EXHIBIT 1.1
Apex Mortgage Capital, Inc.
4,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
September __, 2001
▇▇▇▇▇▇ MERCHANT PARTNERS, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Apex Mortgage Capital, Inc., a Maryland corporation (the "Company"),
confirms its agreement with ▇▇▇▇▇▇ Merchant Partners, Inc. (the "Underwriter")
with respect to (i) the sale by the Company of 4,000,000 shares of common stock,
par value $.01 per share, of the Company ("Common Stock"), and the purchase by
the Underwriter of 4,000,000 shares of Common Stock, and (ii) the grant of the
option described in Section 1(b) hereof to purchase all or any part of 600,000
additional shares of Common Stock to cover over-allotments, if any, from the
Company to the Underwriter. The 4,000,000 shares of Common Stock to be
purchased by the Underwriter (the "Initial Shares") and all or any part of the
600,000 shares of Common Stock subject to the option described in Section l(b)
hereof (the "Option Shares") are hereinafter called, collectively, the "Shares."
The Company understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after this
Underwriting Agreement (this "Agreement") has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-2 (No. 333-________) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required by the Commission on or before
the date hereof, and will file such additional amendments thereto and such
amended prospectuses as may hereafter be required by the Commission. The
registration statement as amended at the time it became effective (including all
information deemed (whether by incorporation by reference or otherwise) to be a
part of the registration statement at the time it became effective pursuant to
the Securities Act and the Securities Act Regulations) is hereinafter called the
"Registration Statement," except that, if the Company files a post-effective
amendment to such Registration Statement which becomes effective prior to the
Closing Time (as defined below), the term "Registration Statement" shall refer
to such Registration Statement as so amended. Any registration statement filed
pursuant to Rule 462(b) of the Securities Act Regulations is hereinafter called
the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the 462(b) Registration
Statement. The Registration Statement has been declared effective under the
Securities Act and the Securities Act Regulations by the Commission. Each
prospectus included in the Registration Statement, or amendments thereof or
supplements thereto, before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company in connection with the
offering of the Shares with the consent of the Underwriter pursuant to Rule
424(a) of the Securities Act Regulations is hereinafter called the "Preliminary
Prospectus." The term "Prospectus" means the final prospectus, as first filed
with the Commission by the Company in connection with the offering of the Shares
pursuant to paragraph (1) or (4) of Rule 424(b) of the Securities Act
Regulations, and any amendments thereof or supplements thereto.
The Company and the Underwriter agree as follows:
1. Sale and Purchase:
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(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $________ for each Initial Share, the Company agrees to sell
to the Underwriter and the Underwriter agrees to purchase from the Company
4,000,000 Initial Shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company hereby grants to the
Underwriter an option to purchase up to 600,000 Option Shares. The option hereby
granted will expire 30 days after the date hereof and may be exercised one time
in whole or in part only for the purpose of covering over-allotments, which may
be made in connection with the offering and distribution of the Initial Shares,
upon notice by the Underwriter to the Company setting forth the number of Option
Shares as to which the Underwriter is exercising the option and the time and
date of payment and delivery for such Option Shares. Any such time and date of
delivery (the "Date of Delivery") shall be determined by the Underwriter, but
shall not be later than five full business days (or earlier, without the written
consent of the Company, than three full business days) after the exercise of
said option, nor in any event prior to the Closing Time, as hereinafter defined.
2. Payment and Delivery:
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(a) Initial Shares. The Initial Shares to be purchased by the
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Underwriter may request upon at least forty-
eight hours' prior notice to the Company shall be delivered by or on behalf of
the Company to the Underwriter, including, at the option of the Underwriter,
through the facilities of The Depository Trust Company ("DTC") for the account
of the Underwriter, against receipt by the Company of payment by or on behalf of
the Underwriter of the purchase price therefor by wire transfer of immediately
available funds to the account specified to the Underwriter by the Company upon
at least forty-eight hours' prior notice. The Company shall cause the
certificates representing the Initial Shares to be made available for checking
and packaging at least twenty-four hours prior to the Closing Time (as defined
below) with respect thereto at the offices of Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP,
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at the office of
DTC or its designated
custodian, as the case may be (the "Designated Office"). The time and date of
such delivery and payment shall be 9:30 a.m., New York City time, on September
__, 2001 or on such other time and date as the Company and the Underwriter may
agree upon in writing. The time at which such payment and delivery are actually
made is hereinafter sometimes called the "Closing Time" and the date of delivery
of either the Initial Shares or Option Shares is hereinafter sometimes called
the "Date of Delivery."
