EXECUTION COPY
ANNALY CAPITAL MANAGEMENT, INC.
35,500,000 SHARES
COMMON STOCK
($0.01 PAR VALUE)
UNDERWRITING AGREEMENT
AUGUST 16, 2006
UNDERWRITING AGREEMENT
August 16, 2006
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Citigroup Global Markets Inc.
UBS Securities LLC
As Representatives of the several Underwriters,
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Annaly Capital Management, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters"), for whom Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Citigroup Global
Markets Inc. and UBS Securities LLC are acting as representatives, an aggregate
of 35,500,000 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 5,325,000 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") an automatic shelf registration statement on Form
S-3 (File No. 333-134404), including a base prospectus, with respect to the
Shares, and which incorporates by reference documents which the Company has
filed or will file in accordance with the provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (collectively,
the "Exchange Act"), which registration statement became effective upon filing
under Rule 462(e) of the Securities Act. The Company has prepared a prospectus
supplement (the "Prospectus Supplement") to the base prospectus included as part
of such registration statement setting forth the terms of the offering, sale and
plan of distribution of the Shares and additional information concerning the
Company and its business. The Company has furnished to Xxxxxxx Xxxxx, for use by
the Underwriters and by dealers, copies of one or more preliminary prospectuses,
containing the base prospectus included as part of such registration statement,
as supplemented by a preliminary Prospectus Supplement, and including the
documents incorporated in such base prospectus by reference
(each, a "Preliminary Prospectus"), relating to the Shares. Except where the
context otherwise requires, such registration statement, as amended when it
became effective, including all documents filed as part thereof or incorporated
by reference therein, and including any information contained in a Prospectus
(as defined below) subsequently filed with the Commission pursuant to Rule
424(b) under the Securities Act, collectively, are herein called the
"Registration Statement," and the base prospectus, including all documents
incorporated therein by reference, included in the Registration Statement, as
supplemented by the Prospectus Supplement, in the form filed by the Company with
the Commission pursuant to Rule 424(b) and Rule 430(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." The Registration
Statement at the time it originally became effective is herein called the
"Original Registration Statement." The information included in such prospectus
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective pursuant to Rule 430B is referred to as "Rule 430B
Information." Any reference herein to the Registration Statement, the
Prospectus, any Preliminary Prospectus or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Prospectus or any
Preliminary Prospectus shall be deemed to refer to and include the filing after
the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Agreement, all
references to the Registration Statement, the Prospectus, any Preliminary
Prospectus or to any amendment or supplement thereto shall be deemed to include
any copy filed with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System ("XXXXX"), and such copy shall be identical in
content to any Prospectus or Preliminary Prospectus delivered to the
Underwriters for use in connection with the offering of the Shares.
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" in
the Registration Statement, any Preliminary Prospectus or the Prospectus (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in or otherwise deemed by Securities Act Regulations to be a part
of or included in the Registration Statement, any Preliminary Prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Exchange Act which is incorporated by reference in the
Registration Statement, such Preliminary Prospectus or the Prospectus, as the
case may be.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell the Firm Shares to the several Underwriters,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Company the respective number of Firm Shares (subject to such adjustment as
Xxxxxxx Xxxxx may determine to avoid fractional shares) set forth opposite the
name of such Underwriter in Schedule A annexed hereto at a purchase price of
$11.685 per Share. The Company is advised by Xxxxxxx Xxxxx that the Underwriters
intend (i) to make a
public offering of the Shares as soon as the Underwriters deem advisable after
this Agreement has been executed and delivered and (ii) initially to offer the
Firm Shares upon the terms set forth in the Prospectus. The Underwriters may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as they may determine.
In addition, the Company hereby grants to the several
Underwriters the option to purchase, and upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Underwriters shall have the right to purchase, severally and not jointly, from
the Company ratably in accordance with the number of Firm Shares to be purchased
by each of them (subject to such adjustment as Xxxxxxx Xxxxx shall determine to
avoid fractional shares), all or a portion of the Additional Shares as may be
necessary to cover over-allotments made in connection with the offering of the
Firm Shares, at the same purchase price per share to be paid by the Underwriters
to the Company for the Firm Shares. This option may be exercised by Xxxxxxx
Xxxxx on behalf of the several Underwriters at any time and from time to time on
or before the thirtieth day following the date hereof, by written notice to the
Company. Each such notice shall set forth the aggregate number of Additional
Shares as to which the option is being exercised and the date and time when
Additional Shares are to be delivered (such date and time being herein referred
to as an "additional time of purchase"); provided, however, that an additional
time of purchase shall not be (i) earlier than the time of purchase (as defined
below) or (ii) later than the tenth Business Day after the date on which the
option shall have been exercised. The number of Additional Shares to be sold to
each Underwriter shall be the number which bears the same proportion to the
aggregate number of Additional Shares being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule A hereto
bears to the aggregate number of Firm Shares (subject, in each case, to such
adjustment as Xxxxxxx Xxxxx may determine to eliminate fractional shares). As
used herein "Business Day" shall mean a day on which the New York Stock Exchange
(the "NYSE") is open for trading and commercial banks in the City of New York
are open for business.
2. PAYMENT AND DELIVERY. Payment of the purchase price for
the Firm Shares shall be made to the Company by federal funds wire transfer
against delivery of the certificates for the Firm Shares to Xxxxxxx Xxxxx
through the facilities of the Depository Trust Company ("DTC") for the
respective accounts of the Underwriters. Such payment and delivery shall be made
at 10:00 A.M., New York City time, on August 16, 2006 (unless another time shall
be agreed to by Xxxxxxx Xxxxx and the Company or unless postponed in accordance
with the provisions of Section 8 hereof). The time at which such payment and
delivery are actually made is herein sometimes called the "time of purchase."
Certificates for the Firm Shares shall be delivered to Xxxxxxx Xxxxx, through
the facilities of DTC, in definitive form in such names and in such
denominations as Xxxxxxx Xxxxx shall specify no later than the second Business
Day preceding the time of purchase. For the purpose of expediting the checking
of the certificates for the Firm Shares by Xxxxxxx Xxxxx, the Company agrees to
make such certificates available to Xxxxxxx Xxxxx for such purpose at least one
full Business Day preceding the time of purchase.
Payment of the purchase price for Additional Shares shall be
made at each additional time of purchase in the same manner and at the same
office as the payment for the Firm Shares. Certificates for Additional Shares
shall be delivered to Xxxxxxx Xxxxx, through the facilities of DTC, in
definitive form in such names and in such denominations as Xxxxxxx Xxxxx shall
specify no later than the second Business Day preceding each additional time of
purchase.
For the purpose of expediting the checking of the certificates for Additional
Shares by Xxxxxxx Xxxxx, the Company agrees to make such certificates available
to Xxxxxxx Xxxxx for such purpose at least one full Business Day preceding each
additional time of purchase.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to each of the Underwriters as of the date
hereof, the Applicable Time referred to in Section 3(c), as of the time of
purchase and, if applicable, at each additional time of purchase that:
(a) (1) At the time of filing the Original Registration
Statement, (2) at the time of the most recent amendment thereto for the purposes
of complying with Section 10(a)(3) of the Securities Act or otherwise (whether
such amendment was by post-effective amendment, incorporated report filed
pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus), (3)
at the time the Company or any person acting on its behalf (within the meaning,
for this clause only, of Rule 163(c) of the Securities Act) made any offer
relating to the Shares in reliance on the exemption of Rule 163 of the
Securities Act and (4) at the date hereof, the Company was and is a "well-known
seasoned issuer" as defined in Rule 405 of the Securities Act ("Rule 405"),
including not having been and not being an "ineligible issuer" as defined in
Rule 405. The Registration Statement is an "automatic shelf registration
statement," as defined in Rule 405, and the Shares, since their registration on
the Registration Statement, have been and remain eligible for registration by
the Company on a Rule 405 "automatic shelf registration statement". The Company
has not received from the Commission any notice pursuant to Rule 401(g)(2) of
the Securities Act objecting to the use of the automatic shelf registration
statement form.
At the time of filing the Original Registration Statement, at
the earliest time thereafter that the Company or another offering participant
made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities
Act) of the Shares and at the date hereof, the Company was not and is not an
"ineligible issuer," as defined in Rule 405.
(b) The Original Registration Statement became effective upon
filing under Rule 462(e) of the Securities Act on May 23, 2006 and any
post-effective amendment thereto and also became effective upon filing under
Rule 462(e). The Registration Statement has been filed with the Commission and
has been deemed effective under the Securities Act. The Company has not
received, and has no notice of, any order of the Commission preventing or
suspending the use of the Registration Statement, or threatening or instituting
proceedings for that purpose. Any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement have been so
described or filed. The Prospectus Supplement has been or will be so prepared
and will be filed pursuant to Rule 424(b) of the Securities Act on or before the
second Business Day following the date of this Agreement or on such other day as
the parties may mutually agree. The Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the requirements of the
Securities Act. Copies of the Registration Statement, the Preliminary Prospectus
and the Prospectus, any such amendments or supplements and all documents
incorporated by reference therein that were filed with the Commission on or
prior to the date of this Agreement (including one fully executed copy of each
of the Registration Statement and of each amendment thereto for the
Underwriters) have been delivered to the
Underwriters and their counsel. The Company has not distributed any offering
material in connection with the offering or sale of the Shares other than the
Registration Statement, the Preliminary Prospectus, the Prospectus, Issuer
General Use Free Writing Prospectuses (as defined below) or any other materials,
if any, permitted by the Securities Act.
