.M., New
York City time, on February 23, 2004 (unless another time shall be agreed to by
the Lead Manager and the Company or unless postponed in accordance with the
provisions of Section 8 hereof). The time at which such payment and delivery are
actually made is herein sometimes called the "time of purchase." Certificates
for the Firm Shares shall be delivered to the Lead Manager, through the
facilities of DTC, in definitive form in such names and in such denominations as
the Lead Manager shall specify no later than the second Business Day preceding
the time of purchase. For the purpose of expediting the checking of the
certificates for the Firm Shares by the Lead Manager, the Company agrees to make
such certificates available to the Lead Manager for such purpose at least one
full Business Day preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall be made
at the additional time of purchase in the same manner and at the same office as
the payment for the Firm Shares. Certificates for the Additional Shares shall be
delivered to the Lead Manager, through the facilities of DTC, in definitive form
in such names and in such denominations as the Lead Manager shall specify no
later than the second Business Day preceding the additional time of purchase.
For the purpose of expediting the checking of the certificates for the
Additional Shares by the Lead Manager, the Company agrees to make such
2
certificates available to the Lead Manager for such purpose at least one full
Business Day preceding the additional time of purchase.
3. Representations and Warranties of the Company. The Company
and, where applicable, Xxxxxxxxx Mortgage Advisory Corporation, the Company's
external manager (the "Manager"), represent and warrant to the Underwriters
that:
(a) The Company meets the requirements for use of Form S-3 under
the Securities Act. The Registration Statement has been filed with, and has been
declared effective under the Securities Act by, the Commission. The Company has
not received, and has no notice of, any order of the Commission preventing or
suspending the use of the Registration Statement or threatening or instituting
proceedings for that purpose. Any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement have been so
described or filed. The Prospectus Supplement has been or will be so prepared
and will be filed pursuant to Rule 424(b) of the Securities Act on or before the
second Business Day following the date of this Agreement or on such other day as
the Lead Manager and the Company may mutually agree. Copies of the Registration
Statement and the Prospectus, any amendments or supplements thereto and all
documents incorporated by reference therein that were filed with the Commission
on or prior to the date of this Agreement (including one fully executed copy of
the Registration Statement and of each amendment thereto) have been delivered to
the Underwriters and their counsel. Neither the Company nor the Manager has
distributed any offering material in connection with the offering or sale of the
Shares other than the Registration Statement, the Prospectus or any other
materials, if any, permitted by the Securities Act.
(b) Each part of the Registration Statement, when such part became
or becomes effective or was or is filed with the Commission, and the Prospectus
and any amendment or supplement thereto, on the date of filing thereof with the
Commission and at the time of purchase and, if applicable, at the additional
time of purchase, conformed or will conform in all material respects with the
requirements of the Securities Act. Each part of the Registration Statement,
when such part became or becomes effective or was or is filed with the
Commission, did not or will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission and at the
time of purchase and, if applicable, at the additional time of purchase, did not
or will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
foregoing shall not apply to statements in, or omissions from, any such document
in reliance upon, and in conformity with, written information concerning the
Underwriters that was furnished in writing to the Company by the Lead Manager,
on behalf of the Underwriters, specifically for use in the preparation thereof.
Neither the Commission nor any state or other jurisdiction or other regulatory
body has issued, or, to the knowledge of the Company, is threatening to issue,
any stop order under the Securities Act or other order suspending the
effectiveness of the Registration Statement or preventing or suspending the use
of the Prospectus or suspending the qualification or registration of the Shares
for offering or sale in any jurisdiction nor has instituted or, to the knowledge
of the Company, threatened to institute proceedings for any such purpose.
(c) The documents incorporated by reference in the Registration
Statement, the Prospectus or any amendment or supplement thereto, when they
became or become effective under the Securities Act or were or are filed with
the Commission under the Securities Act or the Exchange Act, as the case may be,
conformed or will conform in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable.
3
(d) The consolidated financial statements of the Company and the
Subsidiaries (as defined below), together with the related schedules and notes
thereto, set forth or included or incorporated by reference in the Registration
Statement and Prospectus are accurate in all material respects and fairly
present the financial condition of the Company and the Subsidiaries as of the
dates indicated and the results of operations, changes in financial position,
shareholders' equity and cash flows for the periods therein specified and are in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein). The
selected financial and statistical data included or incorporated by reference in
the Registration Statement and the Prospectus present fairly the information
shown therein and, to the extent based upon or derived from the financial
statements, have been compiled on a basis consistent with the financial
statements presented therein. Any pro forma financial statements of the Company
and the Subsidiaries, and the related notes thereto, included or incorporated by
reference in the Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the basis described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein. No other financial statements are required to
be set forth or incorporated by reference in the Registration Statement or the
Prospectus under the Securities Act that are not so set forth or incorporated by
reference therein.
(e) The Prospectus delivered to the Underwriters for use in
connection with this offering will be identical to the version of the Prospectus
created to be transmitted to the Commission for filing via XXXXX, except to the
extent permitted by Regulation S-T.
(f) The Company has been duly formed and incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Maryland, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction, each of which is listed on Schedule B
annexed hereto, 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 and the Subsidiaries taken as a whole (a "Material Adverse Effect"), and
has full corporate power and authority necessary to own, hold, lease and/or
operate its assets and properties, to conduct the business in which it is
engaged and as described in the Prospectus and to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The Company is in compliance in all material respects with the laws,
orders, rules, regulations and directives issued or administered by such
jurisdictions. Complete and correct copies of the charter and the by-laws of the
Company and all amendments thereto have been delivered to the Underwriters and,
except as set forth in the exhibits to the Registration Statement, no changes
therein will be made subsequent to the date hereof and prior to the time of
purchase or, if applicable, the additional time of purchase.
(g) The Company has no "subsidiaries" (as such term is defined in
Rule 1-02 of Regulation S-X promulgated under the Securities Act) other than
Xxxxxxxxx Mortgage Funding Corporation ("Funding I"), Xxxxxxxxx Mortgage
Acceptance Corporation ("Acceptance I"), Xxxxxxxxx Mortgage Home Loans, Inc.
("TMHL"), Xxxxxxxxx Mortgage Funding Corporation II ("Funding II") and Xxxxxxxxx
Mortgage Acceptance Corporation II ("Acceptance II") (each a "Subsidiary" and,
collectively, the "Subsidiaries"). Each of the Subsidiaries has been duly formed
and incorporated and is validly existing as a corporation in good standing under
the laws of the State of Delaware, is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction, each of which is
listed on Schedule C annexed hereto, 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, and
has full corporate power and authority necessary to own, hold, lease and/or
operate its assets and properties and to conduct the business in which it is
engaged and as described in the
4
Prospectus. Each of the Subsidiaries is in compliance in all material respects
with the laws, orders, rules, regulations and directives issued or administered
by such jurisdictions. Complete and correct copies of the certificates of
incorporation and of the by-laws of the Subsidiaries and all amendments thereto
have been delivered to the Underwriters and, except as set forth in the exhibits
to the Registration Statement, no changes therein will be made subsequent to the
date hereof and prior to the time of purchase or, if applicable, the additional
time of purchase.
(h) Other than the Subsidiaries, the Company 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. All of the outstanding
shares of capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable, and are wholly owned by
the Company, directly or through TMHL, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or other equity or adverse claims.
The Company directly owns 100% of each of Funding I, Acceptance I and TMHL.
Funding II and Acceptance II are wholly owned by TMHL. No options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligation into shares of capital stock or ownership
interests in the Subsidiaries are outstanding.
(i) The Manager has been duly formed and incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction, each of which is listed on Schedule D
annexed hereto, in which its ownership or lease of property or assets or the
conduct of its business requires such qualification, and has full corporate
power and authority necessary to own, hold, lease and/or operate its assets and
properties, to conduct the business in which it is engaged and as described in
the Prospectus and to enter into this Agreement, and the Manager is in
compliance in all material respects with the laws, orders, rules, regulations
and directives issued or administered by such jurisdictions. Complete and
correct copies of the certificate of incorporation and of the by-laws of the
Manager and all amendments thereto have been delivered to the Underwriters and
no changes therein will be made subsequent to the date hereof and prior to the
time of purchase or, if applicable, the additional time of purchase. The Manager
has no "subsidiaries" (as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act).
(j) TMA Mortgage Funding Trust II (the "Trust") has been duly
formed and is validly existing as a business trust under the Delaware Business
Trust Act, in good standing under the laws of Delaware, with full authority to
perform all functions (i) which business trusts are authorized to perform and
(ii) which are described in the Prospectus. The trustee for the Trust is the
Wilmington Trust Company.