(b) Option Shares. Any Option Shares to be purchased by the
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Underwriter may request upon at least forty-
eight hours' prior notice to the Company shall be delivered by or on behalf of
the Company to the Underwriter, including, at the option of the Underwriter,
through the facilities of DTC for the account of the Underwriter, against
receipt by the Company of payment by or on behalf of the Underwriter of the
purchase price therefor by wire transfer of immediately available funds to the
account specified to the Underwriter by the Company upon at least forty-eight
hours' prior notice. The Company shall cause the certificates representing the
Option Shares to be made available for checking and packaging at least twenty-
four hours prior to the Date of Delivery with respect thereto at the Designated
Office. The time and date of such delivery and payment shall be 9:30 a.m., New
York City time, on the date specified by the Underwriter in the notice given by
the Underwriter to the Company of the Underwriter's election to purchase such
Option Shares or on such other time and date as the Company and the Underwriter
may agree upon in writing.
3. Representations and Warranties of the Company: The Company
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represents and warrants to the Underwriter that:
(a) the authorized shares of Common Stock of the Company conform in
all material respects to the description thereof contained or incorporated by
reference in the Registration Statement and Prospectus; the Company has an
authorized, issued and outstanding capital stock is as set forth in the
Prospectus in the column entitled "Actual" under the caption "Capitalization" as
of the date stated in such section (except for subsequent issuances, if any,
pursuant to this Agreement, pursuant to agreements or benefit plans described or
incorporated by reference in the Prospectus and pursuant to outstanding
options); immediately after the Closing Time, __________ shares of Common Stock
will be issued and outstanding (subject to the Underwriter's option described in
Section 1(b) hereof) and no shares of any other class of capital stock will be
issued and outstanding. All of the issued and outstanding shares of Common Stock
of the Company have been duly authorized and are validly issued, fully paid and
non-assessable, and have been offered, sold and issued by the Company in
compliance in all material respects with all applicable laws (including, without
limitation, federal and state securities laws); none of the issued shares of
Common Stock of the Company have been issued in violation of any preemptive or
similar rights granted by the Company; except those disclosed or incorporated by
reference in 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 Common Stock of the Company or any security convertible
into or exchangeable for shares of Common Stock of the Company;
(b) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Maryland with the
requisite corporate
power and authority to own, lease and operate its properties and to conduct its
business as now conducted and as described in the Registration Statement and the
Prospectus and to authorize, execute and deliver this Agreement and to
consummate the transactions contemplated hereby;
(c) the Company is duly qualified or registered to transact business
in each jurisdiction in which it conducts its businesses, except where the
failure, individually or in the aggregate, to be so qualified or registered
could not reasonably be expected to have a material adverse effect on the
assets, business, operations, earnings, properties or condition (financial or
otherwise) of the Company ("Material Adverse Effect"), and the Company is in
good standing in each jurisdiction in which it owns or leases real property or
maintains an office and in which such good standing is necessary, except where
the failure to be in good standing could not reasonably be expected to have a
Material Adverse Effect; the Company does not own, directly or indirectly, any
significant subsidiaries, as defined in the Securities Act Regulations;
(d) the Company is in compliance in all material respects with all
applicable laws, rules, regulations, orders, decrees and judgments applicable to
the Company;
(e) 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 constitute a
breach of, or default under), its charter or bylaws, or in the performance or
observance of any obligation, agreement, covenant or condition contained in any
license, indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument to which the Company is a party or by which the Company
or its properties is bound, except for such breaches or defaults which could not
reasonably be expected to have a Material Adverse Effect, and the issuance, sale
and delivery by the Company of the Shares, the execution, delivery and
performance of this Agreement, and consummation of the transactions contemplated
hereby will not conflict with, or result in any breach of, or constitute a
default under (nor constitute any event which with notice, lapse of time, or
both would constitute a breach of, or default under), (i) any provision of the
charter or bylaws of the Company, or (ii) any provision of any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company is a party or by which the Company or its
properties may be bound or affected, or (iii) any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable to
the Company, except in each case for such conflicts, breaches or defaults which
could not reasonably be expected to have a Material Adverse Effect;
(f) the Company has the corporate power and authority to enter into
and perform this Agreement and to consummate the transactions contemplated
hereby; this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, by general principles of equity, and by federal or state
securities laws and public policy considerations in respect thereof;
(g) the issuance and sale of the Shares to the Underwriter hereunder
has been duly authorized by the Company; when issued and delivered against
payment therefor as provided in this Agreement, the Shares will be validly
issued, fully paid and non-assessable and the issuance of the Shares will not be
subject to any preemptive or similar rights; except as contemplated
herein, no person or entity holds a right to require or participate in the
registration under the Securities Act of the Shares pursuant to the Registration
Statement; no person or entity has a right of participation or first refusal
with respect to the sale of the Shares by the Company; there are no contracts,
agreements or understandings between the Company and any person or entity
granting such person or entity the rights to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement; the form of