(c) Each part of the Registration Statement, when such part
became effective and at each deemed effective date with respect to the
Underwriters pursuant to Rule 430B(f)(2) of the Securities Act or was or is
filed with the Commission, and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at the time of
purchase and, if applicable, at each additional time of purchase, conformed or
will conform in all material respects with the requirements of the Securities
Act. Each part of the Registration Statement, when such part became or becomes
effective or was or is filed with the Commission, did not or will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
The Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the time of purchase and, if applicable, at
each additional time of purchase, did not or will not include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that the foregoing shall not apply to statements
in, or omissions from, any such document in reliance upon, and in conformity
with, written information concerning the Underwriters that was furnished in
writing to the Company by Xxxxxxx Xxxxx, on behalf of the several Underwriters,
specifically for use in the preparation thereof.
(d) As of the Applicable Time neither (x) the Issuer General
Use Free Writing Prospectus(es) (as defined below) issued at or prior to the
Applicable Time, the information included on Schedule C hereto and the Statutory
Prospectus (as defined below) as of the Applicable Time, all considered together
(collectively, the "General Disclosure Package"), nor (y) any individual Issuer
Limited Use Free Writing Prospectus, when considered together with the General
Disclosure Package, included any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
As used in this subsection and elsewhere in this Agreement:
"Applicable Time" means 8:00 am (Eastern time) on August 17,
2006 or such other time as agreed by the Company and Xxxxxxx Xxxxx.
"Issuer Free Writing Prospectus" means any "issuer free
writing prospectus," as defined in Rule 433 of the Securities Act ("Rule 433"),
relating to the Shares that (i) is required to be filed with the Commission by
the Company, (ii) is a "road show that is a written communication" within the
meaning of Rule 433(d)(8)(i) whether or not required to be filed with the
Commission or (iii) is exempt from filing pursuant to Rule 433(d)(5)(i) because
it contains a description of the Shares or of the offering that does not reflect
the final terms, in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the
Company's records pursuant to Rule 433(g).
"Issuer General Use Free Writing Prospectus" means any Issuer
Free Writing Prospectus that is intended for general distribution to prospective
investors, as evidenced by it being specified in Schedule B hereto.
"Issuer Limited Use Free Writing Prospectus" means any Issuer
Free Writing prospectus that is not an Issuer General Use Free Writing
Prospectus.
"Statutory Prospectus" as of any time means the prospectus
relating to the Shares that is included in the Registration Statement
immediately prior to that time, including any document incorporated by reference
therein.
Each Issuer Free Writing Prospectus, as of its issue date and
at all subsequent times through the completion of the public offer and sale of
the Shares or until any earlier date that the Company notified or notifies
Xxxxxxx Xxxxx as described in the next sentence, did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus, including
any document incorporated by reference therein, and any preliminary or other
prospectus deemed to be a part thereof that has not been superseded or modified.
The representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement, the
Prospectus or any Issuer Free Writing Prospectus made in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Xxxxxxx Xxxxx expressly for use therein.
(e) The documents incorporated by reference in the
Registration Statement, the Prospectus or any amendment or supplement thereto,
when they 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 and, when read together with the other information in the Prospectus,
(a) at the time the Original Registration Statement became effective, (b) at the
earlier of time the Prospectus was first used and the date and time of the first
contract of sale of Shares in this offering and (c) at the Applicable Time, did
not and 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.
(f) The consolidated financial statements of the Company,
together with the related schedules and notes thereto, set forth or included or
incorporated by reference in the Registration Statement, the General Disclosure
Package, and the Prospectus are accurate in all material respects and fairly
present the financial condition of the Company as of the dates indicated and the
results of operations, changes in financial position, stockholders' equity and
cash flows for the periods therein specified are in conformity with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein). The selected financial and
statistical data included or incorporated by reference in the Registration
Statement, and the Prospectus present fairly the information shown therein and,
to the extent based upon or derived from the financial statements, have been
compiled on a basis consistent with the financial statements presented therein.
No other financial statements are
required to be set forth or to be incorporated by reference in the Registration
Statement or the Prospectus under the Securities Act.
(g) The Preliminary Prospectus was, and the Prospectus and
the General Disclosure Package delivered to the Underwriters for use in
connection with this offering will be, identical to the versions of the
Preliminary Prospectus, Prospectus and the General Disclosure Package,
respectively, created to be transmitted to the Commission for filing via XXXXX,
except to the extent permitted by Regulation S-T.
(h) The Company has been duly formed and incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Maryland, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or assets or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the business, assets, properties, prospects, financial condition or results
of operation of the Company taken as a whole (a "Material Adverse Effect"), and
has full corporate power and authority necessary to own, hold, lease and/or
operate its assets and properties, to conduct the business in which it is
engaged and as described in the Prospectus and to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby, and the Company is in compliance in all material respects with the laws,
orders, rules, regulations and directives issued or administered by such
jurisdictions.
(i) The Company has no "significant subsidiaries" (as such
term is defined in Rule 1-02 of Regulation S-X promulgated under the Securities
Act) and does not own, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity,
except for Fixed Income Discount Advisory Company ("FIDAC"). Complete and
correct copies of the articles of incorporation and of the bylaws of the Company
and all amendments thereto have been delivered to Xxxxxxx Xxxxx and, except as
set forth in the exhibits to, or incorporated by reference into, the
Registration Statement, no changes therein will be made subsequent to the date
hereof and prior to the time of purchase or, if applicable, each additional time
of purchase.
(j) The Company is not in breach of, or in default under (nor
has any event occurred which with notice, lapse of time, or both would result in
any breach of, or constitute a default under), (i) its articles of incorporation
or bylaws or (ii) any obligation, agreement, covenant or condition contained in
any contract, license, repurchase agreement, indenture, mortgage, deed of trust,
bank loan or credit agreement, note, lease or other evidence of indebtedness, or
any lease, contract or other agreement or instrument to which the Company is a
party or by which it or any of its assets or properties may be bound or
affected, the effect of which breach or default under clause (ii) could have a
Material Adverse Effect. The execution, delivery and performance of this
Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated hereby will not conflict with, or result in any breach
of, constitute a default under or a Repayment Event (as defined below) under
(nor constitute any event which with notice, lapse of time, or both would result
in any breach of, constitute a default under or a Repayment Event under), (i)
any provision of the articles of incorporation or bylaws of the Company, (ii)
any provision of any contract, license, repurchase agreement, indenture,
mortgage, deed of trust, bank loan or credit agreement, note, lease or other
evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Company is a party or by which the Company or any of its
assets or properties may be bound or affected, the effect of which could have a
Material Adverse Effect, or (iii) under any federal, state, local or foreign
law, regulation or rule or any decree, judgment or order applicable to the
Company. As used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any subsidiary.
(k) As of June 30, 2006, as of the date of this Agreement and
as of the time of purchase, the Company had, has or will have an authorized,
issued and outstanding capitalization as set forth under the headings
"Historical" and "As adjusted for both offerings," respectively, in the section
of the Prospectus Supplement entitled "Capitalization." All of the issued and
outstanding shares of capital stock, including the Common Stock of the Company,
have been duly and validly authorized and issued and are fully paid and
non-assessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of any preemptive right, resale
right, right of first refusal or similar right.
(l) This Agreement has been duly authorized, executed and
delivered by the Company.
(m) The capital stock of the Company, including the Shares,
conforms and will conform in all material respects to the description thereof
contained in the Registration Statement, General Disclosure Package and the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same. The certificates for the Shares are in due and
proper form and the holders of the Shares will not be subject to personal
liability by reason of being such holders.
(n) The Shares have been duly and validly authorized by the
Company for issuance and sale pursuant to this Agreement and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued and fully paid and non-assessable, free and clear of any pledge, lien,
encumbrance, security interest or other claim, and will be registered pursuant
to Section 12 of the Exchange Act.
(o) No approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the issuance and sale
of the Shares or the consummation by the Company of the transaction contemplated
hereby other than (i) registration of the Shares under the Securities Act, (ii)
any necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriters, or
(iii) such approvals as have been obtained in connection with the approval of
the listing of the Shares on NYSE.