(k) Neither the Company, any of the Subsidiaries, the Trust nor
the Manager is 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) their respective charters, by-laws or
organizational documents, as the case may be, or (ii) any obligation, agreement,
covenant or condition contained in any contract, license, repurchase agreement,
management 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, any of the Subsidiaries,
the Trust or the Manager is a party or by which the Company, the Subsidiaries,
the Trust, the Manager or any of their respective assets or properties may be
bound or affected. Except as set forth in Schedule E annexed hereto, to the
knowledge of the Company and the Manager, no other party under any contract or
other agreement to which the Company or any of the Subsidiaries is a party is in
default in any respect thereunder. 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 or
5
constitute a default under (or 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 charter, by-laws or organizational documents, as the case
may be, of the Company, any of the Subsidiaries, the Trust or the Manager, (ii)
any provision of any contract, license, repurchase agreement, management
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, any of the Subsidiaries, the Trust
or the Manager is a party or by which the Company, any of the Subsidiaries, the
Trust or the Manager, or any of their respective assets or properties may be
bound or affected, or, with respect to the Manager, which would have a material
adverse effect on the ability of the Manager to perform its obligations under
the Management Agreement, dated July 15, 1999, between the Company and the
Manager, as amended on October 17, 2000 (the "Management Agreement"), or (iii)
any federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any of the Subsidiaries. Neither
the Company, any of the Subsidiaries, the Trust nor the Manager has, at any time
during the past five years, (i) made any unlawful contributions to any candidate
for any political office or failed fully to disclose any contribution in
violation of law or (ii) made any payment to any state, federal or foreign
government official or other person charged with similar public or quasi-public
duty (other than payment required or permitted by applicable law).
(l) As of September 30, 2003, as of the date of this Agreement and
as of the time of purchase, the Company had, has or will have an authorized,
issued and outstanding capitalization as set forth under the headings "Actual,"
and "As adjusted," respectively, in the section of the Prospectus Supplement
entitled "Capitalization." All of the issued and outstanding shares of capital
stock, including the Shares, 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.
(m) This Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(n) The capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained in the
Registration Statement and Prospectus and such description conforms to the
rights set forth in the instruments defining the same. The certificates for the
Shares are in due and proper form and the holders of the Shares will not be
subject to personal liability by reason of being such holders.
(o) The Shares have been duly and validly authorized by the
Company for issuance and sale pursuant to this Agreement and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued and fully paid and non-assessable, free and clear of any pledge, lien,
encumbrance, security interest or other claim, and will be registered pursuant
to Section 12 of the Exchange Act.
(p) No approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the issuance and sale of the
Shares or the consummation by the Company of the transaction contemplated hereby
other than (i) registration of the Shares under the Securities Act, (ii) any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriters or (iii)
such approvals as have been obtained in connection with the approval of the
listing of the Shares on the NYSE.
6
(q) Except for incentive awards to be granted under the Company's
2002 Long-Term Amended and Restated Incentive Plan (the "Plan"), 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 issuance and sale of the Shares to the Underwriters
hereunder, nor does any Person have preemptive rights, co-sale rights, rights of
first refusal or other rights to purchase or subscribe for any of the Shares or
any securities or obligations convertible into or exchangeable for, or any
contracts or commitments to issue or sell any of, the Shares or any options,
rights or convertible securities or obligations, other than those that have been
expressly waived prior to the date hereof.
(r) PricewaterhouseCoopers LLP ("PWC"), whose report on the
consolidated financial statements of the Company is filed with the Commission as
part of the Registration Statement and the Prospectus, are and, during the
periods covered by their report, were independent public accountants as required
by the Securities Act. PWC is not in violation of the auditor independence
requirements of the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act") with
respect to the Company.
(s) Each of the Company, the Subsidiaries, the Trust and the
Manager has all necessary licenses, permits, authorizations, consents and
approvals and has made all necessary filings required under any federal, state,
local or foreign law, regulation or rule, and has obtained all necessary
permits, authorizations, consents and approvals from other Persons, in order to
conduct its business as described in the Prospectus, except where the failure to
obtain such licenses, permits, authorizations, consents and approvals would not
have a Material Adverse Effect. Each of the Company, the Subsidiaries, the Trust
and the Manager has obtained all accreditation or certification required by any
applicable law from any governmental agency or authority in order to provide the
products and services which it currently provides or which it proposes to
provide as set forth in the Prospectus. Neither the Company, any of the
Subsidiaries, the Trust nor the Manager is 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, any of the Subsidiaries, the Trust or the Manager.
(t) The descriptions in the Registration Statement and the
Prospectus of the legal or governmental proceedings, contracts, leases and other
legal documents therein described present fairly the information required to be
shown and there are no legal or governmental proceedings, contracts, leases or
other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required. All agreements between
the Company, any of the Subsidiaries, the Trust or the Manager, as the case may
be, and third parties expressly referenced in the Prospectus are legal, valid
and binding obligations of the Company, the Subsidiaries, the Trust or the
Manager, as the case may be, 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 (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(u) There are no actions, suits, claims, investigations, inquiries
or proceedings pending or, to the Company's knowledge, threatened to which the
Company, any of the Subsidiaries, the Trust or the Manager or any of their
respective officers or directors is a party or of which the properties or other
assets of any such entity 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.
(v) During the period of at least the last 24 calendar months
prior to the date of this Agreement, the Company has timely filed with the
Commission all documents and other material required to be filed pursuant to
Sections 13, 14 and 15(d) under the Exchange Act. During the period of at least
7
the last 36 calendar months preceding the filing of the Registration Statement,
the Company has filed all reports required to be filed pursuant to Sections 13,
14 and 15(d) under the Exchange Act. As of the date of this Agreement, the
aggregate market value of the Company's voting stock held by nonaffiliates of
the Company was equal to or greater than $150 million.
(w) Except as disclosed in the Prospectus (excluding any
disclosure contained in any amendment or supplement to, or incorporated by
reference into, the Prospectus after the date of this Agreement), since the date
of the latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving a
prospective material adverse change in the condition (financial or otherwise),
business, net worth, properties, assets or results of operations of the Company,
the Subsidiaries and the Trust, taken as a whole. Subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus and during the time that a prospectus relating to the Shares is
required to be delivered under the Securities Act, there has not been and will
not be (i) any transaction which is material to the Company, the Subsidiaries
and the Trust, except transactions in the ordinary course of business, (ii) any
obligation, direct or contingent, which is material to the Company, the
Subsidiaries and the Trust taken as a whole, incurred by the Company, the
Subsidiaries or the Trust, except obligations incurred in the ordinary course of
business, (iii) any change in the capital stock or outstanding indebtedness of
the Company or the Subsidiaries except pursuant to Section 4(m) hereof, or (iv)
except for regular quarterly dividends on the Common Stock in amounts per share
that are consistent with past practice, any dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock. Neither
the Company, the Subsidiaries nor the Trust has any material contingent
obligation which is not disclosed in the Registration Statement or Prospectus.
(x) There are no Persons with registration or other similar rights
to have any equity or debt securities, including securities which are
convertible into or exchangeable for equity securities, registered pursuant to
the Registration Statement or otherwise registered by the Company under the
Securities Act.
(y) Neither the Company, the Subsidiaries nor the Trust has
defaulted on any installment on indebtedness for borrowed money or on any rental
on one or more long term leases, which defaults would have a Material Adverse
Effect. Since it first became a publicly-registered entity, the Company has not
filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act indicating
that it (i) has failed to pay any dividend or sinking fund installment on
preferred stock or (ii) has defaulted on any installment on indebtedness for
borrowed money or on any rental on one or more long term leases, which defaults
would have a Material Adverse Effect.
(z) Each of the Company, the Subsidiaries, the Trust, the Manager
and each of their respective officers, directors and controlling Persons has
not, directly or indirectly, (i) taken any action designed to cause or to result
in, or that has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock to facilitate
the sale of the Shares or (ii) since the filing of the Registration Statement
(except pursuant to the Company's Dividend Reinvestment and Stock Purchase Plan
(the "DRSPP") and the Company's sales agreement with Cantor Xxxxxxxxxx & Co.)
(A) sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, shares of Common Stock or (B) paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other securities of the
Company.
(aa) The Shares have been approved for listing on the NYSE, subject
to official notice of issuance.
(bb) Except as set forth in Schedule F annexed hereto, neither the
Company nor any of the Subsidiaries, the Trust or its affiliates (including the
Manager) (i) is required to register as a "broker" or
8
"dealer" in accordance with the provisions of the Exchange Act or (ii) directly
or indirectly through one or more intermediaries, controls or has any other
association with (within the meaning of Article I of the By-laws of the National
Association of Securities Dealers ("NASD")) any member firm of the NASD.
(cc) The Company has not relied upon the Underwriters or their
legal counsel for any legal, tax or accounting advice in connection with the
offering and sale of the Shares.
(dd) Any certificate signed by any officer of the Company delivered
to the Lead Manager or to counsel for the Underwriters pursuant to or in
connection with this Agreement shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
(ee) As of the date of this Agreement, the investment portfolio
(other than cash and cash equivalents) of the Company consists of
adjustable-rate mortgage securities and adjustable-rate mortgage loans. As of
the date of this Agreement, the derivative financial instruments held by the
Company consist solely of interest rate cap agreements, interest rate swap
agreements and eurodollar futures contracts. As of the date of this Agreement
and except as otherwise disclosed in the Prospectus, the Company has no plan or
intention to materially alter its stated investment policies and operating
policies and strategies, as such are described in the Company's Annual Report on
Form 10-K for the year ended December 31, 2002 or in any Quarterly Report on
Form 10-Q or 10-Q/A subsequently filed with the SEC, including making any change
to any stated investment percentages or guidelines or the stated
equity-to-assets ratio currently employed by the Company, the Subsidiaries and
the Trust. The Company, the Subsidiaries and the Trust have good and marketable
title to all properties and assets owned, directly or indirectly, by the
Company, the Subsidiaries and the Trust, 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
interfere with the use made or proposed to be made of such property or asset by
the Company, the Subsidiaries and the Trust. Except for "real estate owned"
properties owned by the Company as a result of foreclosures on delinquent loans,
if any, the Company, the Subsidiaries and the Trust do not own any real
property. Any real property and buildings held under lease by the Company, the
Subsidiaries and the Trust are held under valid, existing and enforceable
leases, with such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the use made or proposed to be made of such
property and buildings by the Company and the Subsidiaries.