certificates evidencing the Shares complies in all material respects with all
applicable laws and in all material respects with all applicable requirements of
the charter and bylaws of the Company and the requirements of the American Stock
Exchange;
(h) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the transactions
contemplated hereby, or its sale and delivery of the Shares as contemplated
hereby, other than (i) such as have been obtained, or will have been obtained on
or before the Closing Time or the relevant Date of Delivery, as the case may be,
under the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder (the "Exchange Act
Regulations"), (ii) such approvals as have been obtained in connection with the
approval of the listing of the Shares on the American Stock Exchange, (iii) any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriter, and (iv)
any necessary approvals by the National Association of Securities Dealers (the
"NASD");
(i) the Company has the necessary licenses, authorizations, consents
and approvals and has made the necessary filings required under any federal,
state or local law, regulation or rule, and has obtained the necessary
authorizations, consents and approvals from other persons required in order to
conduct its business as described in the Registration Statement and Prospectus
except where the failure to obtain such licenses, authorizations, consents and
approvals or make such filings could not reasonably be expected to have a
Material Adverse Effect; the Company is not in violation of, in default under,
or has received any notice regarding a possible violation, default or revocation
of any such license, 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 except where such violation, default or revocation
could not reasonably be expected to have a Material Adverse Effect;
(j) each of the Registration Statement and any Rule 462(b)
Registration Statement has been declared effective by the Commission under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been issued
by the Commission under the Securities Act and no proceedings for that purpose
have been instituted and are pending or, to the knowledge of the Company, are
threatened by the Commission, and any request on the part of the Commission for
additional information has been complied with to the reasonable satisfaction of
the Commission;
(k) the Company and the transactions contemplated by this Agreement
satisfy the requirements and conditions for using a registration statement on
Form S-2 under the Securities Act and the Securities Act Regulations, as set
forth in the General Instructions to Form S-2;
except for the information and documents required to be delivered with the
Registration Statement, the Preliminary Prospectus and the Prospectus, the
Registration Statement and the Preliminary Prospectus comply and the Prospectus
and any further amendments or supplements thereto will comply, when they have
become effective or are filed with the Commission, as the case may be, in all
material respects with the requirements of the Securities Act and the Securities
Act Regulations and, in each case, present or incorporate by reference or will
present or will incorporate by reference, fairly the information required to be
presented; the Registration Statement did not, and any amendment thereto will
not, in each case as of the applicable effective date, 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;
provided, however, that the Company makes no warranty or representation with
respect to any statement contained in the Registration Statement, the
Preliminary Prospectus or the Prospectus in reliance upon and in conformity with
the information furnished in writing by or on behalf of the Underwriter to the
Company expressly for use in the Registration Statement, the Preliminary
Prospectus or the Prospectus (that information being limited to that described
in the last sentence of the first paragraph of Section 8(c) hereof); and the
Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), 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 were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement, the Preliminary Prospectus or the Prospectus in
reliance upon and in conformity with the information and furnished in writing by
or on behalf of the Underwriter to the Company expressly for use in the
Registration Statement, the Preliminary Prospectus or the Prospectus (that
information being limited to that described in the last sentence of the first
paragraph of Section 8(c) hereof);
(l) each document incorporated by reference in the Prospectus, when it
became effective or was filed with the Commission, as the case may be, conformed
in all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the Securities Act Regulations and the Exchange
Act Regulations, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(m) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriter for use in connection with this offering will be substantially
similar to the versions of the Preliminary Prospectus and Prospectus transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("▇▇▇▇▇"), as permitted by Regulation S-T;
(n) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or to which the properties, assets or rights of the Company are
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitration panel
or agency which could reasonably be expected to result in a Material Adverse
Effect and which could materially affect the consummation of the transactions
contemplated by this Agreement;
(o) the financial statements, including the notes thereto, included as
part of the Registration Statement and the Prospectus or incorporated therein by
reference, present fairly the financial position of the Company as of the dates
indicated and the results of operations and changes in financial position and
cash flows of the Company for the periods specified; such financial statements
have been prepared in conformity with generally accepted accounting principles
as applied in the United States and on a consistent basis during the periods
involved (except as indicated in the notes thereto); the financial statement
schedules included in the Registration Statement and the Prospectus fairly
present the information shown therein; except for the information and the
documents required to be delivered with the Registration Statement, the
Preliminary Prospectus and the Prospectus, no other financial statements or
schedules are required by Form S-2 or otherwise to be included in the
Registration Statement or Prospectus;
(p) Deloitte & Touche, LLP whose reports on the financial statements
of the Company are included as part of the Registration Statement and Prospectus
or are incorporated therein by reference, are and were during the periods
covered by their reports independent public accountants as required by the
Securities Act and the Securities Act Regulations;