(p) No person, as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the Securities Act (each, a "Person"), has the
right, contractual or otherwise, to cause the Company to issue to it any shares
of capital stock or other securities of the Company upon the issue and sale of
the Shares to the Underwriters hereunder, nor does any Person have
preemptive rights, co-sale rights, rights of first refusal or other rights to
purchase or subscribe for any of the Shares or any securities or obligations
convertible into or exchangeable for, or any contracts or commitments to issue
or sell any of, the Shares or any options, rights or convertible securities or
obligations, other than those that have been expressly waived prior to the date
hereof, except with respect to shares to be issued and registered in connection
with the Company's acquisition of FIDAC as described in the Registration
Statement (the "FIDAC Shares").
(q) Deloitte & Touche LLP (the "Accountants"), whose report
on the consolidated financial statements of the Company is filed with the
Commission as part of the Registration Statement and the Prospectus, are and,
during the periods covered by their reports, were independent public accountants
as required by the Securities Act.
(r) The Company has all necessary licenses, authorizations,
consents and approvals and has made all necessary filings required under any
federal, state, local or foreign law, regulation or rule, and has obtained all
necessary permits, authorizations, consents and approvals from other Persons, in
order to conduct its business as described in the Prospectus, except as such as
could not have a Material Adverse Effect. The Company is not required by any
applicable law to obtain accreditation or certification from any governmental
agency or authority in order to provide the products and services which it
currently provides or which it proposes to provide as set forth in the
Prospectus. The Company is not in violation of, or in default under, any such
license, permit, authorization, consent or approval or any federal, state, local
or foreign law, regulation or rule or any decree, order or judgment applicable
to the Company, the effect of which could have a Material Adverse Effect.
(s) The descriptions in the Registration Statement, the
General Disclosure Package and the Prospectus of the legal or governmental
proceedings, contracts, leases and other legal documents therein described
present fairly the information required to be shown, and there are no legal or
governmental proceedings, contracts, leases, or other documents of a character
required to be described in the Registration Statement, the General Disclosure
Package or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required. All agreements between
the Company and third parties expressly referenced in the General Disclosure
Package and Prospectus are legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
equitable principles.
(t) There are no actions, suits, claims, investigations,
inquiries or proceedings pending or, to the best of the Company's knowledge,
threatened to which the Company or any of its officers or directors is a party
or of which any of its properties or other assets is subject at law or in
equity, or before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency which could result in a
judgment, decree or order having a Material Adverse Effect.
(u) Subsequent to the respective dates as of which
information is given in the Registration Statement, the General Disclosure
Package (including as of the Applicable Time), and the Prospectus, there has not
been (i) any material adverse change, or any development
which would reasonably be expected to cause a material adverse change, in the
business, properties or assets described or referred to in the Registration
Statement, the General Disclosure Package, or the Prospectus, or the results of
operations, condition (financial or otherwise), net worth, business, prospects
or operations of the Company taken as a whole, (ii) any transaction which is
material to the Company, except transactions in the ordinary course of business,
(iii) any obligation, direct or contingent, which is material to the Company
taken as a whole, incurred by the Company, except obligations incurred in the
ordinary course of business, (iv) any change in the capital stock or outstanding
indebtedness of the Company, or (v) except for regular quarterly dividends on
the shares of Series A cumulative redeemable preferred stock and the Series B
cumulative convertible preferred stock, (collectively, the "Preferred Stock")
and Common Stock in amounts per share that are consistent with past practice,
any dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock. The Company has no material contingent
obligation which is not disclosed in the Registration Statement, the General
Disclosure Package, or the Prospectus.
(v) There are no Persons with registration or other similar
rights to have any equity or debt securities, including securities which are
convertible into or exchangeable for equity securities, registered pursuant to
the Registration Statement or otherwise registered by the Company under the
Securities Act, except with respect to the FIDAC Shares.
(w) The Company (i) does not have any issued or outstanding
preferred stock, or other than the Preferred Stock, or (ii) has not defaulted on
any installment on indebtedness for borrowed money or on any rental on one or
more long term leases, which defaults would have a Material Adverse Effect on
the financial position of the Company. The Company has not filed a report
pursuant to Section 13(a) or 15(d) of the Exchange Act since the filing of its
last Annual Report on Form 10-K, indicating that it (i) has failed to pay any
dividend or sinking fund installment on preferred stock or (ii) has defaulted on
any installment on indebtedness for borrowed money or on any rental on one or
more long term leases, which defaults would have a Material Adverse Effect on
the financial position of the Company.
(x) Each of the Company and its officers, directors and
controlling Persons has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Common Stock to facilitate the sale of the Shares, or (ii) since
the filing of the Registration Statement (except pursuant to the Company's
dividend reinvestment and share purchase plan (the "DRSPP") and in accordance
with the Second Amended and Restated Sales Agency Agreement, dated May 11, 2005
between the Company and UBS Securities LLC, the Sales Agreement, dated August 3,
2006, between the Company and UBS Securities LLC and the ATM Equity Offering
Sales Agreement, dated August 3, 2006, between the Company and Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated) (A) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of, the Shares or (B) paid or
agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company.
(y) The shares have been approved for listing on the NYSE,
subject only to official notice of issuance.
(z) Neither the Company nor any of its affiliates (i) is
required to register as a "broker" or "dealer" in accordance with the provisions
of the Exchange Act or (ii) directly or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the Bylaws of the National Association of Securities Dealers
("NASD")) any member firm of the NASD.
(aa) Any certificate signed by any officer of the Company
delivered to Xxxxxxx Xxxxx or to counsel for the Underwriters pursuant to or in
connection with this Agreement shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
(bb) As of the date of this Agreement, the investment
portfolio of the Company (i) consists entirely of (a) mortgage-backed securities
guaranteed, as to payments of principal and interest, by either the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association or the
Government National Mortgage Association and (b) Federal Home Loan Bank, Federal
Home Loan Mortgage Corporation, or Federal National Mortgage Association
debentures and (ii) all of such mortgage-backed securities are REIT (as defined
below) eligible assets. As of the date of this Agreement, the Company has no
plan or intention to materially alter (i) its capital investment policy or (ii)
except in accordance with its capital investment policy, the percentage of its
investment portfolio that is invested in mortgage-backed securities which are
guaranteed, as to payments of principal and interest, by either the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association or the
Government National Mortgage Association. The Company has good and marketable
title to all of the properties and assets owned by it, in each case free and
clear of any security interests, liens, encumbrances, equities, claims and other
defects (except for any security interest, lien, encumbrance or claim that may
otherwise exist under any applicable repurchase agreement), except such as do
not have a Material Adverse Effect and do not interfere with the use made or
proposed to be made of such property or asset by the Company, and except as
described in or contemplated by the Prospectus and the General Disclosure
Package. The Company owns no real property. Any real property and buildings held
under lease by the Company are held under valid, existing and enforceable
leases, with such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the use made or proposed to be made of such
property and buildings by the Company.
(cc) The Company has filed all federal, state and foreign
income and franchise tax returns required to be filed on or prior to the date
hereof and has paid taxes shown as due thereon (or that are otherwise due and
payable), other than taxes which are being contested in good faith and for which
adequate reserves have been established in accordance with generally accepted
accounting principles. The Company has no knowledge, after due inquiry, of any
tax deficiency which has been asserted or threatened against the Company. To the
knowledge of the Company, there are no tax returns of the Company that are
currently being audited by federal, state or local taxing authorities or
agencies which would have a Material Adverse Effect.
(dd) The Company owns or possesses adequate license or other
rights to use all patents, trademarks, service marks, trade names, copyrights,
software and design licenses, trade secrets, manufacturing processes, other
intangible property rights and know-how (collectively, "Intangibles") necessary
to entitle the Company to conduct its business as described in the
Prospectus, and the Company has not received notice of infringement of or
conflict with (and the Company knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles which could have
a Material Adverse Effect.
(ee) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ff) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 and 15d-14 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company is made known to the
Company's Chief Executive Officer and its Chief Financial Officer, and such
disclosure controls and procedures are effective to perform the functions for
which they were established; any significant material weaknesses in internal
controls have been identified for the Company's Chief Executive Officer and its
Chief Financial Officer; and since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no significant changes
in internal controls or in other factors that could significantly affect
internal controls.
(gg) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the business in which it is engaged. The Company
has no reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect.
(hh) The Company is not in violation, and has not received
notice of any violation with respect to, any applicable environmental, safety or
similar law applicable to the business of the Company. The Company has received
all permits, licenses or other approvals required of them under applicable
federal and state occupational safety and health and environmental laws and
regulations to conduct its business, and the Company is in compliance with all
terms and conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which could not, singly or in the aggregate, have
a Material Adverse Effect.
(ii) The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions herein
contemplated, except as may otherwise exist with respect to the Underwriters
pursuant to this Agreement.
(jj) There are no existing or threatened labor disputes with
the employees of the Company which are likely to have individually or in the
aggregate a Material Adverse Effect.