(ff) Each of the Company, the Subsidiaries and the Trust 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. Neither the Company
nor the Manager has knowledge, after due inquiry, of any tax deficiency which
has been asserted or threatened against the Company, any of the Subsidiaries or
the Trust. To the knowledge of the Company and the Manager, there are no tax
returns of the Company, the Subsidiaries or the Trust that are currently being
audited by federal, state or local taxing authorities or agencies which would
have a Material Adverse Effect.
(gg) The Company, the Subsidiaries and the Trust own or possess
adequate license or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intellectual property rights and know-how
(collectively, "Intangibles") necessary to entitle the Company, the Subsidiaries
and the Trust to conduct their business as described in the Prospectus, and the
Company, the Subsidiaries and the Trust have 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.
9
(hh) TMHL owns or possesses adequate and validly issued licenses,
or is otherwise authorized by law, to originate loans as a mortgage lender in
all states in which TMHL has originated or is currently originating loans. As of
the date of this Agreement, TMHL is licensed, or is otherwise authorized by law,
to originate loans in each of the jurisdictions set forth on Schedule G annexed
hereto. To the knowledge of the Company and the Manager, all third-party service
providers used, employed, hired or otherwise contracted with by the Company or
any of the Subsidiaries have obtained all necessary licenses or other relevant
authorization to do business in all jurisdictions in which such third-party
service providers do business on behalf of the Company or the Subsidiaries.
(ii) Each of the Company, the Subsidiaries, the Trust 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 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.
(jj) Each of the Company, the Subsidiaries and the Trust 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, including, but not limited to, directors' and officers' insurance and
insurance covering real and personal property owned or leased by the Company,
the Subsidiaries and the Trust against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect. Neither the Company, the Subsidiaries,
the Trust nor the Manager has been refused any insurance coverage which has been
sought and applied for and has no reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.
(kk) Neither the Company, the Subsidiaries, the Trust nor the
Manager is in violation, and has not received notice of any violation with
respect to, any applicable local, state or federal environmental, safety or
similar law applicable to the business of the Company, the Subsidiaries and the
Trust. Each of the Company, the Subsidiaries, the Trust and the Manager has
received all permits, licenses or other approvals required of it under
applicable federal and state occupational safety and health and environmental
laws and regulations to conduct its business, and each of the Company, the
Subsidiaries, the Trust and the Manager 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.
(ll) Neither the Company, the Subsidiaries, the Trust nor any of
their affiliates has incurred any liability for any finder's fees or similar
payments in connection with the transactions herein contemplated, except as may
otherwise exist with respect to the Underwriters pursuant to this Agreement.
(mm) There are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company, the Subsidiaries,
the Trust or the Manager which are likely to have individually or in the
aggregate a Material Adverse Effect. None of the employees of the Company, the
Subsidiaries or the Trust is represented by a union and, to the knowledge of the
Company, no union organizing activities are taking place. To the knowledge of
the Company and the Manager, neither the Company, the Subsidiaries, the Trust
nor the Manager has violated any federal, state or local law relating to
discrimination in hiring, promotion or pay of employees, or any applicable wage
or hour laws, or the
10
rules and regulations thereunder, which might, individually or in the aggregate,
result in a Material Adverse Effect.
(nn) Neither the Company, the Subsidiaries, the Trust nor, to the
knowledge of the Company and the Manager, any employee or agent of the Company,
the Subsidiaries or the Trust, has made any payment of funds of the Company, the
Subsidiaries or the Trust, or received or retained any funds, in violation of
any law, rule or regulation or of a character required to be disclosed in the
Prospectus. No relationship, direct or indirect, exists between or among the
Company, the Subsidiaries, the Trust or the Manager, on the one hand, and the
directors, officers and stockholders of the Company, the Subsidiaries, the Trust
or the Manager, on the other hand, which is required by the Securities Act to be
described in the Registration Statement and the Prospectus that is not so
described.
(oo) The Company, for all taxable years commencing with the taxable
year ended December 31, 1993, and each of the Subsidiaries, since its respective
date of inception, have been, and upon the sale of the Shares will continue to
be, organized and operated in conformity with the requirements for qualification
and taxation of the Company as a "real estate investment trust" ("REIT") under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"). The proposed method of operation of the Company and each of the
Subsidiaries and the Trust as described in the Prospectus will enable the
Company to continue to meet the requirements for qualification and taxation as a
REIT under the Code, and no actions have been taken (or not taken which are
required to be taken) which would cause such qualification to be lost. The
Company intends to continue to operate in a manner which would permit it to
qualify as a REIT under the Code. The Company has no intention of changing its
operations or engaging in activities which would cause it to fail to qualify, or
make economically undesirable its continued qualification, as a REIT.
(pp) Neither the Company, the Subsidiaries nor the Trust is and,
after giving effect to the offering and sale of the Shares, will 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 (the
"Investment Company Act").
(qq) The Manager has full legal right, power and authority to
perform its duties in accordance with and under the Management Agreement and to
consummate the transactions contemplated therein. The Management Agreement has
been duly authorized, executed and delivered by the Manager and constitutes a
valid and binding agreement of the Manager, enforceable in accordance with its
terms, except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and by general equitable principles (regardless of whether
enforcement is considered in a proceeding in equity or at law). To the knowledge
of the Company and the Manager, there is no breach of, or default under (nor has
any event occurred which with notice, lapse of time, or both would constitute a
breach of, or default under), the Management Agreement by the Manager.
(rr) No relationship, direct or indirect, exists between or among
the Company or any of the Subsidiaries, the Trust or the Manager, on the one
hand, and the directors, officers, stockholders or trustees of the Company, any
of the Subsidiaries, the Trust or the Manager, on the other hand, which is
required by the rules of the NASD to be described in the Registration Statement
and the Prospectus which is not so described. Except as otherwise disclosed in
the Prospectus, there are no material outstanding loans or advances or material
guarantees of indebtedness by the Company or any of the Subsidiaries or the
Trust to or for the benefit of any of the officers or directors of the Company,
any of the Subsidiaries or the Manager or any of the members of the families of
any of them.
11
(ss) The Company, the Subsidiaries and the Trust are in compliance
in all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"). No "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company, the Subsidiaries and the Trust would
have any liability. The Company, the Subsidiaries and the Trust have not
incurred and do not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Code. Each "pension plan" for which the Company, the
Subsidiaries or the Trust would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(tt) The Company is in compliance with applicable provisions of the
Xxxxxxxx-Xxxxx Act that are effective 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.
4. Certain Covenants of the Company. The Company and, where
applicable, the Manager hereby covenant and agree with the Underwriters that:
(a) The Company will furnish such information as may be required
and otherwise will cooperate in qualifying the Shares for offering and sale
under the securities or blue sky laws of such jurisdictions (both domestic and
foreign) as the Lead Manager may designate and maintain such qualifications in
effect so long as required for the distribution of the Shares; provided,
however, that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
jurisdiction (except service of process with respect to the offering and sale of
the Shares). The Company will promptly advise the Lead Manager of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(b) The Company will prepare the Prospectus in a form approved by
the Lead Manager and file such Prospectus with the Commission pursuant to Rule
424(b) under the Securities Act not later than 10:00 a.m., New York City time,
on or before the second Business Day following the date of this Agreement or on
such other day as the parties may mutually agree and will furnish promptly (and
with respect to the initial delivery of such Prospectus, not later than 10:00
a.m., New York City time, on or before the second Business Day following the
date of this Agreement or on such other day as the parties may mutually agree)
to the Underwriters copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendments or supplements
thereto after the effective date of the Registration Statement) in such
quantities and at such locations as the Lead Manager may reasonably request for
the purposes contemplated by the Securities Act, which Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the version created to be transmitted to the Commission for filing
via XXXXX, except to the extent permitted by Regulation S-T.
(c) The Company will advise the Lead Manager immediately,
confirming such advice in writing, of (i) the receipt of any comments from the
Commission relating to the Registration Statement or the Prospectus or, prior to
the termination of the underwriting syndicate contemplated in this Agreement,
any other filing of the Company under the Securities Act or the Exchange Act,
(ii) any request by the Commission for amendments or supplements to the
Prospectus or, prior to the termination of the underwriting syndicate
contemplated in this Agreement, the Registration Statement or for additional
information with respect thereto, (iii) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of the
12
Prospectus, (iv) the suspension of the qualification of the Shares for offering
or sale in any jurisdiction or (v) the initiation, threatening or contemplation
of any proceedings for any of such purposes and, if the Commission or any other
governmental agency or authority should issue any such order, the Company will
make every reasonable effort to obtain the lifting or removal of such order as
soon as possible. The Company will promptly provide the Lead Manager with copies
of all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Securities Act or, prior to the termination of the underwriting syndicate
contemplated in this Agreement, relating to any documents incorporated by
reference into the Registration Statement or the Prospectus. The Company will
advise the Lead Manager promptly of any proposal to amend or supplement the
Prospectus or, prior to the termination of the underwriting syndicate
contemplated in this Agreement, the Registration Statement, including by filing
any documents that would be incorporated therein by reference, will afford the
Lead Manager a reasonable opportunity to comment on any such proposed amendment
or supplement and will not file any such amendment or supplement to which the
Lead Manager shall object in writing.