(q) subsequent to the respective dates as of which information is
given in the Registration Statement and the Preliminary Prospectus, and except
as may be otherwise indicated in the Registration Statement or Preliminary
Prospectus, there has not been (i) a Material Adverse Effect, whether or not
arising in the ordinary course of business, (ii) any transaction, entered into
by the Company which is material to the Company, (iii) any obligation,
contingent or otherwise incurred by the Company, which is material to the
Company or (iv) any dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock;
(r) to the knowledge of the Company, the Company is not in breach of,
or default under (nor has any event occurred which with notice, lapse of time,
or both would constitute a breach of, or default under), the management
agreement dated December 9, 1997, as amended (the "Management Agreement")
between the Company and TCW Investment Management Company (the "Manager"),
except where such breaches or defaults could not reasonably be expected to have
a Material Adverse Effect;
(s) other than the executive officers named in the Registration
Statement, the Company has no employees and does not own or lease any real
property;
(t) each of the Company and, to its knowledge, its officers, directors
and controlling persons has not taken, and will not take any action which is
designed to or which constituted or which might reasonably be expected to cause
or result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(u) the Company has not relied upon the Underwriter or counsel for the
Underwriter for any legal, tax or accounting advice in connection with the
offering and sale of the Shares other than with respect to the NASD and the blue
sky laws;
(v) any certificate signed by any officer of the Company, which is
designated as a "Certificate," references this section and is delivered to the
Underwriter or to counsel for the
Underwriter 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;
(w) the Company has good title to all personal property owned by it,
free and clear of all liens, security interests, pledges, charges, encumbrances,
mortgages and defects, except such as are disclosed or incorporated by reference
in the Registration Statement, the Preliminary Prospectus or the Prospectus or
such as do not materially and adversely affect the value of such property or do
not interfere with the use made or proposed to be made of such property by the
Company or could not reasonably be expected to result in a Material Adverse
Effect;
(x) the descriptions incorporated by reference in the Registration
Statement and the Preliminary Prospectus of the contracts, leases and other
legal documents therein described present fairly the information required to be
shown, and there are no contracts, leases, or other documents of a character
required to be described in the Registration Statement or the Preliminary
Prospectus or to be filed as exhibits to the Registration Statement which are
not described or filed as required or incorporated by reference as permitted;
(y) to its knowledge, 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 other than as disclosed to the Underwriter
respecting the Company's name, the Company has not received notice of
infringement of or, to its knowledge, conflict with the asserted rights of
others with respect to any Intangibles except as could not reasonably be
expected to result in a Material Adverse Effect;
(z) 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; and (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability;
(aa) the Company has filed on a timely basis all necessary federal,
state, local and foreign income and franchise tax returns required to be filed
through the date hereof and has paid all taxes shown as due thereon; and, to its
knowledge, no tax deficiency has been asserted against the Company, nor does the
Company know of any tax deficiency which is likely to be asserted against it
which if determined adversely to the Company, could reasonably be expected to
have a Material Adverse Effect;
(bb) the Company maintains insurance (issued by insurers of recognized
financial responsibility) of the types and in the amounts generally deemed
adequate for its business and consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering personal property owned or leased by the Company against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect;
(cc) except as otherwise disclosed or incorporated by reference in the
Registration Statement or the Preliminary Prospectus, there are no other
material outstanding loans or advances or material guarantees of indebtedness by
the Company to or for the benefit of any of the officers or directors of the
Company or any of the members of the families of any of them, which are required
to be disclosed in the Preliminary Prospectus;
(dd) the Shares have been approved for listing, upon official notice
of issuance, on the American Stock Exchange;
(ee) in connection with the offering of Shares, the Company has not
offered and will not offer its Common Stock or any other securities convertible
into or exchangeable or exercisable for Common Stock in a manner in violation of
the Securities Act or the Securities Act Regulations; other than the information
and documents required or permitted to be distributed pursuant to the Securities
Act, the Securities Act Regulations, the Exchange Act and the Exchange Act
Regulations, the Company has not distributed and will not distribute any
offering material in connection with the offer and sale of the Shares except as
contemplated herein;
(ff) the Company is organized and operates in conformity with the
requirements for qualification as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"),
and the Company's proposed method of operation will enable it to satisfy the
requirements for qualification as a real estate investment trust under the Code;
(gg) no relationship exists between or among the Company on the one
hand, and the directors, officers, stockholders, customers or suppliers of the
Company on the other hand, which is required by the Securities Act and the
Securities Act Regulations to be described in the Registration Statement and the
Prospectus and which is not so described or incorporated by reference; and
(hh) the Company is not and, after giving effect to the offering and
sale of the Shares, will not become an "investment company" or an entity
"controlled" by and "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
4. Certain Covenants: The Company hereby agrees with the Underwriter:
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(a) to furnish the Underwriter such information as may be reasonably
required and otherwise to cooperate in qualifying the Shares for offer and sale
under the securities or blue sky laws of such states as the Underwriter may