(kk) Neither the Company nor, to the knowledge of the
Company, any employee or agent of the Company, has made any payment of funds of
the Company or received or retained any funds in violation of any law, rule or
regulation or of a character required to be disclosed in the Prospectus. No
relationship, direct or indirect, exists between or among the Company, on the
one hand, and the directors, officers and stockholders of the Company, on the
other hand, which is required by the Securities Act to be described in the
Registration Statement and the Prospectus that is not so described.
(ll) The Company, since its date of inception, has been, and
upon the sale of the Shares will continue to be, organized and operated in
conformity with the requirements for qualification and taxation as a "real
estate investment trust" (a "REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"), for all taxable years
commencing with its taxable year ended December 31, 1997. The proposed method of
operation of the Company as described in the Prospectus will enable the Company
to continue to meet the requirements for qualification and taxation as a REIT
under the Code, and no actions have been taken (or not taken which are required
to be taken) which would cause such qualification to be lost. The Company
intends to continue to operate in a manner which would permit it to qualify as a
REIT under the Code. The Company has no intention of changing its operations or
engaging in activities which would cause it to fail to qualify, or make
economically undesirable its continued qualification, as a REIT.
(mm) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(nn) No relationship, direct or indirect, exists between or
among the Company, on the one hand, and the directors, officers, stockholders or
directors of the Company, on the other hand, which is required by the rules of
the NASD to be described in the Registration Statement and the Prospectus which
is not so described.
(oo) The Company has not, directly or indirectly, including
through any subsidiary, extended credit, arranged to extend credit, or renewed
any extension of credit, in the form of a personal loan, to or for any director
or executive officer of the Company, or to or for any family member or affiliate
of any director or executive officer of the Company.
(pp) Neither the Company nor any of the subsidiaries nor, to
the Company's knowledge, any employee or agent of the Company or the
subsidiaries has made any payment of funds of the Company or the subsidiaries or
received or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Registration Statement or the Prospectus.
(qq) The Company is in compliance with all presently
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated thereunder (the "Xxxxxxxx-Xxxxx Act") and is actively
taking steps to ensure that it will be in compliance with other applicable
provisions of the Xxxxxxxx-Xxxxx Act upon the effectiveness of such provisions.
(rr) The Registration Statement is not the subject of a
pending proceeding or examination under Section 8(d) or 8(e) of the Securities
Act, and the Company is not the subject of a pending proceeding under Section 8A
of the Securities Act in connection with the offering of the Shares.
4. CERTAIN COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees with each of the Underwriters that:
(a) The Company will furnish such information as may be
required and otherwise will cooperate in qualifying the Shares for offering and
sale under the securities or blue sky laws of such jurisdictions (both domestic
and foreign) as Xxxxxxx Xxxxx may designate and to maintain such qualifications
in effect so long as required for the distribution of the Shares, provided that
the Company shall not be required to qualify as a foreign corporation or to
consent to the service of process under the laws of any such jurisdiction
(except service of process with respect to the offering and sale of the Shares).
The Company will promptly advise Xxxxxxx Xxxxx of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
(b) The Company will prepare the Prospectus in a form in
compliance with Rule 430(A) and approved by the Underwriters and file such
Prospectus with the Commission pursuant to Rule 424(b) under the Securities Act
not later than 10:00 A.M. (New York City time), on or before the second Business
Day following the date of this Agreement or on such other day as the parties may
mutually agree and to furnish promptly (and with respect to the initial delivery
of such Prospectus, not later than 10:00 A.M. (New York City time) on or before
the second Business Day following the date of this Agreement or on such other
day as the parties may mutually agree) to the Underwriters copies of the
Prospectus (or of the Prospectus as amended or supplemented if the Company shall
have made any amendments or supplements thereto after the effective date of the
Registration Statement) in such quantities and at such locations as the
Underwriters may reasonably request for the purposes contemplated by the
Securities Act, which the Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the version created to be
transmitted to the Commission for filing via XXXXX, except to the extent
permitted by Regulation S-T.
(c) The Company will advise Xxxxxxx Xxxxx immediately,
confirming such advice in writing, of (i) the receipt of any comments from the
Commission relating to any filing of the Company under the Securities Act or the
Exchange Act, (ii) any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information
with respect thereto, (iii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
or of any examination pursuant to Section 8(e) of the Securities Act concerning
the Registration Statement, (iv) the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, (v) the initiation, threatening
or contemplation of any proceedings for any of such purposes and, if the
Commission or any other governmental agency or authority should issue any such
order, the Company will make every reasonable effort to obtain the lifting or
removal of such order as soon as possible. The Company will advise Xxxxxxx Xxxxx
promptly of any proposal to amend or
supplement the Registration Statement or the Prospectus including by filing any
documents that would be incorporated therein by reference, and will xxxxxxx
Xxxxxxx Xxxxx with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file or
use any such document to which Xxxxxxx Xxxxx or counsel for the Underwriters
shall object in writing. The Company has given Xxxxxxx Xxxxx notice of any
filings made pursuant to the Exchange Act within 48 hours prior to the
Applicable Time; the Company will give Xxxxxxx Xxxxx notice of its intention to
make any such filing from the Applicable Time to the time of purchase and, if
applicable, each additional time of purchase, and will furnish the Xxxxxxx Xxxxx
with copies of any such documents a reasonable amount of time prior to such
proposed filing, as the case may be, and will not file or use any such document
to which the Xxxxxxx Xxxxx or counsel for the Underwriters shall object in
writing.
(d) The Company will advise Xxxxxxx Xxxxx promptly and, if
requested by Xxxxxxx Xxxxx, xxxx confirm such advice in writing when any
post-effective amendment to the Registration Statement becomes effective under
the Securities Act.
(e) The Company will furnish to Xxxxxxx Xxxxx and, upon
request, to each of the other Underwriters for a period of five years from the
date of this Agreement (i) copies of any reports or other communications which
the Company shall send to its stockholders or shall from time to time publish or
publicly disseminate, (ii) copies of all annual, quarterly and current reports
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar
form as may be designated by the Commission, (iii) copies of documents or
reports filed with any national securities exchange on which any class of
securities of the Company is listed, and (iv) such other information as Xxxxxxx
Xxxxx may reasonably request regarding the Company, in each case as soon as such
communications, documents or information become available.
(f) The Company will advise the Underwriters promptly of the
happening of any event known to the Company within the time during which a
Prospectus relating to the Shares is required to be delivered under the
Securities Act which would require the making of any change in the Prospectus
then being used, or in the information incorporated by reference therein, so
that the Prospectus would not include an untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with any law. If within the time during which a
Prospectus relating to the Shares is required to be delivered under the
Securities Act any event shall occur or condition shall exist which, in the
reasonable opinion of the Company, Xxxxxxx Xxxxx or their respective counsel,
would require the making of any change in the Prospectus then being used, or in
the information incorporated by reference therein, so that the Prospectus would
not include an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend or supplement the Prospectus to comply
with any law, the Company will promptly prepare and furnish to the Underwriters
copies of the proposed amendment or supplement before filing any such amendment
or supplement with the Commission and thereafter promptly furnish, at the
Company's own expense, to the Underwriters and to dealers copies in such
quantities and at such locations as Xxxxxxx Xxxxx may from time to time
reasonably request of an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus
as so amended or supplemented will not, in the circumstances when it is so
delivered, be misleading or so that the Prospectus will comply with the law. If
at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the information contained
in the Registration Statement relating to the Shares or the Statutory Prospectus
or any preliminary prospectus or included or would include an untrue statement
of a material fact or omitted or would omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances,
prevailing at that subsequent time, not misleading, the Company will promptly
notify Xxxxxxx Xxxxx and will promptly amend or supplement, at its own expense,
such Issuer Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission.
(g) The Company will make generally available to its
stockholders as soon as practicable, and in the manner contemplated by Rule 158
of the Securities Act but in any event not later than 15 months after the end of
the Company's current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period beginning after the date upon which the
Prospectus Supplement is filed pursuant to Rule 424(b) under the Securities Act
that shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder and will advise the Underwriters in writing when such
statement has been made available.
(h) The Company will furnish to Xxxxxxx Xxxxx a signed copy
of the Registration Statement, as initially filed with the Commission, and of
all amendments thereto (including all exhibits thereto and documents
incorporated by reference therein) and such number of conformed copies of the
foregoing (other than exhibits) as Xxxxxxx Xxxxx may reasonably request.
(i) The Company will apply the net proceeds from the sale of
the Shares in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(j) The Company will furnish to Xxxxxxx Xxxxx, not less than
two Business Days before a filing with the Commission during the period referred
to in paragraph (f) above, a copy of any document proposed to be filed pursuant
to Section 13, 14 or 15(d) of the Exchange Act and during such period will file
all such documents in a manner and within the time periods required by the
Exchange Act.