(d) The Company will use its best efforts to advise the Lead
Manager promptly and, if requested by the Lead Manager, will confirm such advice
in writing when, prior to the termination of the underwriting syndicate
contemplated in the Agreement, any post-effective amendment to the Registration
Statement becomes effective under the Securities Act.
(e) The Company will furnish to the Lead Manager for a period of
five years from the date of this Agreement (i) copies of any reports or other
communications which the Company shall send to its stockholders or shall from
time to time publish or publicly disseminate, (ii) copies of all annual,
quarterly and current reports filed with the Commission on Forms 10-K, 10-Q and
8-K or such other similar form as may be designated by the Commission, (iii) if
different than the items contained in clauses (i) and (ii) above, copies of
documents or reports filed with any national securities exchange on which any
class of securities of the Company is listed (other than correspondence or other
similar communications) and (iv) such other information as the Lead Manager may
reasonably request regarding the Company, the Subsidiaries or the Trust, in each
case as soon as such communications, documents or information become available.
(f) The Company will advise the Lead Manager promptly of the
happening of any event known to the Company or the Manager within the time
during which a Prospectus relating to the Shares is required to be delivered
under the Securities Act which would require the making of any change in the
Prospectus then being used, or in the information incorporated by reference
therein, so that the Prospectus would not include an untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend or supplement the Prospectus to comply with any law. If within the time
during which a Prospectus relating to the Shares is required to be delivered
under the Securities Act any event shall occur or condition shall exist which,
in the reasonable opinion of the Company, the Lead Manager or their respective
counsel, would require the making of any change in the Prospectus then being
used, or in the information incorporated by reference therein, so that the
Prospectus would not include an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with any law, the Company will promptly prepare and
furnish to the Lead Manager copies of the proposed amendment or supplement
before filing any such amendment or supplement with the Commission and
thereafter promptly furnish, at the Company's own expense, to the Lead Manager
and to dealers copies in such quantities and at such locations as the Lead
Manager may from time to time reasonably request of an appropriate amendment to
the Registration Statement or supplement to the
13
Prospectus so that the Prospectus as so amended or supplemented will not, in the
circumstances when it is so delivered, be misleading or so that the Prospectus
will comply with the law.
(g) The Company will make generally available to its stockholders
as soon as practicable, and in the manner contemplated by Rule 158 of the
Securities Act but in any event not later than 15 months after the end of the
Company's current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period beginning after the date upon which the
Prospectus Supplement is filed pursuant to Rule 424(b) under the Securities Act
that shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
(h) The Company will furnish to the Lead Manager a copy of the
signed Registration Statement, as initially filed with the Commission, and of
all amendments thereto (including all exhibits thereto and documents
incorporated by reference therein) and such number of conformed copies of the
foregoing (other than exhibits) as the Lead Manager may reasonably request.
(i) The Company will apply the net proceeds from the sale of the
Shares in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(j) The Company will use its best efforts to furnish to the Lead
Manager, not less than two Business Days before a filing with the Commission
during the period referred to in paragraph (f) above, a copy of any document
proposed to be filed pursuant to Section 13, 14 or 15(d) of the Exchange Act and
during such period to file all such documents in a manner and within the time
periods required by the Exchange Act.
(k) The Company will furnish to the Lead Manager, as early as
practicable prior to the time of purchase and the additional time of purchase,
as the case may be, but not later than two Business Days prior thereto, a copy
of the latest available unaudited interim consolidated financial statements of
the Company, the Subsidiaries and the Trust which have been read by the
Company's independent certified public accountants, as stated in their letter to
be furnished pursuant to Section 6(b) hereof.
(l) The Company, the Subsidiaries and the Trust will maintain and
keep accurate books and records reflecting their assets and maintain internal
accounting controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii) transactions are
recorded as necessary to permit the preparation of the Company's consolidated
financial statements and to maintain accountability for the assets of the
Company, the Subsidiaries and the Trust, (iii) access to the assets of the
Company, the Subsidiaries and the Trust is permitted only in accordance with
management's authorization and (iv) the recorded accounts of the assets of the
Company, the Subsidiaries and the Trust are compared with existing assets at
reasonable intervals.
(m) Neither the Company, the Subsidiaries, the Trust nor the
Manager will sell, offer, contract to sell, pledge, grant any option to purchase
or otherwise dispose of, directly or indirectly, or file with the Commission a
registration statement, or amend any effective registration statement under the
Securities Act relating to, any shares of capital stock, or any securities
convertible into, or exercisable, exchangeable or redeemable for shares of
capital stock, or publicly disclose the intention to make any such offer, sale,
contract to sell, pledge, disposition, filing or amendment, for a period of 60
days after the date hereof, without the prior written consent of the Lead
Manager, which consent will not be unreasonably withheld. The foregoing sentence
shall not apply to (i) the Shares to be sold hereunder, (ii) shares of Common
Stock issued in connection with the DRSPP, (iii) the grant of awards pursuant to
the Plan, (iv) the filing of any amendment or prospectus supplement to the
Registration Statement and/or any new registration statement on Form S-3 by the
Company in contemplation of any "at the market" offering of shares of Common
Stock pursuant to Rule 415(a)(4) promulgated under the Securities Act (a
14
"Rule 415(a)(4) Offering") or any off-market offering; provided, however, that
any such filing shall be in compliance with the conditions set forth in this
Section 4 and filed pursuant to arrangements that we may enter into with Cantor
Xxxxxxxxxx & Co., (v) the issuance and sale of shares of Common Stock by the
Company in any Rule 415(a)(4) Offering or any off-market offering pursuant to
arrangements that we may enter into with Cantor Xxxxxxxxxx & Co. that is in
compliance with all applicable securities laws and the rules and regulations of
the NYSE following the expiration of a period of 15 days after the date hereof
to the 30th day after the date hereof; provided, that any such issuance and sale
of shares of Common Stock in such Rule 415(a)(4) Offering or any off-market
offering shall be at a purchase price per share equal to or greater than the
public sale price per share of Common Stock set forth on the cover page of the
Prospectus, or (vi) the issuance and sale of shares of Common Stock by the
Company in any Rule 415(a)(4) Offering or any off-market offering pursuant to
arrangements that we may enter into with Cantor Xxxxxxxxxx & Co. that is in
compliance with all applicable securities laws and the rules and regulations of
the NYSE from and after the 30th day after the date hereof.
(n) The Company will use its best efforts to cause each director
and those executive officers named in the Prospectus Supplement of the Company
to furnish to the Lead Manager, prior to the time of purchase, a letter or
letters, substantially in the form of Exhibit A attached hereto, pursuant to
which each such person shall agree not to sell, offer, contract to sell, pledge,
grant any option to purchase or otherwise dispose of, directly or indirectly,
any shares of capital stock, or any securities convertible into, or exercisable,
exchangeable or redeemable for shares of capital stock of the Company for a
period of 45 days after the date hereof, without the prior written consent of
the Lead Manager. The foregoing sentence shall not apply to any shares of Common
Stock sold by any such officer or director to the Company, at the current market
value, as reported on the NYSE, at the time of any such sale pursuant to a stock
repurchase plan instituted by the Company and approved by the Company's Board of
Directors, which is in compliance with all applicable securities laws and the
rules and regulations of the NYSE.
(o) The Company will use its best efforts to cause the Shares to
be listed on the NYSE and to maintain such listing and to file with the NYSE all
documents and notices required by the NYSE of companies that have securities
that are listed on the NYSE.
(p) The Company will engage and maintain, at its expense, a
registrar and transfer agent for the Shares.
(q) The Company will pay all expenses, fees and taxes (other than
any transfer taxes and fees and disbursements of counsel for the Underwriters,
except as set forth under Section 5 hereof or (iii) or (iv) below) in connection
with (i) the preparation and filing of the Registration Statement, the
Prospectus, and any amendments or supplements thereto, and the printing and
furnishing of copies of each thereof to the Underwriters and to dealers
(including costs of mailing and shipment), (ii) the issuance, sale and delivery
of the Shares by the Company, (iii) as relating to the offering by the Company
of the Shares, the word processing and/or printing of this Agreement, any
agreement among the Underwriters, any dealer agreements, any statements of
information, any custody agreement and any powers of attorney, as applicable,
and the reproduction and/or printing and furnishing of copies of each thereof to
the Underwriters and to dealers (including costs of mailing and shipment), (iv)
the qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as aforesaid
(including the legal fees and filing fees and other disbursements of counsel to
the Underwriters) and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers, (v) any
listing of the Shares on the NYSE and any registration thereof under the
Exchange Act, (vi) the filing, if any, for review of the public offering of the
Shares by the NASD and (vii) the performance of the Company's other obligations
hereunder.
15
(r) Prior to termination of the underwriting syndicate
contemplated by this Agreement, neither the Company, the Subsidiaries, the Trust
nor the Manager will (i) take, directly or indirectly, any action designed to
stabilize or manipulate the price of any security of the Company, or which may
cause or result in, or which might in the future reasonably be expected to cause
or result in, the stabilization or manipulation of the price of any security of
the Company, to facilitate the sale or resale of any of the Shares, (ii) sell,
bid for, purchase or pay any Person (other than as contemplated by the
provisions hereof) any compensation for soliciting purchases of the Shares, or
(iii) pay or agree to pay to any Person any compensation for soliciting any
order to purchase any other securities of the Company.