reasonably designate and to maintain such qualifications in effect as long as
reasonably 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 state;
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the sale of the Shares may commence, the Company will
endeavor to cause such post-effective
amendment to become effective as soon as practicable and will advise the
Underwriter promptly and, if requested by the Underwriter, will confirm such
advice in writing, when such post-effective amendment has been declared
effective by the Commission;
(c) to prepare the Prospectus in a form reasonably approved by the
Underwriter and file such Prospectus with the Commission pursuant to Rule 424(b)
within the time period prescribed by the Securities Act Regulations 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 the second day following the
execution and delivery of this Agreement) to the Underwriter as many 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) as the Underwriter may reasonably request for the
purposes contemplated by the Securities Act Regulations, which Prospectus and
any amendments or supplements thereto furnished to the Underwriter will be
substantially similar to the version created to be transmitted to the Commission
for filing via ▇▇▇▇▇, as permitted by Regulation S-T;
(d) to advise the Underwriter promptly and (if requested by the
Underwriter) to confirm such advice in writing, when the Registration Statement
has been declared effective by the Commission and when any post-effective
amendment thereto has been declared effective by the Commission under the
Securities Act Regulations;
(e) to advise the Underwriter immediately, confirming such advice in
writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) 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, to the knowledge of the Company,
of the suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or, to the knowledge of the Company, of the initiation or
threatening of any proceedings for any of such purposes and, if the Commission
or any other government agency or authority should issue to the Company any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Underwriter promptly of any proposal to
amend or supplement the Registration Statement or Prospectus and, unless the
Company determines it is required by applicable law, to file no such amendment
or supplement to which the Underwriter shall reasonably object in writing;
(f) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Underwriter, be required by the
Securities Act or requested by the Commission;
(g) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Securities Act Regulations, to furnish a copy
thereof to the Underwriter and counsel for the Underwriter and obtain the
consent of the Underwriter to the filing, which consent shall not be
unreasonably withheld or delayed;
(h) to the extent consistent with Regulation FD (for purposes of this
paragraph (h), the phrase "consistent with Regulation FD" means without
obligating the Company to make similar disclosures to all of its stockholders or
the public generally), to furnish to the Underwriter for a period of five years
from the date of this Agreement (i) as soon as available, copies of all annual,
quarterly and current reports or other communications supplied to holders of
shares of Common Stock, (ii) as soon as practicable after the filing thereof,
copies of all reports filed by the Company with the Commission, the NASD or the
American Stock Exchange and (iii) such other publicly available information as
the Underwriter may reasonably request regarding the Company;
(i) to the extent consistent with Regulation FD (for purposes of this
paragraph (i), the phrase "consistent with Regulation FD" means without
obligating the Company to make similar disclosures to all of its stockholders or
the public generally), to advise the Underwriter promptly during any period of
time in which a Prospectus relating to the Shares is required to be delivered
under the Securities Act Regulations (i) of any material change in the Company's
assets, operations, business or condition (financial or otherwise) or (ii) of
the happening of any event which would require the making of any change in the
Prospectus then being used so that the Prospectus would not include 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 were made, not misleading, and, during such time,
to prepare and furnish, at the Company's expense, to the Underwriter promptly
such amendments or supplements to such Prospectus as may be necessary to reflect
any such change and to furnish to the Underwriter a copy of such proposed
amendment or supplement before filing any such amendment or supplement with the
Commission;
(j) to furnish promptly to the Underwriter a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith) and
such number of conformed copies of the foregoing as the Underwriter may
reasonably request;
(k) to furnish to the Underwriter, not less than two business days
before filing with the Commission, subsequent to the effective date of the
Registration Statement and during the period of time in which a prospectus
relating to the Shares is required to be delivered under the Securities Act
Regulations, a copy of any document proposed to be filed with the Commission
pursuant to Section 13, 14, or 15(d) of the Exchange Act;
(l) to apply the net proceeds of the sale of the Shares in accordance
with its statements under the caption "Use of Proceeds" in the Prospectus;
(m) to use its commercially reasonable efforts to effect and maintain
the listing of the Shares on the American Stock Exchange and to file with the
American Stock Exchange all documents and notices required by the American Stock
Exchange of companies that have securities that are listed on the American Stock
Exchange;
(n) to engage and maintain, at its expense, a registrar and transfer
agent for the Common Stock;
(o) to materially comply with all of the provisions of any
undertakings in the Registration Statement;
(p) to use its reasonable efforts to meet the requirements for
qualification as a real estate investment trust under Sections 856 through 860
of the Code;
(q) to conduct its affairs in such a manner so as to ensure that the
Company will not be an "investment company" or an entity "controlled" by an
investment company within the meaning of the Investment Company Act;
(r) to not itself and to use its reasonable efforts to cause its
officers, directors and affiliates not to (i) take, directly or indirectly prior
to the distribution of the Shares, 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 anyone 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; and
(s) to maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, and (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles, and to maintain asset
accountability.