(k) The Company will not sell, offer, contract to sell,
pledge, register, grant any option to purchase or otherwise dispose of, directly
or indirectly, any shares of capital stock, or any securities convertible into,
or exercisable, exchangeable or redeemable for shares of capital stock, except
for the sales to the Underwriters pursuant to this Agreement and except for
issuances of Common Stock upon the exercise of outstanding options, for a period
of 90 days after the date hereof, without the prior written consent of Xxxxxxx
Xxxxx. The foregoing sentence shall not apply to (i) the Shares to be sold
hereunder, (ii) any shares of Common Stock issued by the Company upon the
exercise of an option outstanding on the date hereof and referred to in the
Prospectus, (iii) shares of Common Stock issued pursuant to the DRSPP, (iv) the
grant of awards pursuant to the Company's Long-Term Stock Incentive Plan or
issuances pursuant to the exercise of employee stock options or other awards or
(v) with respect to any FIDAC Shares. Notwithstanding the foregoing, if (1)
during the last 17 days of the 90-day restricted period the
Company issues an earnings release or material news or a material event relating
to the Company occurs or (2) prior to the expiration of the 90-day restricted
period, the Company announces that it will release earnings results or becomes
aware that material news or a material event will occur during the 16-day period
beginning on the last day of the 90-day restricted period, the restrictions
imposed in this paragraph (k) shall continue to apply until the expiration of
the 18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
(l) The Company will use its best efforts to cause each
officer and director of the Company to furnish to Xxxxxxx Xxxxx, prior to the
time of purchase, a letter or letters, substantially in the form of Exhibit C
hereto, pursuant to which each such person shall agree, subject to certain
exceptions set forth therein, not to sell, offer, contract to sell, pledge,
grant any option to purchase or otherwise dispose of, directly or indirectly,
any shares of capital stock, or any securities convertible into, or exercisable,
exchangeable or redeemable for shares of capital stock of the Company for a
period of 90 days after the date hereof, without the prior written consent of
Xxxxxxx Xxxxx.
(m) The Company will use its best efforts to cause the
Shares to be listed on the NYSE and to maintain such listing and to file with
the NYSE all documents and notices required by the NYSE of companies that have
securities that are listed on the NYSE.
(n) The Company will maintain and keep accurate books and
records reflecting their assets and maintain internal accounting controls which
provide reasonable assurance that (i) transactions are executed in accordance
with management's authorization, (ii) transactions are recorded as necessary to
permit the preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company, (iii) access to the
assets of the Company is permitted only in accordance with management's
authorization and (iv) the recorded accounts of the assets of the Company are
compared with existing assets at reasonable intervals.
(o) The Company will engage and maintain, at its expense, a
registrar and transfer agent for the Shares.
(p) The Company will pay all expenses, fees and taxes (other
than any transfer taxes and fees and disbursements of counsel for the
Underwriters, except as set forth under Section 5 hereof or (iii) or (iv) below)
in connection with (i) the preparation and filing of the Registration Statement,
each Preliminary Prospectus, the Prospectus, any Permitted Free Writing
Prospectus and any amendments or supplements thereto, and the printing and
furnishing of copies of each thereof to the Underwriters and to dealers
(including costs of mailing and shipment), (ii) the issuance, sale and delivery
of the Shares by the Company, (iii) the word processing and/or printing of this
Agreement, any Agreement among the Underwriters, any dealer agreements, and the
reproduction and/or printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (iv) the
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the Shares, including
without limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection with
the road show presentations, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of aircraft and other transportation chartered in connection with the road
show, except that the lodging, airfare (except if the Company charters a flight
in which case employees of the Underwriters ride on such charter without
charge), and incidental expenses of employees of the Underwriters shall be the
responsibility of the Underwriters, (v) the qualification of the Shares for
offering and sale under state laws and the determination of their eligibility
for investment under state law as aforesaid (including the legal fees and filing
fees and other disbursements of counsel to the Underwriters) and the
preparation, printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (vi) any listing of the
Shares on the NYSE and any registration thereof under the Exchange Act, (vii)
the filing, if any, for review of the public offering of the Shares by the NASD,
(viii) the performance of the Company's other obligations hereunder, and (ix)
the costs and expenses (including without limitation any damages or other
amounts payable in connection with legal or contractual liability) associated
with the reforming of any contracts for sale of the Shares made by the
Underwriters caused by a breach of the representation contained in the first
paragraph of Section 3(d).
(q) The Company will not (i) take, directly or indirectly,
prior to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay any Person
(other than as contemplated by the provisions hereof) any compensation for
soliciting purchases of the Shares, or (iii) pay or agree to pay to any Person
any compensation for soliciting any order to purchase any other securities of
the Company.
(r) The Company will not invest in futures contracts,
options on futures contracts or options on commodities unless the Company is
exempt from the registration requirements of the Commodity Exchange Act, as
amended, or otherwise complies with the Commodity Exchange Act, as amended. In
addition, the Company will not engage in any activities which might be subject
to the Commodity Exchange Act, as amended, unless such activities are exempt
from that Act or otherwise comply with that Act or with an applicable no-action
letter to the Company from the Commodities Futures Trading Commission.
(s) The Company will comply with all of the provisions of
any undertakings in the Registration Statement.
(t) The Company has been organized and operated in
conformity with the requirements for qualification and taxation of the Company
as a REIT under the Code, and the Company's proposed methods of operation will
enable the Company to continue to meet the requirements for qualification and
taxation as a REIT under the Code for subsequent taxable years.
(u) The Company will not be or become, at any time prior to
the expiration of three years after the date of the Agreement, an "investment
company," as such term is defined in the Investment Company Act.
(v) The Company has retained the Accountants as its
qualified accountants and qualified tax experts (i) to test procedures and
conduct annual compliance reviews designed to determine compliance with the REIT
provisions of the Code and the Company's exempt status under the Investment
Company Act and (ii) to otherwise assist the Company in monitoring appropriate
accounting systems and procedures designed to determine compliance with the REIT
provisions of the Code and the Company's exempt status under the Investment
Company Act.
(w) The Company will comply with all requirements imposed
upon it by the Securities Act and the Exchange Act as from time to time in
force, so far as necessary to permit the continuance of sales of, or dealings
in, the Shares as contemplated by the provisions hereof and the Prospectus.
(x) The Company will maintain such controls and other
procedures, including, without limitation, those required by Sections 302 and
906 of the Xxxxxxxx-Xxxxx Act, and the applicable regulations thereunder that
are designed to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company's management, including its chief
executive officer and chief financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure and to ensure that material information relating to the Company is
made known to them by others within those entities, particularly during the
period in which such periodic reports are being prepared.
(y) The Company will comply with all effective applicable
provisions of the Xxxxxxxx-Xxxxx Act.
(z) The Company represents and agrees that, unless it
obtains the prior consent of Xxxxxxx Xxxxx, and each Underwriter represents and
agrees that, unless it obtains the prior consent of the Company and Xxxxxxx
Xxxxx, it has not made and will not make any offer relating to the Shares that
would constitute an "issuer free writing prospectus," as defined in Rule 433, or
that would otherwise constitute a "free writing prospectus," as defined in Rule
405, required to be filed with the Commission or, in the case of the Company,
whether or not required to be filed with the Commission; provided, however, that
prior to the preparation of the Final Term Sheet in accordance with Section
4(b), the Underwriters are authorized to use the information with respect to the
final terms of the Shares in communications conveying information relating to
the offering to investors. Any such free writing prospectus consented to by the
Company and Xxxxxxx Xxxxx is hereinafter referred to as a "Permitted Free
Writing Prospectus." The Company represents that it has treated or agrees that
it will treat each Permitted Free Writing Prospectus as an "issuer free writing
prospectus," as defined in Rule 433, and has complied and will comply with the
requirements of Rule 433 applicable to any Permitted Free Writing Prospectus,
including timely filing with the Commission where required, legending and record
keeping.
5. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Shares
are not delivered for any reason other than the termination of this Agreement
pursuant to the default by one or more of the Underwriters in its or their
respective obligations hereunder, the Company shall, in addition to paying the
amounts described in Section 4(p) hereof, reimburse the Underwriters for all of
their out-of-pocket expenses, including the fees and disbursements of their
counsel.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties on the part of the Company on the date hereof, at
the Applicable Time and at the time of purchase (and the several obligations of
the Underwriters at each additional time of purchase are subject to the accuracy
of the representations and warranties on the part of the Company on the date
hereof, at the Applicable Time and at the time of purchase (unless previously
waived) and at each additional time of purchase, as the case may be), the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Company shall furnish to Xxxxxxx Xxxxx at the time
of purchase and at each additional time of purchase, as the case may be,
opinions of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP and XxXxx Xxxxxx LLP,
each counsel for the Company, addressed to the Underwriters, and dated the time
of purchase or each additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in form satisfactory to
Fried Xxxxx Xxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters,
substantially in the form of Exhibit A and Exhibit B, respectively attached
hereto.