(s) The Company will comply with all requirements imposed upon it
by the Securities Act and the Exchange Act as from time to time in force, so far
as necessary to permit the continuance of sales of, or dealings in, the Shares
as contemplated by the provisions hereof and the Prospectus.
(t) The Company will not invest in futures contracts, options on
futures contracts or options on commodities unless the Company is exempt from
the registration requirements of the Commodity Exchange Act, as amended, or
otherwise complies with the Commodity Exchange Act, as amended, or with an
applicable no-action letter to or on behalf of the Company from the Commodity
Futures Trading Commission. In addition, the Company will not engage in any
activities which might be subject to the Commodity Exchange Act, as amended,
unless such activities are exempt from that Act or otherwise comply with that
Act or with an applicable no-action letter to or on behalf of the Company from
the Commodity Futures Trading Commission.
(u) The Company will comply with all of the provisions of any
undertakings in the Registration Statement.
(v) The Company and the Subsidiaries have been organized and
operated in conformity with the requirements for qualification and taxation of
the Company as a REIT under the Code, and the Company's proposed methods of
operation will enable the Company to continue to meet the requirements for
qualification and taxation as a REIT under the Code for subsequent taxable
years.
(w) The Company will not be or become, at any time prior to the
expiration of three years after the date of this Agreement, an "investment
company," as such term is defined in the Investment Company Act.
(x) The Company has retained PWC (for all periods after January 1,
1999) as its qualified accountants and qualified tax experts (i) to test
procedures and conduct annual compliance reviews designed to determine
compliance with the REIT provisions of the Code and the Company's exempt status
under the Investment Company Act and (ii) to otherwise assist the Company in
monitoring appropriate accounting systems and procedures designed to determine
compliance with the REIT provisions of the Code and the Company's exempt status
under the Investment Company Act.
(y) Prior to the time of purchase (and, if applicable, the
additional time of purchase), neither the Company, the Subsidiaries, the Trust
nor the Manager will issue any press releases or other communications directly
or indirectly and will hold no press conferences with respect to the Company,
the Subsidiaries or the Trust, the financial condition, results of operations,
business, properties, assets or liabilities of the Company, the Subsidiaries or
the Trust, or the offering of the Shares, without the Lead Manager's prior
written consent, which shall not be unreasonably withheld.
(z) The Company, the Subsidiaries and the Trust will maintain such
controls and other procedures, including, without limitation, those required by
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act, and the applicable regulations
thereunder that are designed to ensure that information required to be
16
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission's rules and forms, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company's management,
including its Chief Executive Officer and Principal Financial Officer, or
persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure and to ensure that material information relating
to the Company, the Subsidiaries and the Trust is made known to them by others
within those entities, particularly during the period in which such periodic
reports are being prepared.
(aa) The Company, the Subsidiaries and the Trust will comply with
all effective applicable provisions of the Xxxxxxxx-Xxxxx Act.
5. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the default by one or more of the Underwriters in its or their respective
obligations hereunder, the Company shall, in addition to paying the amounts
described in Section 4(q) hereof, reimburse the Underwriters for all of their
out-of-pocket expenses, including the fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company and the Manager on the date hereof and
at the time of purchase (and the several obligations of the Underwriters at the
additional time of purchase are subject to the accuracy of the representations
and warranties on the part of the Company and the Manager on the date hereof, at
the time of purchase (unless previously waived) and at the additional time of
purchase, as the case may be), the performance by the Company of its obligations
hereunder and to the following additional conditions precedent:
(a) The Company shall cause to be furnished to the Lead Manager at the
time of purchase and at the additional time of purchase, as the case may be, an
opinion of Dechert LLP, counsel for the Company, addressed to the Lead Manager,
and dated the time of purchase or the additional time of purchase, as the case
may be, with reproduced copies for each of the other Underwriters and in form
satisfactory to Xxxxxxxx Chance US LLP, counsel for the Underwriters,
substantially in the form of Exhibit B attached hereto.
(b) The Lead Manager shall have received from PWC, a letter dated, the
date of this Agreement and the time of purchase and the additional time of
purchase, as the case may be, and addressed to the Lead Manager (with reproduced
copies for each of the Underwriters) in the form heretofore approved by the Lead
Manager relating to the financial statements, including any pro forma financial
statements of the Company and the Subsidiaries and such other matters
customarily covered by comfort letters issued in connection with a registered
public offering.
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (i) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Lead Manager deems such explanation unnecessary, and (ii) such changes,
decreases or increases do not, in the sole judgment of the Lead Manager, make it
impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement and the Prospectus.
(c) The Lead Manager shall have received at the time of purchase and at
the additional time of purchase, as the case may be, the favorable opinion of
Xxxxxxxx Chance US LLP, counsel for the Underwriters, dated the time of purchase
or the additional time of purchase, as the case may be, in a form
17
satisfactory to the Lead Manager. In rendering the foregoing opinion or
opinions, such counsel may rely, as to matters involving the laws of the State
of Maryland, upon the opinion or opinions addressed to the Underwriters of
Dechert LLP, counsel for the Company.
(d) No amendment or supplement to the Registration Statement or
Prospectus, including documents deemed to be incorporated by reference therein,
shall be filed to which the Underwriters object in writing.
(e) Prior to the time of purchase or the additional time of purchase,
as the case may be, (i) no stop order with respect to the effectiveness of the
Registration Statement shall have been issued under the Securities Act or
proceedings initiated under Section 8(d) or 8(e) of the Securities Act; (ii) the
Registration Statement and all amendments thereto, or modifications thereof, if
any, shall not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and (iii) the Prospectus and all amendments or
supplements thereto, or modifications thereof, if any, shall not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading.
(f) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the time of purchase or the additional time
of purchase, as the case may be, shall have been made within the applicable time
period prescribed for such filing by Rule 424.
(g) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, (i) no material
and unfavorable change, financial or otherwise (other than as referred to in the
Registration Statement and Prospectus), in the business, condition, net worth or
prospects of the Company, the Subsidiaries or the Trust shall occur or become
known and (ii) no transaction which is material and unfavorable to the Company,
the Subsidiaries, the Trust or the Manager shall have been entered into by the
Company, any of the Subsidiaries or the Trust.
(h) The Company will, at the time of purchase or additional time of
purchase, as the case may be, deliver to the Lead Manager a certificate of two
of its executive officers (one of which shall be Xxxxxxx Xxxxxxxxx) to the
effect that the representations and warranties of the Company and the Manager as
set forth in this Agreement are true and correct as of each such date, that the
Company shall perform such of its obligations under this Agreement as are to be
performed at or before the time of purchase or the additional time of purchase,
as the case may be, and that the conditions set forth in paragraphs (e) and (g)
of this Section 6 have been met.
(i) The Company shall have furnished to the Lead Manager such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus as of the time of purchase and
the additional time of purchase, as the case may be, as the Lead Manager may
reasonably request.
(j) The Shares shall have been approved for listing on the NYSE,
subject only to notice of issuance at or prior to the time of purchase or the
additional time of purchase, as the case may be.
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) The Lead Manager shall have received lock-up agreements from the
Company and its executive officers and directors and the Manager, substantially
in the form of Exhibit A attached hereto, and such letter agreements shall be in
full force and effect.
18
(m) Between the time of execution of this Agreement and the time of
purchase or additional time of purchase, as the case may be, there shall not
have occurred any downgrading, nor shall any notice or announcement have been
given or made of (i) any intended or potential downgrading or (ii) any review or
possible change that does not indicate an improvement, in the rating accorded
any securities of or guaranteed by the Company by any "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
under the Securities Act.
7. Effective Date of Agreement; Termination. This Agreement shall
become effective when the parties hereto have executed and delivered this
Agreement. The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of the Lead Manager or any
group of Underwriters (which may include the Lead Manager) which has agreed to
purchase in the aggregate at least 50% of the Firm Shares at any time prior to
the time of purchase or, if applicable, the additional time of purchase, (i) if
any of the conditions specified in Section 6 shall not have been fulfilled when
and as required by this Agreement to be fulfilled, (ii) if any material adverse
and unfavorable change occurs (financial or otherwise), or any development
involving a material adverse and unfavorable change occurs (financial or
otherwise) (in each case, other than as disclosed in, or incorporated by
reference into, the Registration Statement and Prospectus (exclusive of any
supplement thereto)), in the operations, business, net worth, condition or
prospects of the Company, the Subsidiaries or the Trust, or a material change in
management of the Company, the Subsidiaries, the Trust or the Manager occurs,
whether or not arising in the ordinary course of business, which would, in the
Lead Manager's sole judgment or in the judgment of such group of Underwriters,
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and the Prospectus, (iii) if the United States shall have
declared a national emergency or war or there has occurred an outbreak or
escalation of hostilities or acts of terrorism involving the United States or
there has occurred any other national or international calamity or crisis or
change in financial, economic, political or other conditions in the United
States or elsewhere, the effect of which, in the Lead Manager's sole judgment or
in the judgment of such group of Underwriters, make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares on
the terms and in the manner contemplated in the Registration Statement and the
Prospectus or enforce contracts for the sale of the Shares, (iv) if trading in
any securities of the Company has been suspended by the Commission or by the
NYSE, or if trading generally on the NYSE, the American Stock Exchange or the
NASDAQ has been suspended (including an automatic halt in trading pursuant to
market-decline triggers other than those in which solely program trading is
temporarily halted), or limitations on or minimum prices for trading (other than
limitations on hours or numbers of days of trading) shall have been fixed, or
maximum ranges for prices for securities have been required, by such exchange or
the NASD or the NASDAQ or by order of the Commission or any other governmental
authority, (v) if a banking moratorium shall have been declared by New York or
United States authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States,
(vi) if there shall have occurred any downgrading, or any notice or announcement
shall have been given or made of (a) any intended or potential downgrading or
(b) any watch, review or possible change that does not indicate an affirmation
or improvement, in the rating accorded any securities of or guaranteed by the
Company or any of the Subsidiaries by any "nationally recognized statistical
rating organization," as that term is defined in Rule 436(g)(2) under the
Securities Act, (vii) if any federal or state statute, regulation, rule or order
of any court or other governmental authority has been enacted, published,
decreed or otherwise promulgated which, in the Lead Manager's reasonable opinion
or in the reasonable opinion of such group of Underwriters, materially adversely
affects or will materially adversely affect the business or operations of the
Company or any of the Subsidiaries, or (viii) if any action has been taken by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which, in the Lead Manager's reasonable opinion or in the
reasonable opinion of such group of Underwriters, has a material adverse effect
on the securities markets in the United States.