5. Payment of Expenses:
-------------------
The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, including expenses and fees
(other than the expenses and fees of the Underwriter and its counsel except as
provided below) in connection with (i) the preparation and filing of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and any
amendments or supplements thereto, and the printing and furnishing of copies of
each thereof to the Underwriter and to dealers (including costs of mailing and
shipment), (ii) the preparation, issuance and delivery of the certificates for
the Shares to the Underwriter, including any stock or other transfer taxes or
duties payable upon the sale of the Shares to the Underwriter, (iii) the
printing of this Agreement and any dealer agreements and furnishing of copies of
each to the Underwriter and to dealers (including costs of mailing and
shipment), (iv) the qualification of the Shares for offering and sale under
state laws that the Company and the Underwriter have mutually agreed are
appropriate and the determination of their eligibility for investment under
state law as aforesaid (including, for this aspect of the transaction, the legal
fees and filing fees and other disbursements of counsel for the Underwriter) and
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriter and to dealers, provided, however, that
such fees shall not exceed $1,000, (v) filing for review of the public offering
of the Shares by the NASD (including, for this aspect of the transaction, the
legal fees and filing fees and other disbursements of counsel for the
Underwriters relating thereto), provided, however, that such fees shall not
exceed $2,000, (vi) the fees and expenses of any transfer agent or registrar for
the Shares and miscellaneous expenses
-12-
referred to in Part II of the Registration Statement, (vii) the Company's
expenses incurred for lodging and travel of the Company's employees (provided
that the parties shall use their reasonable efforts to utilize a commercial
carrier) in making road show presentations with respect to the offering of the
Shares, and (viii) the fees and expenses incurred by the Company in connection
with the listing of the Shares on the American Stock Exchange.
6. Conditions of the Underwriter's Obligations: The obligations of
-------------------------------------------
the Underwriter hereunder to purchase Shares at the Closing Time or on the Date
of Delivery, as applicable, are subject to (i) the accuracy of the
representations and warranties on the part of the Company in all material
respects on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, (ii) the performance by the Company of its obligations
hereunder in all material respects, and (iii) to the satisfaction of the
following further conditions at the Closing Time or on the Date of Delivery, as
applicable:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective by the Commission before the offering of the Shares may
commence, such post-effective amendment shall have been declared effective by
the Commission not later than 5:30 p.m., New York City time, on the date hereof,
or at such later date and time as shall be reasonably consented to in writing by
the Underwriter, which consent shall not be unreasonably withheld or delayed;
(b) The Underwriter shall have received at the Closing Time and on
each Date of Delivery an opinion of O'Melveny & ▇▇▇▇▇ LLP, counsel for the
Company, addressed to the Underwriter and dated the Closing Time and each Date
of Delivery and substantially in the form attached hereto as Exhibit C;
(c) The Underwriter shall have received at the Closing Time and on
each Date of Delivery an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP,
counsel for the Company, addressed to the Underwriter and dated the Closing Time
and each Date of Delivery and substantially in the form attached hereto as
Exhibit D;
(d) The Underwriter shall have received at the Closing Time and on
each Date of Delivery an opinion of O'Melveny & ▇▇▇▇▇ LLP, tax counsel for the
Company, addressed to the Underwriter and dated the Closing Time and each Date
of Delivery and substantially in the form attached hereto as Exhibit E;
(e) The Underwriter shall have received from Deloitte & Touche, LLP,
letters dated, respectively, as of the date of this Agreement, the Closing Time
and each Date of Delivery, as the case may be, addressed to the Underwriter, in
form and substance reasonably satisfactory to the Underwriter, relating to the
financial statements of the Company, and such other matters customarily covered
by comfort letters issued in connection with registered public offerings of a
similar nature;
(f) The Underwriter shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP,
counsel to the Underwriter, dated the Closing Time or such Date of Delivery,
addressed to the Underwriter and in form and substance satisfactory to the
Underwriter;
-13-
(g) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriter shall have reasonably
objected in writing;
(h) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued and outstanding, and no proceedings for such purpose shall have been
initiated or threatened by the Commission and remain unresolved, and no
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes, has occurred and remain unresolved, (ii) the Registration