(b) Xxxxxxx Xxxxx shall have received from the Accountants,
letters dated, respectively, the date of this Agreement and the time of purchase
and each additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by Xxxxxxx Xxxxx relating to the financial statements,
including any pro forma financial statements of the Company and such other
matters customarily covered by comfort letters issued in connection with a
registered public offering.
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (i) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless
Xxxxxxx Xxxxx xxxx such explanation unnecessary, and (ii) such changes,
decreases or increases do not, in the sole judgment of Xxxxxxx Xxxxx, make it
impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement and the Prospectus.
(c) Xxxxxxx Xxxxx shall have received at the time of
purchase and at each additional time of purchase, as the case may be, the
favorable opinion of Fried Xxxxx Xxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the
Underwriters, dated the time of purchase or each additional time of purchase, as
the case may be.
(d) No amendment or supplement to the Registration Statement
or the Prospectus, including documents deemed to be incorporated by reference
therein, or Issuer Free Writing Prospectus shall be filed to which the
Underwriters object in writing.
(e) Prior to the time of purchase or each additional time of
purchase, as the case may be, (i) no stop order with respect to the
effectiveness of any one of the Registration Statement shall have been issued
under the Securities Act or proceedings initiated under Section 8(d) or 8(e) of
the Securities Act; (ii) the Registration Statement and all amendments thereto,
or modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) the
Prospectus and all amendments or supplements thereto, or modifications thereof,
if any, and the General Disclosure Package shall not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(f) All filings with the Commission required by Rule 424
under the Securities Act to have been filed by the time of purchase or each
additional time of purchase, as the case may be, shall have been made within the
applicable time period prescribed for such filing by Rule 424 (without reliance
on Rule 424(b)(8)). A prospectus containing the Rule 430(A) information shall
have been filed with the Commission in accordance with Rule 424(b) (or a post
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430(A)).
(g) Between the time of execution of this Agreement and the
time of purchase or each additional time of purchase, as the case may be, (i) no
material and unfavorable change, financial or otherwise (other than as referred
to in the Registration Statement, and the Prospectus and the General Disclosure
Package, in each case as of the Applicable Time), in the business, condition,
net worth or prospects of the Company shall occur or become known and (ii) no
transaction which is material and unfavorable to the Company shall have been
entered into by the Company.
(h) The Company will, at the time of purchase or each
additional time of purchase, as the case may be, deliver to Xxxxxxx Xxxxx a
certificate of two of its executive officers to the effect that the
representations and warranties of the Company as set forth in this Agreement are
true and correct as of each such date, that the Company shall perform such of
its obligations under this Agreement as are to be performed at or before the
time of purchase and at or before each additional time of purchase, as the case
may be, and that the conditions set forth in paragraphs (e) and (g) of this
Section 6 have been met.
(i) The Company shall have furnished to Xxxxxxx Xxxxx such
other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus as of the time of
purchase and each additional time of purchase, as the case may be, as Xxxxxxx
Xxxxx may reasonably request.
(j) The Shares shall have been approved for listing on the
NYSE, subject only to notice of issuance at or prior to the time of purchase or
each additional time of purchase, as the case may be.
(k) The NASD shall not have raised any objection with
respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(l) Xxxxxxx Xxxxx shall have received lock-up agreements
from the Company and its officers and directors, in the form of Exhibit C
attached hereto, and such letter agreements shall be in full force and effect.
(m) Between the time of execution of this Agreement and the
time of purchase or each additional time of purchase, as the case may be, there
shall not have occurred any downgrading, nor shall any notice or announcement
have been given or made of (i) any intended or potential downgrading or (ii) any
review or possible change that does not indicate an improvement, in the rating
accorded any securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization," as that term is defined in Rule
436(g)(2) under the Securities Act.
7. TERMINATION. The obligations of the several Underwriters
hereunder shall be subject to termination in the absolute discretion of Xxxxxxx
Xxxxx, at any time prior to the time of purchase or, if applicable, each
additional time of purchase, (i) if any of the conditions specified in Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, (ii) if any material adverse and unfavorable change occurs (financial
or otherwise), or any development involving a material adverse and unfavorable
change occurs (financial or otherwise) (in each case, other than as disclosed
in, or incorporated by reference into, the Registration Statement, the General
Disclosure Package, and the Prospectus as of the Applicable Time (exclusive of
any supplement thereto)), in the operations, business, net worth, condition or
prospects of the Company, or a material change in management of the Company
occurs, whether or not arising in the ordinary course of business, which would,
in the sole judgment of Xxxxxxx Xxxxx, make it impracticable to market the
Shares, (iii) if (a) the United States shall have declared war in accordance
with its constitutional processes or there has occurred an outbreak or
escalation of hostilities or other national or international calamity or crisis
or change or development in economic, political or other conditions the effect
of which on, or (b) any material adverse change in the financial markets of the
United States or the international financial markets is such as to make it, in
the sole judgment of Xxxxxxx Xxxxx, impracticable or inadvisable to market the
Shares or enforce contracts for the sale of the Shares, (iv) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or by the NYSE, or if trading generally on the NYSE, American Stock
Exchange or in the Nasdaq National Market has been suspended, materially
limited, (including an automatic halt in trading pursuant to market-decline
triggers other than those in which solely program trading is temporarily
halted), or limitations on or minimum prices for trading (other than limitations
on hours or numbers of days of trading) shall have been fixed, or maximum ranges
for prices for securities have been required, by such exchange or the NASD or
Nasdaq or by order of the Commission or any other governmental authority, (v) if
a banking moratorium shall have been declared by New York or United States
authorities or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, (vi) if there
shall have occurred any downgrading, or any notice or announcement shall have
been given or made of (a) any intended or potential downgrading or (b) any
review or possible change that does not indicate an improvement, in the rating
accorded any securities of or guaranteed by the Company by any "nationally
recognized statistical rating organization," as that term is defined in Rule
436(g)(2)
under the Securities Act, (vii) if any federal or state statute, regulation,
rule or order of any court or other governmental authority has been enacted,
published, decreed or otherwise promulgated which, in the reasonable opinion of
Xxxxxxx Xxxxx, materially adversely affects or will materially adversely affect
the business or operations of the Company, or (viii) if any action has been
taken by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which, in the reasonable opinion of Xxxxxxx Xxxxx,
has a material adverse effect on the securities markets in the United States.
If Xxxxxxx Xxxxx elects to terminate this Agreement as
provided in this Section 7, the Company and each other Underwriter shall be
notified promptly by telephone, which shall be promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated
by this Agreement, is not carried out by the Underwriters for any reason
permitted under this Agreement or if such sale is not carried out because the
Company shall be unable to comply with any of the terms of this Agreement, the
Company shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 3, 4(p), 5, 9 and 10 hereof), and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Sections 9 and 10 hereof) or to one
another hereunder.
8. INCREASE IN UNDERWRITERS' COMMITMENTS. If any
Underwriter shall default in its obligation under this Agreement to take up and
pay for the Shares to be purchased by it under this Agreement (otherwise than
for reasons sufficient to justify the termination of this Agreement under the
provisions of Section 7 hereof), Xxxxxxx Xxxxx shall have the right, within 36
hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 36 hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased at the
time of purchase or each additional time of purchase, as the case may be, each
non-defaulting Underwriter shall take up and pay for (in addition to the number
of Shares which it is otherwise obligated to purchase on such date pursuant to
this Agreement) the number of Shares agreed to be purchased by all such
defaulting Underwriters in such amount or amounts as Xxxxxxx Xxxxx may designate
with the consent of each Underwriter so designated or, in the event no such
designation is made, such Shares shall be taken up and paid for by all
non-defaulting Underwriters pro rata in proportion to the aggregate number of
Firm Shares set opposite the names of such non-defaulting Underwriters in
Schedule A; and (ii) if the total number of Defaulted Shares exceeds 10% of such
total number of Shares to be purchased at the time of purchase or each
additional time of purchase, as the case may be, and if neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
five Business Day period from the date of default for the purchase of such
Defaulted Shares, Xxxxxxx Xxxxx may terminate this Agreement by notice to the
Company, without liability of any party to any other party except that the
provisions of Sections 3 4(p), 5, 9 and 10 shall at all times be effective and
shall survive such termination. Nothing in this paragraph, and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
Without relieving any defaulting Underwriter from its
obligations hereunder, the Company agrees with the non-defaulting Underwriters
that they will not sell any Shares hereunder unless all of the Shares are
purchased by the Underwriters (or by substituted Underwriters selected by
Xxxxxxx Xxxxx with the approval of the Company or selected by the Company with
Xxxxxxx Xxxxx' approval).
If a new Underwriter or Underwriters are substituted for a
defaulting Underwriter or Underwriters in accordance with the foregoing
provisions, the Company or Xxxxxxx Xxxxx shall have the right to postpone the
time of purchase or each additional time of purchase, as the case may be, for a
period not exceeding seven Business Days from the date of substitution in order
that any necessary changes in the Registration Statement and the Prospectus and
other documents may be effected.