19
If the Lead Manager or any group of Underwriters elects to terminate
this Agreement as provided in this Section 7, the Company and each other
Underwriter shall be notified promptly by telephone, which shall be promptly
confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(q), 5 and 9 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments. Subject to Sections 6 and 7,
if any Underwriter shall default in its obligation under this Agreement to take
up and pay for the Shares to be purchased by it under this Agreement (otherwise
than for reasons sufficient to justify the termination of this Agreement under
the provisions of Section 7 hereof), the Lead Manager shall have the right,
within 36 hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 36 hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased at the
time of purchase or the additional time of purchase, as the case may be, each
non-defaulting Underwriter shall take up and pay for (in addition to the number
of Shares which it is otherwise obligated to purchase on such date pursuant to
this Agreement) the number of Shares agreed to be purchased by all such
defaulting Underwriters in such amount or amounts as the Lead Manager may
designate with the consent of each Underwriter so designated or, in the event no
such designation is made, such Shares shall be taken up and paid for by all
non-defaulting Underwriters pro rata in proportion to the aggregate number of
Firm Shares set opposite the names of such non-defaulting Underwriters in
Schedule A; and (ii) if the total number of Defaulted Shares exceeds 10% of such
total number of Shares to be purchased at the time of purchase or the additional
time of purchase, as the case may be, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five Business
Day period from the date of default for the purchase of such Defaulted Shares,
the Lead Manager may terminate this Agreement by notice to the Company, without
liability of any party to any other party except that the provisions of Sections
4(q), 5 and 9 shall at all times be effective and shall survive such
termination. Nothing in this paragraph, and no action taken hereunder, shall
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that they
will not sell any Shares hereunder unless all of the Shares are purchased by the
Underwriters (or by substituted Underwriters selected by the Lead Manager with
the approval of the Company or selected by the Company with the Lead Manager's
approval).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter or Underwriters in accordance with the foregoing provisions, the
Company or the Lead Manager shall have the right to postpone the time of
purchase or the additional time of purchase, as the case may be, for a period
not exceeding five Business Days from the date of substitution in order that any
necessary changes in the Registration Statement and Prospectus and other
documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
20
9. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and each Person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing Persons from and against any loss, damage, expense, liability or claim
(including, but not limited to, the reasonable cost of investigation) which,
jointly or severally, any such Underwriter or any such Person may incur under
the Securities Act, the Exchange Act, federal or state statutory law or
regulation, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include the Prospectus and the
Prospectus as amended or supplemented by the Company), or in any documents filed
under the Exchange Act and deemed to be incorporated by reference into the
Prospectus, or in any application or other document executed by or on behalf of
the Company or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under the
securities or blue sky laws thereof or filed with the Commission, (ii) upon any
omission or alleged omission to state in any such document a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading or
(iii) any act or failure to act or any alleged act or failure to act by the
Underwriters in connection with, or relating in any manner to, the Shares or the
offering contemplated hereby, and which is included as part of or referred to in
any loss, damage, expense, liability, claim or action arising out of or based
upon matters covered by clause (i) or (ii) above (provided that the Company
shall not be liable under this clause (iii) to the extent it is finally
judicially determined by a court of competent jurisdiction that such loss,
damage, expense, liability, claim or action resulted directly from any such acts
or failures to act undertaken or omitted to be taken by the Underwriters through
their gross negligence or willful misconduct), except insofar as any such loss,
damage, expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in and in
conformity with information furnished in writing by or on behalf of any
Underwriter through the Lead Manager to the Company expressly for use with
reference to such Underwriter in the Prospectus or arises out of or is based
upon any omission or alleged omission to state a material fact in connection
with such information required to be stated in the Prospectus or necessary to
make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding") is brought
against an Underwriter or any such Person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such Underwriter
or such Person shall promptly notify the Company in writing of the institution
of such Proceeding and the Company shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission
to so notify the Company shall not relieve the Company from any liability which
the Company may have to any Underwriter or any such Person or otherwise. Such
Underwriter or such controlling Person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or of such Person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Company (in which case the Company shall not have
the right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such
21
fees and expenses shall be borne by the Company and paid as incurred (it being
understood, however, that the Company shall not be liable for the expenses of
more than one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). The
Company shall not be liable for any settlement of any such Proceeding effected
without its written consent (which shall not be unreasonably withheld) but if
settled with the written consent of the Company, the Company agrees to indemnify
and hold harmless any Underwriter and any such Person from and against any loss
or liability by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 Business Days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, any Person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
director of the Company and each officer of the Company who signed the
Registration Statement from and against any loss, damage, expense, liability or
claim (including, but not limited to, the reasonable cost of investigation)
which, jointly or severally, the Company or any such Person may incur under the
Securities Act, the Exchange Act, federal or state statutory law or regulation,
the common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any (i) untrue statement or alleged untrue
statement of a material fact contained in, and in conformity with information
furnished in writing by or on behalf of such Underwriter through the Lead
Manager to the Company expressly for use with reference to such Underwriter in,
the Registration Statement (or in the Registration Statement as amended by or on
behalf of any post-effective amendment thereof by the Company) or in a
Prospectus, or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission or (ii) omission or alleged omission to state in any such
document a material fact in connection with such information required to be
stated therein or necessary to make the statement therein, in the light of the
circumstances under which they were made, not misleading.
If any Proceeding is brought against the Company or any such Person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such Person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Underwriter shall not relieve the such Underwriter from any
liability which such Underwriter may have to the Company or any such Person or
otherwise. The Company or such Person shall have the right to employ its own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of the Company or such Person unless the employment
22
of such counsel shall have been authorized in writing by such Underwriter in
connection with the defense of such Proceeding or such Underwriter shall not
have employed counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to or in
conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the written
consent of such Underwriter, such Underwriter agrees to indemnify and hold
harmless the Company and any such Person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then the indemnifying party agrees
that it shall be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more than 60 Business
Days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then in order to provide just and equitable contribution in
such circumstance, each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses, liabilities or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other hand
from the offering of the Shares or (ii) if, but only if, the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, damages, expenses, liabilities or claims, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Underwriters on the other shall be deemed to
be in the same respective proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, bear to the aggregate public offering price of the
shares. The relative fault of the Company on the one hand and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
damages, expenses, liabilities and claims referred to in this subsection shall
be deemed to include any legal or other
23
fees or expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any claim or Proceeding.
(d) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be liable or responsible
for, or be required to contribute, any amount pursuant to this Section 9 in
excess of the amount of the underwriting discounts and commissions applicable to
the Shares purchased by such Underwriter. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this Section
9 and the covenants, warranties and representations of the Company contained in
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, its directors and
officers or any Person (including each partner, officer or director of such
Person) who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors or officers or any Person who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and shall survive any termination of this Agreement or the issuance and
delivery of the Shares. The Company and each Underwriter agree promptly to
notify each other upon the commencement of any Proceeding against it and, in the
case of the Company, against any of the Company's officers or directors in
connection with the issuance and sale of the Shares, or in connection with the
Registration Statement or Prospectus.
10. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by facsimile and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
X.X. Xxxxxxx & Sons, Inc., 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX,
00000, Attention: A. Xxxxxxx Xxxxx, III (with a copy to Xxxxxxxx Chance US LLP,
Attention: Xxx X. Xxxxxxxxx, facsimile number (000) 000-0000), and if to the
Company, shall be sufficient in all respects if delivered or sent to the Company
at the offices of the Company at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xx, Xxx
Xxxxxx 00000, Attention: Xxxxx Xxxxxxxxx, President (with a copy to Dechert LLP,
Attention: Xxxxxxx Xxxxxxx, facsimile number (000) 000-0000).
11. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement (a "Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction, service and venue
in any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against the Lead Manager or any
indemnified party. The Lead Manager and the Company (on its behalf and, to the
extent permitted by applicable law, on behalf of its stockholders and
affiliates) waive all right to trial by jury in any action, proceeding or
24
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company agrees that a final judgment
in any such action, proceeding or counterclaim brought in any such court shall
be conclusive and binding upon the Company and may be enforced in any other
courts in the jurisdiction of which the Company is or may be subject, by suit
upon such judgment.