Statement shall not contain 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 not misleading, and (iii) the Prospectus 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 light of the
circumstances under which they were made, not misleading;
(i) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery (i) no Material Adverse Effect of the
Company shall occur or become known (whether or not arising in the ordinary
course of business) or that makes it, in the reasonable judgment of the
Underwriter, impracticable to market the Shares in the manner contemplated in
the Prospectus, or (ii) no transaction which is material and unfavorable to the
Company shall have been entered into by the Company;
(j) At the Closing Time, the Shares shall have been approved for
listing, upon official notice of issuance, on the American Stock Exchange;
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements, which
objection has not been resolved to the reasonable satisfaction of the NASD;
(l) The Underwriter shall have received lock-up agreements from each
person listed on Schedule I attached hereto, substantially in the form of
----------
Exhibit A attached hereto, and such lock-up agreements shall be in full force
and effect;
(m) The Manager shall have furnished the Underwriter the letter
agreement substantially in the form of Exhibit B attached hereto (the "Manager's
Representation Letter") and the representations and warranties in the Manager's
Representation Letter shall be accurate in all material respects as of the date
hereof, the Closing Time and on each Date of Delivery;
(n) The Company will, at the Closing Time and on each Date of
Delivery, deliver to the Underwriter a certificate of two principal executive
officers to the effect that, to each of such officer's knowledge, the
representations and warranties of the Company set forth in this Agreement are
true and correct in all material respects, the conditions set forth in
paragraphs (i) and (k) have been satisfied in all material respects, and the
Company has performed in all material respects its obligations under this
Agreement, in each case as of such date;
-14-
(o) The Company shall have furnished to the Underwriter such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus, the representations,
warranties and statements of the Company contained herein, the performance by
the Company of its covenants contained herein, and the fulfillment of any
conditions contained herein, as of the Closing Time or any Date of Delivery as
the Underwriter may reasonably request; and
(p) All filings with the Commission required by Rule 424 under the
Securities Act Regulations shall have been made within the applicable time
period proscribed for such filing by such Rule.
7. Termination: The obligations of the Underwriter hereunder shall
-----------
be subject to termination in the reasonable discretion of the Underwriter, at
any time prior to the Closing Time or any Date of Delivery, (i) if any of the
conditions specified in Section 6 shall not have been fulfilled in all material
respects when and as required by this Agreement to be fulfilled, or (ii) if
there has been since the respective dates as of which information is given in
the Registration Statement, any Material Adverse Effect, whether or not arising
in the ordinary course of business, or (iii) if there has occurred outbreak or
escalation of hostilities or other national or international calamity or crisis
or change in economic, political or other conditions the effect of which on the
financial markets of the United States is such as to make it, in the reasonable
judgment of the Underwriter, impracticable to market the Shares or enforce
contracts for the sale of the Shares, or (iv) if trading in any securities of
the Company has been suspended by the Commission or by the American Stock
Exchange, or if trading generally on the American Stock Exchange has been
suspended (including automatic halt in trading pursuant to market-decline
triggers other than those in which solely program trading is temporarily
halted), or limitations on prices for trading (other than limitations on hours
or numbers of days of trading) have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or the NASD or by order of the
Commission or any other governmental authority, or (v) 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 the Underwriter materially adversely affects or will
materially adversely affect the business or operations of the Company, or (vi)
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 the
Underwriter has a material adverse effect on the securities markets in the
United States, or (vii) in the case of any of the events specified in clauses
(i) through (vi), such event, singly or together with any other such events,
makes it, in the judgment of the Underwriter, impracticable to market or deliver
the Shares on the terms and in the manner contemplated in the Prospectus.
If the Underwriter elects to terminate this Agreement as provided in
this Section 7, the Company shall be notified promptly by telephone, promptly
confirmed by facsimile.
If the sale to the Underwriter of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriter for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability
-15-
under this Agreement and the Underwriter shall be under no obligation or
liability to the Company under this Agreement or to one another hereunder.