The term Underwriter as used in this Agreement shall refer to
and include any Underwriter substituted under this Section 8 with like effect as
if such substituted Underwriter had originally been named in Schedule A.
9. INDEMNIFICATION.
----------------
(a) Indemnification of Underwriters. The Company agrees to
indemnify and hold harmless the Underwriters, their affiliates, as such term is
defined in Rule 501(b) under the Securities Act (each, an "Affiliate") and the
person, if any, who controls each Underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430B Information, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 10 below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430B Information or any
preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430B
Information or any preliminary prospectus, any Issuer Free Writing Prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Xxxxxxx Xxxxx expressly for use therein.
(c) Actions against Parties; Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 9(a) above, counsel to the indemnified parties shall be selected by
the Xxxxxxx Xxxxx, and, in the case of parties indemnified pursuant to Section
9(b) above, counsel to the indemnified parties shall be selected by the Company.
An indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 9 or Section 10 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If
at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 9(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
10. CONTRIBUTION. If the indemnification provided for in
Section 9 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (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 pursuant to this Agreement or (ii) if the allocation provided by
clause (i) 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 hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, 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 hand in connection with the offering of the Shares
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the Net Proceeds from the offering of the Shares pursuant to this
Agreement (before deducting expenses) received by the Company, relative to the
total compensation received by the Underwriters from the sale of Shares on
behalf of the Underwriters.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 10 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 which does not take account of the
equitable considerations referred to above in this Section 10. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 10 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 10, the Underwriters
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
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.
For purposes of this Section 10, the 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 Underwriters' Affiliates shall have the same rights
to contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company.
11. NOTICES. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered or
sent to Xxxxxxx Xxxxx & Co., 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxx Xxxxxx, with a copy for information purposes to Xxxxxxx Xxxx
Xxxxx, Esq. at Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP, Xxx Xxx Xxxx Xxxxx,
Xxx Xxxx, XX 00000 and if to the Company, shall be sufficient in all respects if
delivered or sent to the Company at the offices of the Company at 1211 Avenue of
the Americas, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.X.
Xxxxxxx with a copy for information purposes to Xxxxxxx Xxxxxx, Esq. at
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx, 0000 X Xxxxxx XX, Xxxxxxxxxx, X.X.
00000.
12. 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.
13. SUBMISSION TO JURISDICTION. Except as set forth below,
no Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and the
Company consents to the non-exclusive jurisdiction of such courts and personal
service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any Claim arising out of
or in any way relating to this Agreement is brought by any third party against
Xxxxxxx Xxxxx or any indemnified party. Each of Xxxxxxx
Xxxxx and the Company (on its behalf and, to the extent permitted by applicable
law, on behalf of its stockholders and affiliates) waives all right to trial by
jury in any action, proceeding or counterclaim (whether based upon contract,
tort or otherwise) in any way arising out of or relating to this Agreement. The
Company agrees that a final judgment in any such action, proceeding or
counterclaim brought in any such court shall be conclusive and binding upon the
Company and may be enforced in any other courts in the jurisdiction of which the
Company is or may be subject, by suit upon such judgment.
14. PARTIES AT INTEREST. The Agreement herein set forth has
been and is made solely for the benefit of the Underwriters, the Company and to
the extent provided in Section 9 and 10 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.
15. NO ADVISORY OR FIDUCIARY RELATIONSHIP. The Company
acknowledges and agrees that (a) the purchase and sale of the Shares pursuant to
this Agreement, including the determination of the public offering price of the
Shares and any related discounts and commissions, is an arm's-length commercial
transaction between the Company, on the one hand, and the several Underwriters,
on the other hand, (b) in connection with the offering contemplated hereby and
the process leading to such transaction each Underwriter is and has been acting
solely as a principal and is not the agent or fiduciary of the Company, or its
respective stockholders, creditors, employees or any other party, (c) no
Underwriter has assumed or will assume an advisory or fiduciary responsibility
in favor of the Company with respect to the offering contemplated hereby or the
process leading thereto (irrespective of whether such Underwriter has advised or
is currently advising the Company on other matters) and no Underwriter has any
obligation to the Company with respect to the offering contemplated hereby
except the obligations expressly set forth in this Agreement, (d) the
Underwriters and their respective affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of each of the
Company, and (e) the Underwriters have not provided any legal, accounting,
regulatory or tax advice with respect to the offering contemplated hereby and
the Company has consulted its own respective legal, accounting, regulatory and
tax advisors to the extent it deemed appropriate.
16. TAX DISCLOSURE. Notwithstanding any other provision of
this Agreement, immediately upon commencement of discussions with respect to the
transactions contemplated hereby, the Company (and each employee, representative
or other agent of the Company) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to the Company relating to such tax
treatment and tax structure. For purposes of the foregoing, the term "tax
treatment" is the purported or claimed federal income tax treatment of the
transactions contemplated hereby, and the term "tax structure" includes any fact
that may be relevant to understanding the purported or claimed federal income
tax treatment of the transactions contemplated hereby.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Underwriter or its
Affiliates or selling agents, any person controlling any Underwriter, its
officers or directors or any person controlling the Company, and (ii) delivery
of and payment for the Shares.
18. INTEGRATION. This Agreement supersedes all prior
agreements and understandings (whether written or oral) between the Company and
the Underwriters, or any of them, with respect to the subject matter hereof.
19. 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.
20. 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.
21. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME.
If the foregoing correctly sets forth the understanding among
the Company and the Underwriters, please so indicate in the space provided below
for the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
ANNALY CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial 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
----------
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
CITIGROUP GLOBAL MARKETS INC.
UBS SECURITIES LLC
BY: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By /s/ Xxxxxxx Xxxx
-------------------------------------
Authorized Signatory
For themselves and as Representative(s) of the other Underwriters named in
Schedule A hereto.
SCHEDULE A
NUMBER OF
UNDERWRITER FIRM SHARES
------------------------------------------------------------- -------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated............ 15,975,000
Citigroup Global Markets Inc. ................................ 5,325,000
UBS Securities LLC ........................................... 5,325,000
Bear, Xxxxxxx, & Co. Inc. .................................... 2,662,500
Xxxxxx Brothers............................................... 2,662,500
Xxxxx, Xxxxxxxx & Xxxxx, Inc.................................. 1,775,000
RBC Capital Markets Corporation .............................. 1,775,000
-------------
Total................................................ 35,500,000
=============
Sch-A
SCHEDULE B
Issuer General Use Free Writing Prospectus
None
Sch-B
SCHEDULE C
Information
Number of Firm Shares: 35,500,000
Initial public offering price per Share: $12.30
Sch-C
EXHIBIT A
OPINION OF XXXXXXXXXXX & XXXXXXXX XXXXXXXXX XXXXXX LLP
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland, with the corporate
power and authority to own, lease and operate its properties and conduct its
business as described in the Prospectus and to enter into and perform its
obligations under or as contemplated by the Underwriting Agreement.
2. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good standing
would not have a Material Adverse Effect (with your permission, we have relied
in respect of matters of fact related to the opinion in this paragraph upon a
certificate of an officer of the Company).
3. The Underwriting Agreement has been duly authorized, executed, and
delivered by the Company.
4. The Shares have been duly authorized by the Company for issuance
and sale to the Underwriters pursuant to the Underwriting Agreement and, when
issued and delivered by the Company pursuant to the Underwriting Agreement
against payment of the consideration set forth therein, will be validly issued,
fully paid and non-assessable and no holder of the Shares is or will be subject
to personal liability, under the General Corporation Law of the State of
Maryland (the "MGCL") or the Charter or By-laws of the Company, by reason of
being a holder.
5. The Company has an authorized capitalization as of June 30, 2006
as set forth in the Prospectus Supplement under the caption "Capitalization."
All issued and outstanding shares of capital stock of the Company are validly
issued, fully paid, and non-assessable, and conform in all material respects
with the description thereof contained in the Prospectus. The Shares when issued
and outstanding will conform in all material respects with the description
thereof contained in the Prospectus.
6. The issuance of the Shares is not subject to preemptive or other
similar rights of any stockholder of the Company arising by operation of the
MGCL or under the Charter or By-laws of the Company, or, to our knowledge, any
contractual preemptive rights, resale rights, rights of first refusal or similar
rights. To our knowledge, except as disclosed in the Registration Statement and
the Prospectus, there is no outstanding option, warrant or other right calling
for the issuance of, and no commitment, plan or arrangement to issue, any shares
of capital stock of the Company or any security convertible into, exercisable
for, or exchangeable for shares of capital stock of the Company. To our
knowledge, no holder of any security of the Company has the right to have any
security owned by such holder included for registration in the Registration
Statement.
Exh-A-1
7. The forms of certificate used by the Company to represent shares
of Common Stock comply in all material respects with any applicable requirement
of the MGCL, the Company's Charter and By-laws, and the New York Stock Exchange.