13. Parties at Interest. This Agreement has been and is made solely for
the benefit of the Underwriters, the Company and to the extent provided in
Section 9 hereof the controlling Persons, directors and officers referred to in
such Section, and their respective successors, assigns, heirs, pursuant
representatives and executors and administrators. No other Person, partnership,
association or corporation (including a purchaser, as such purchaser, from any
of the Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
25
If the foregoing correctly sets forth the understanding among the
Company, the Manager and the Underwriters, please so indicate in the space
provided below for the purpose, whereupon this letter and your acceptance shall
constitute a binding agreement among the Company, the Manager and the
Underwriters, severally.
Very truly yours,
XXXXXXXXX MORTGAGE, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President and Chief Operating Officer
Accepted and agreed to as of the date first
above written, on behalf of itself and the
other several Underwriters named in Schedule A
X.X. XXXXXXX & SONS, INC.
By: /s/ A. Xxxxxxx Xxxxx, III
--------------------------------
Name: A. Xxxxxxx Xxxxx, III
Title: Managing Director
Accepted and agreed to as of the date first
above written, only as to the
representations and warranties of the
Manager as set forth in Section 3 hereof and
the applicable covenants in Section 4
hereof.
XXXXXXXXX MORTGAGE ADVISORY CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chief Executive Officer
SCHEDULE A
Number of
Underwriter Firm Shares
----------- -----------
X.X. Xxxxxxx & Sons, Inc. 1,400,000
Xxxxx Xxxxxxx & Co. 700,000
Wachovia Capital Markets, LLC 700,000
Xxxxxxxxx & Company, Inc. 525,000
Flagstone Securities LLC 175,000
Total: 3,500,000
Sch A-1
SCHEDULE B
LIST OF JURISDICTIONS IN WHICH XXXXXXXXX MORTGAGE, INC.
IS QUALIFIED AS A FOREIGN CORPORATION
New Mexico
Sch B-1
SCHEDULE C
LIST OF JURISDICTIONS IN WHICH EACH SUBSIDIARY IS QUALIFIED
AS A FOREIGN CORPORATION
Subsidiaries of Xxxxxxxxx Mortgage, Inc.:
Xxxxxxxxx Mortgage Acceptance Corporation - None
Xxxxxxxxx Mortgage Funding Corporation - None
Xxxxxxxxx Mortgage Home Loans, Inc. -
Alaska Montana
Arizona Nebraska
Arkansas New Hampshire
California New Jersey
Colorado New Mexico
Connecticut New York
Florida North Carolina
Georgia North Dakota
Hawaii Oklahoma
Idaho Oregon
Illinois Pennsylvania
Indiana Rhode Island
Iowa South Carolina
Kansas South Dakota
Kentucky Tennessee
Louisiana Texas
Maine Utah
Maryland Vermont
Massachusetts Virginia
Michigan Washington, D.C.
Minnesota West Virginia
Mississippi Wisconsin
Missouri Wyoming
(See Schedule G for jurisdictions in which Xxxxxxxxx Mortgage Home Loans, Inc.
is authorized or licensed to originate loans.)
Subsidiaries of Xxxxxxxxx Mortgage Home Loans, Inc.:
Xxxxxxxxx Mortgage Acceptance Corporation II - None
Xxxxxxxxx Mortgage Funding Corporation II - None
Sch C-1
SCHEDULE D
LIST OF JURISDICTIONS IN WHICH XXXXXXXXX MORTGAGE ADVISORY CORPORATION
(THE MANAGER) IS QUALIFIED AS A FOREIGN CORPORATION
New Mexico
Sch D-1
SCHEDULE E
None.
Sch E-1
SCHEDULE F
REQUIREMENTS TO REGISTER AS BROKER/DEALER;
RELATIONSHIPS WITH MEMBER FIRMS OF NASD
Xxxxxxxxx Securities Corporation, an affiliate of Xxxxxxxxx Mortgage, Inc., is
registered as a broker/dealer and is a member of the NASD.
Sch F-1
SCHEDULE G
JURISDICTIONS IN WHICH XXXXXXXXX MORTGAGE HOME LOANS, INC. ("TMHL")
IS AUTHORIZED OR LICENSED TO ORIGINATE LOANS
STATES WHERE TMHL HAS OBTAINED LICENSES TO LEND:
Alabama Nebraska
Arizona New Hampshire
California New Mexico
Connecticut New York
Delaware North Carolina
Florida North Dakota
Georgia Oregon
Idaho Rhode Island
Illinois South Dakota
Iowa Tennessee
Kansas Texas
Maine Utah
Maryland Vermont
Massachusetts Virginia
Michigan Washington, D.C.
Minnesota West Virginia
Wisconsin
STATES WHERE LENDING LICENSE IS NOT REQUIRED:
Alaska* Montana
Colorado Wyoming
Indiana
STATES WITH A LENDING LICENSE EXEMPTION:
Arkansas Nevada
Hawaii Ohio
Kentucky Oklahoma
Louisiana South Carolina
Mississippi Washington**
Missouri
STATES IN WHICH LENDING LICENSE APPLICATIONS ARE IN PROCESS:
New Jersey
Pennsylvania
* Alaska does not regulate mortgage lenders, however, if a company
intends to conduct business in the state it must obtain a business
license.
** TMHL is exempt from the state of Washington mortgage licensing
requirements, however, if a company intends to conduct business in the
state it must obtain a business license.
Sch G-1
EXHIBIT A
February ____, 2004
X.X. XXXXXXX & SONS, INC.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Ladies and Gentlemen:
In consideration of the agreement of X.X. Xxxxxxx & Sons, Inc. ("X.X.
Xxxxxxx"), as representative of the underwriters, to underwrite a proposed
public offering (the "Offering") of shares (the "Shares") of common stock, par
value $0.01 per share (the "Common Stock"), of Xxxxxxxxx Mortgage, Inc., a
Maryland corporation (the "Company"), as contemplated by a registration
statement on Form S-3 (File No. 333-111784), including a prospectus (the
"Registration Statement"), with respect to the Shares, the undersigned hereby
agrees that the undersigned will not, for a period of 45 days after the
commencement of the public offering of such Shares, without the prior written
consent of X.X. Xxxxxxx (which consent will not be unreasonably withheld),
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, except that no consent shall be required for sales of
any shares of Common Stock sold by the undersigned to the Company, at the
current market value, as reported on the NYSE, at the time of any such sale,
pursuant to a stock repurchase plan instituted by the Company and approved by
the Company's Board of Directors, which is in compliance with all applicable
securities laws and the rules and regulations of the NYSE.
Very truly yours,
By:______________________________________________
Name:
Title:
Ex A-1
EXHIBIT B
OPINION OF DECHERT LLP
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland, with
the corporate power and corporate authority to own, lease and operate its assets
and properties and conduct its business as described in the Prospectus and the
Prospectus Supplement.
(ii) Each of the Subsidiaries and the Manager has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the corporate power and corporate authority
to own, lease and operate its assets and properties and conduct its business as
described in the Prospectus and the Prospectus Supplement.
(iii) Xxxxxxxxx Mortgage Funding Trust II (the "Trust") has been
duly formed and is validly existing as a statutory trust under the Delaware
Statutory Trust Act in good standing under the laws of Delaware, with the
authority to perform all functions (i) which statutory trusts are authorized to
perform and (ii) which are described in the Prospectus and the Prospectus
Supplement.
(iv) The Company, the Subsidiaries, and the Manager are duly
qualified to do business as a foreign corporation in each jurisdiction listed on
Schedule A and Xxxxxxxxx Mortgage Home Loans Inc. is authorized or licensed to
originate loans in each jurisdiction listed on Schedule A.
(v) The Underwriting Agreement has been duly authorized by all
necessary corporate action of the Company and the Manager. The Underwriting
Agreement has been duly authorized, executed and delivered by the Company and
the Manager.
(vi) The Shares have been duly authorized by the Company and, when
issued and delivered to and paid for by the Underwriter, will be duly and
validly issued and will be fully paid and non-assessable. The Shares when issued
and outstanding will conform in all material respects with the description
thereof contained in the Prospectus. The certificates for the Shares are in due
and proper form and comply with all applicable requirements of the General
Corporation Law of the State of Maryland (the "MGCL"), with any applicable
requirements of the Company's Articles of Incorporation and bylaws and with the
requirements of the New York Stock Exchange (the "NYSE"). No holder of the
Shares is or will be subject to personal liability, under the MGCL or the
Company's Articles of Incorporation or bylaws, by reason of being a holder.
(vii) The Company has an authorized capitalization as set forth in
the Prospectus Supplement. All of the issued and outstanding shares of capital
stock of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable and conform, in all material respects, to the
description thereof contained in the Prospectus.
(viii) The issuance of the Shares is not subject to preemptive or
other similar rights of any shareholder of the Company arising by operation of
the MGCL or under the Company's Articles of Incorporation or bylaws or, to the
best of our knowledge, any contractual preemptive rights, resale rights, rights
of first refusal or similar rights. Except as disclosed in the Prospectus or the
Prospectus Supplement, there is no outstanding option, warrant or other right
calling for the issuance of, and, to the
Ex B-1
best of our knowledge, no commitment, plan or arrangement to issue, any shares
of capital stock of the Company or any security convertible into, exercisable,
exchangeable or redeemable for shares of capital stock of the Company. No holder
of any security of the Company has the right to require any security owned by
such holder to be included for registration in the Registration Statement.
(ix) The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the Subsidiaries listed
on Schedule A to this opinion.
(x) Each part of the Registration Statement, when such part became
effective, and the Prospectus and any amendment or supplement thereto (except as
to the financial statements and schedules and other financial and statistical
data contained or incorporated by reference therein, as to which we do not
express an opinion) on the date of filing with the Commission and at the Time of
Purchase complied as to form in all material respects with the requirements of
the 1933 Act and the 1934 Act, including, without limitation, Item 503 of
Regulation S-K.
(xi) The Registration Statement has been declared effective under
the 1933 Act, the Prospectus and the Prospectus Supplement have been filed as
required by the Underwriting Agreement and, to the best of our knowledge, no
stop order has been issued or proceedings with respect thereto are pending,
contemplated or threatened under the 1933 Act, and any required filings of the
Prospectus and the Prospectus Supplement pursuant to Rule 424 under the 1933 Act
have been made in the manner and within the time period required by such Rule
424.
(xii) 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 authorization, issuance,
transfer, sale and delivery of the Shares and the consummation by the Company of
the transaction as contemplated by the Underwriting Agreement or with the taking
by the Company of any action contemplated hereby other than registration of the
Shares under the 1933 Act and except as may be required under state securities
laws or by the bylaws and rules of the NASD in connection with the purchase and
distribution by the Underwriter of the Shares.
(xiii) The execution, delivery and performance of the Underwriting
Agreement by the Company and the Manager and the consummation by the Company of
the transactions contemplated thereby do not and will not conflict with, or
result in any breach of, or 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, nor cause the time for performance of any obligation
to be accelerated under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company pursuant to the
terms of) (i) any provisions of the charter, bylaws or other organizational
documents, as the case may be, of the Company, the Subsidiaries, the Trust or
the Manager, (ii) any provision of any contract, document or other agreement or
instrument listed on Schedule B to this opinion, (iii) the MGCL or the Delaware
General Corporation Law (the "DGCL") or any federal law, regulation or rule or
any decree, judgment or order applicable to the Company, the Subsidiaries or the
Trust, or (iv) any existing obligation of the Company under any court or
administrative order, judgment or decree of which we have knowledge.
(xiv) All descriptions in the Registration Statement, the Prospectus
and the Prospectus Supplement (i) under the captions "The Company," "Competitive
Strengths -- Proprietary Loan Origination Channels -- Diversified Funding
Sources and Capital Utilizations," "Recent Developments," "Price Range of Common
Stock and Dividends," "Capitalization," "Manager," "Compliance with REIT
Requirements and the Investment Company Act of 1940," "Underwriting," "About
This Prospectus," "About Xxxxxxxxx Mortgage, Inc. -- General," "Risk Factors --
Our REIT tax status creates certain risks -- The loss of the Investment Company
Act exemption could adversely affect us," "Description of
B-2
Debt Securities," "Description of Equity Securities," "Federal Income Tax
Considerations," and "Plan of Distribution," of statutes, regulations, legal and
governmental proceedings or other legal matters, or (ii) of contracts,
instruments, leases, licenses and other agreements (collectively, the
"Documents"), fairly present the information required to be shown and, we do not
know of any statutes or legal or governmental proceedings required to be
described in the Registration Statement, the Prospectus or the Prospectus
Supplement that are not described as required, or of any Documents of a
character required to be described in the Registration Statement or Prospectus
or Prospectus Supplement that are not described as required, and any Document
required to be filed as an exhibit to the Registration Statement has been filed
as an exhibit thereto or has been incorporated as an exhibit by reference into
the Registration Statement.
(xv) To the best of our knowledge, there are no actions, suits,
claims, investigations or proceedings pending, threatened or contemplated to
which the Company, the Subsidiaries, the Trust or the Manager are subject or of
which any of their assets or properties are 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 are required to be described
in the Prospectus but are not so described or which (i) seek to challenge the
legality or enforceability of the Underwriting Agreement, (ii) seek to challenge
the legality or enforceability of any of the Incorporated Documents filed, or
required to be filed, or incorporated by reference as exhibits to the
Registration Statement, (iii) seek damages or other remedies with respect to any
of the Incorporated Documents filed, or required to be filed, as exhibits to the
Registration Statement, (iv) except as set forth in or contemplated by the
Registration Statement, the Prospectus or the Prospectus Supplement, seek money
damages or seek to impose criminal penalties upon the Company, the Subsidiaries,
the Trust or the Manager, or any of their respective officers or directors in
their capacities as such or (v) seek to enjoin any of the business activities of
the Company, the Subsidiaries, the Trust or the Manager or the transactions
described in the Prospectus and the Prospectus Supplement.
(xvi) The statements made in the Prospectus under the "Description
of Debt Securities," "Description of Equity Securities, "Plan of Distribution"
and "Risk Factors" and in the Registration Statement in Item 15 of Part II, to
the extent that they constitute summaries of provisions of the Company's
Articles of Incorporation and bylaws or matters of law or legal conclusions,
have been reviewed by us and are accurate summaries in all material respects.
(xvii) Each of the Incorporated Documents, on the date of filing
thereof with the Commission, complied as to form in all material respects with
the requirements of the 1934 Act and the rules and regulations of the Commission
thereunder; it being understood, however, that we express no opinion with
respect to the financial statements, schedules or other financial or statistical
data included or incorporated by reference in, or omitted from the Registration
statement, the Prospectus and the Prospectus Supplement or any Incorporated
Document. In passing upon the compliance as to form of the Registration
Statement, the Prospectus and the Prospectus Supplement and any Incorporated
Document, we have assumed that the statements made and incorporated by reference
therein are correct and complete.
(xviii) Each of the Company, the Subsidiaries and the Trust is not and
will not, upon consummation of the transactions contemplated by the Underwriting
Agreement, be an "investment company," or a "promoter" or "principal
underwriter" for, a "registered investment company," as such terms are defined
in the Investment Company Act, or a "broker" within the meaning of Section
3(a)(4) of the 1934 Act or a "dealer" within the meaning of Section 3(a)(5) of
the 1934 Act or required to be registered pursuant to Section 15(a) of the 1934
Act.
(xix) The Company, for all taxable years commencing with the taxable
year ended December 31, 1993, and each of the Subsidiaries, since its respective
date of inception, have been, and upon the sale
B-3
of Shares will continue to be, organized and operated in conformity with the
requirements for qualification and taxation of the Company as a REIT under
Sections 856 through 860 of the Code. To the extent that the foregoing opinion
refers to any period prior to the taxable year beginning January 1, 2002, such
opinion is solely based on the opinion of Xxxx, Xxxxx & Xxxxxxx LLP (which Xxxx,
Xxxxx & Xxxxxxx LLP has permitted such counsel to rely upon and such reliance is
expressly permitted by the Underwriters). The proposed method of operation of
the Company and each of the Subsidiaries and the Trust as described in the
Prospectus will enable the Company to continue to meet the requirements for
qualification and taxation as a REIT under the Code, and, to the best of our
knowledge, no actions have been taken (or not taken which are required to be
taken) which would cause such qualification to be lost. The disclosure contained
in the Prospectus under the caption "Federal Income Tax Considerations," to the
extent such information constitutes matters of law, summaries of legal matters
or legal conclusions, has been reviewed by us and is accurate in all material
respects.
(xx) The Shares have been duly authorized for listing by the NYSE,
subject to official notice of issuance.
Such counsel shall confirm that during the preparation of the
Registration Statement and Prospectus, such counsel participated in conferences
with the Underwriters and their counsel and with officers and representatives of
the Company and its independent accountants, at which conferences the contents
of the Registration Statement and the Prospectus (including all documents filed
under the Exchange Act and deemed incorporated by reference therein) were
discussed, reviewed and revised. On the basis of the information which was
developed in the course thereof, considered in light of such counsel's
understanding of applicable law and the experience gained by such counsel
through their practice thereunder, without such counsel assuming responsibility
for, or independently verifying, the accuracy and completeness of such
statements, except to the extent expressly provided above in the applicable
opinion paragraph preceding this paragraph, such counsel shall confirm that
nothing came to their attention that would lead them to believe that either the
Registration Statement (including any document filed under the Exchange Act and
deemed incorporated by reference therein), as of its effective date, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
the Prospectus or any amendment or supplement thereto (including any document
filed under the Exchange Act and deemed incorporated by reference therein) as of
its respective issue date and as of the time of purchase, or, if applicable, the
additional time of purchase, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except for in each of
the above cases the financial statements and schedules and other financial or
statistical data as to which such counsel need express no opinion).
In rendering the foregoing opinion, such counsel may rely as to matters
of fact, upon certificates and written statements of the executive officers of,
and accountants for, the Company. In rendering the foregoing opinions, all
statements and opinions given "to the knowledge of such counsel" (or similar
phrases) shall refer to the actual present knowledge of the attorneys of such
firm who have devoted substantive attention to the offering and related matters
(and who shall be named in such opinion), and not to the knowledge of the firm
or its partners or employees generally, and all such statements and opinions
given to the knowledge of such counsel shall be supported, as to matters of
fact, by officer's certificates obtained from the Company, the Subsidiaries or
the Trust, as appropriate, executed copies of which shall be delivered to the
Lead Manager on the time of purchase.
B-4