8. The information incorporated by reference into the Prospectus from
the Company's Form 10-K for the Company's fiscal year ending December 31, 2005
under the captions "Risk Factors - Risks of Ownership of Our Common Stock -
Maryland Business Combination Act", "Risk Factors - Risks of Ownership of Our
Common Stock - Maryland Control Share Acquisition Act", and the information in
the Prospectus under the caption "Description of Common Stock and Preferred
Stock" and in the Prospectus Supplement under the caption "Risk Factors - Our
operations may be adversely affected if we are subject to the Investment Company
Act" to the extent that such information constitutes a summary of legal matters
under the MGCL or of provisions of the Company's Charter or By-laws or the 1940
Act (as defined below), has been reviewed by us and is correct in all material
respects.
9. The Registration Statement and the Prospectus (in each case other
than (A) the financial statements and supporting schedules and other financial
and accounting data included or incorporated by reference therein or omitted
therefrom as to which we express no opinion and (B) except as expressed in our
opinion in paragraph 10 below, the documents incorporated therein), as of their
respective effective dates, as the case may be, each complied, and as of the
date hereof each comply, as to form in all material respects to the applicable
requirements of the Securities Act.
10. The annual report on Form 10-K for the year ended December 31,
2005, the quarterly reports on Form 10-Q for each of the fiscal quarters ended
March 31, 2006 and June 30, 2006 and the definitive proxy statement filed with
the Commission on April 5, 2006, incorporated by reference in the Registration
Statement (other than the financial statements and supporting schedules and
other financial and accounting data included therein, as to which we express no
opinion), when they were filed with the Commission (or, if later, upon filing of
an amendment thereto) complied as to form in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated thereunder (collectively, the
"1934 Act").
11. The Registration Statement has been declared effective under the
1933 Act; the Prospectus has been filed pursuant to Rule 424(b) of the 1933 Act
Regulations in the manner and within the time period required by Rule 424(b);
and, to our knowledge, based solely on a telephone conversation with a member of
the staff of the Commission, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been initiated or threatened by the Commission.
12. To our knowledge, no consent, approval, authorization, or other
order of any federal regulatory body, federal administrative agency or other
federal governmental body of the United States of America or any state
regulatory body, state administrative agency or other state governmental body of
the State of Maryland is required under the Applicable Laws for the Company to
issue and sell the Shares to the Underwriters as contemplated by the
Underwriting Agreement and to consummate the transactions contemplated thereby.
Exh-A-2
13. The execution, delivery and performance of the Underwriting
Agreement by the Company, the issuance and sale of the Shares to the
Underwriters as contemplated by the Underwriting Agreement and consummation of
the transactions contemplated thereby do not and will not conflict with or
result in a breach or violation of any of the terms and provisions of,
constitute a default under, or cause a Repayment Event under (A) any indenture,
mortgage, deed of trust, lease, repurchase agreement or other agreement, known
to us, to which the Company is a party or is bound, except for such for such
violations, conflicts, breaches, defaults, liens, charges, or encumbrances that
would not result in a Material Adverse Effect, (B) the Charter or By-laws of the
Company, (C) Applicable Laws, (D) the Investment Company Act of 1940, as amended
(the "1940 Act"), or (E) or, to our knowledge, any judgment, decree, order,
rule, or regulation, of any court, other governmental authority, or arbitrator
having jurisdiction over the Company, except for such for such violations,
conflicts, breaches, defaults, liens, charges, or encumbrances that would not
result in a Material Adverse Effect. As used herein, a "Repayment Event" means
any event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any subsidiary.
14. The Company is not in violation of its Charter or By-laws, and, to
our knowledge, no default by the Company exists in the due performance or
observance of any material obligation, agreement, covenant, or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease,
repurchase agreement, other agreement, or instrument that is described or
referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement, except,
in each case above, for such for such violations, conflicts, breaches, defaults,
liens, charges, or encumbrances that would not result in a Material Adverse
Effect.
15. To our knowledge, there are no actions, suits, claims,
investigations or proceedings pending or threatened to which the Company is or
would be a party or to which any of their respective properties is subject which
are required to be described in the Registration Statement or Prospectus but are
not so described.
16. The Company is not, and the transactions contemplated by the
Underwriting Agreement will not cause the Company to become an "investment
company" or an entity "controlled" by an "investment company" under the 1940
Act.
In acting as counsel to the Company, we have participated in conferences with
officers and other representatives of the Company, the independent public
accountants for the Company, and your representatives, at which conferences the
contents of the Registration Statement and the Prospectus, and related matters
were discussed. Although we are not passing upon or assuming responsibility for
the accuracy, completeness or fairness of the statements included or
incorporated by reference in the Registration Statement, the Prospectus, the
General Disclosure Package, or the Incorporated Documents (as defined below) and
have made no independent check or verification thereof (except as set forth in
paragraph eight above), on the basis of the foregoing, nothing has come to our
attention which has led us to believe that (i) the Registration Statement, at
the time the Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or
Exh-A-3
necessary to make the statements therein not misleading, (ii) the documents
included in the General Disclosure Package, as of the Applicable Time, contained
any untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of circumstances
under which they were made, not misleading, or (iii) the Prospectus Supplement,
as of its date or on the date hereof, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except in each case that we express no belief
and make no statement with respect to financial statements and supporting
schedules and other financial and accounting data included or incorporated by
reference in or omitted from the Registration Statement, the Prospectus, the
General Disclosure Package, or the Incorporated Documents. With respect to
statements contained in the General Disclosure Package, any statement contained
in any of the constituent documents shall be deemed to be modified or superseded
to the extent that any information contained in subsequent constituent documents
modifies or replaces such statement. As used herein, the term "Incorporated
Documents," when used with respect to the Registration Statement or the
Prospectus as of any date, means the documents incorporated or deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be, as of such date pursuant to Item 12 of Form S-3.
Exh-A-4
EXHIBIT B
OPINION OF XXXXX XXXXXX LLP
For all taxable years commencing with its taxable year ended December
31, 1997, the Company has been, and upon the sale of Shares will continue to be,
organized and operated in conformity with the requirements for qualification and
taxation as a "real estate investment trust" (a "REIT") under Section 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). The
Company's proposed method of operation will enable the Company to continue to
meet the requirements for qualification and taxation as a REIT under the Code,
and no actions have been taken (or not taken which are required to be taken)
which would cause such qualification to be lost. The disclosure contained in the
Prospectus under the captions "Material Federal Income Tax Considerations" and
the information incorporated by reference into the Prospectus from the Company's
Form 10-K for the Company's fiscal year ending December 31, 2005 under the
captions, "Risk Factors - We and Our Shareholders Are Subject To Certain Tax
Risks" to the extent such information constitutes a summary of the United States
federal income tax laws and legal conclusions referred to therein, is accurate
in all material respects and fairly summarizes the federal income tax laws
referred to therein.
Ex. X-0
XXXXXXX X
Xxxxxx 00, 0000
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED,
As representative of the several Underwriters,
c/o Merrill Xxxxx & Co.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In consideration of the agreement of Xxxxxxx Xxxxx & Co.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), and
certain other underwriters to underwrite a proposed public offering (the
"Offering") of Common Stock, par value $0.01 per share (the "Common Stock"), of
Annaly Capital Management, Inc., a Maryland corporation (the "Company"), as
contemplated by a shelf registration statement on Form S-3 (File No.
333-134404), as amended, including a prospectus (the "Registration Statement"),
the undersigned hereby agrees that the undersigned will not, for a period of 90
days after the commencement of the Offering, without the prior written consent
of Xxxxxxx Xxxxx, offer, sell, contract to sell, pledge, grant any option to
purchase or otherwise dispose of, directly or indirectly, any shares of capital
stock, or any securities convertible into, or exercisable, exchangeable or
redeemable for, shares of capital stock.
Notwithstanding the foregoing, if (1) during the last 17 days
of the 90-day restricted period the Company issues an earnings release or
material news or a material event relating to the Company occurs or (2) prior to
the expiration of the 90-day restricted period, the Company announces that it
will release earnings results or becomes aware that material news or a material
event will occur during the 16-day period beginning on the last day of the
90-day restricted period, the restrictions imposed in this agreement shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event.
The undersigned hereby acknowledges and agrees that written
notice of any extension of the lock-up period pursuant to the previous paragraph
will be delivered by Xxxxxxx Xxxxx, to the Company and that any such notice
properly delivered will be deemed to have been given to, and received by, the
undersigned. The undersigned further agrees that, prior to engaging in any
transaction or taking any other action that is subject to the terms of this
lock-up agreement during the period from the date of this lock-up agreement to
and including the 34th day following the expiration of the initial lock-up
period, it will give notice thereof to the Company and will not consummate such
transaction or take any such action unless it has
Ex. C-1
received written confirmation from the Company that the lock-up period (as may
have been extended pursuant to the previous paragraph) has expired.
Very truly yours,
By:
-------------------------------
Name:
Title:
Ex. C-2