8. Indemnity and Contribution by the Company and the Underwriter:
-------------------------------------------------------------
(a) The Company agrees to indemnify, defend and hold harmless the
Underwriter and any person who controls the Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) which the Underwriter or controlling person may incur
under the Securities Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (i) any
breach of any representation, warranty or covenant of the Company contained
herein, (ii) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company), or arises out
of or is based upon any omission or alleged omission to state a material fact
required to be stated in such Registration Statement or necessary to make the
statements made therein, not misleading, except insofar as any such loss,
expense, liability, damage or claim arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in such Registration Statement and in conformity with
information furnished in writing by the Underwriter to the Company expressly for
use in such Registration Statement; or (iii) any untrue statement or alleged
untrue statement of a material fact contained in a Prospectus (the term
Prospectus for the purpose of this Section 8 being deemed to include any
Preliminary Prospectus and the Prospectus as amended or supplemented by the
Company), or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in such Prospectus or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, except insofar as any such loss, expense,
liability, damage or claim arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission of a material fact
contained in such Prospectus and in conformity with information furnished in
writing by the Underwriter to the Company expressly for use in such Prospectus.
(b) If any action is brought against the Underwriter or controlling
person in respect of which indemnity may be sought against the Company pursuant
to Subsection 8(a) above, the Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses; provided, however, that any failure or delay to so notify the Company
will not relieve the Company of any obligation hereunder, to the extent that the
Company is not materially prejudiced by such failure or delay. The Underwriter
or controlling person shall have the right to employ its or their own outside
legal counsel in any such case, but the fees and expenses of such outside legal
counsel shall be at the expense of the Underwriter or such controlling person
unless the employment of such outside legal counsel shall have been authorized
in writing by the Company in connection with the defense of such action, or the
Company shall not have employed outside legal counsel to have charge of the
defense of such action within a reasonable time or such indemnified party or
parties shall have reasonably concluded (based on the advice of outside legal
counsel) that there may be defenses available to it or them which are different
from or additional to those available to the Company (in which case the Company
shall not have the right to direct the defense of such action on behalf
-16-
of the indemnified party or parties), in any of which events such reasonable
out-of-pocket fees and expenses of outside legal counsel shall be borne by the
Company and paid on a monthly basis as incurred (it being understood, however,
that the Company shall not be liable for the expenses of more than one separate
firm of outside attorneys for the Underwriter or controlling persons). Anything
in this paragraph to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without its
written consent, which shall not be unreasonably withheld.
(c) The Underwriter agrees to indemnify, defend and hold harmless the
Company, the Company's directors, the Company's officers that signed the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, the Company or
any such person may incur under the Securities Act, the Exchange Act or
otherwise, but only insofar as such loss, expense, liability, damage or claim
arises out of or is based upon (i) upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company) and in conformity with information furnished in writing by the
Underwriter to the Company expressly for use in the Registration Statement, or
arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such information required to be stated in such
Registration Statement or necessary to make such information not misleading; or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (the term Prospectus for the purpose of this Section
8 being deemed to include any Preliminary Prospectus and the Prospectus, as
amended and supplemented) and in conformity with information furnished in
writing by the Underwriter to the Company expressly for use in the Prospectus,
or arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in such Prospectus or necessary to make the
statements therein, in the light of the circumstances under which made, not
misleading. The statements set forth (i) in the last paragraph on the cover page
of the Preliminary Prospectus and the Prospectus and (ii) under the caption
"Underwriting" in the Preliminary Prospectus and the Prospectus (to the extent
such statements relate to the Underwriter) constitute the only information
furnished by or on behalf of the Underwriter to the Company expressly for use in
the Registration Statement and the Prospectus and the Underwriter shall be
deemed to have provided such information to the Company regardless of whether
such statements were actually made or delivered by a party other than ▇▇▇▇▇▇
Merchant Partners, Inc. or its representatives.
If any action is brought against the Company or any such person in
respect of which indemnity may be sought against the Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Underwriter in writing of the institution of such action and the Underwriter
shall assume the defense of such action, including the employment of counsel and
payment of expenses. The Company or such person shall have the right to employ
its own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of the Company or such person unless the employment of
such counsel shall have been authorized in writing by the Underwriter in
connection with the defense of such action or the Underwriter shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded
-17-
(based on the advice of counsel) that there may be defenses available to it or
them which are different from or additional to those available to the
Underwriter (in which case the Underwriter shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by such Underwriter
and paid as incurred (it being understood, however, that the Underwriter shall
ot be liable for the expenses of more than one separate firm of attorneys in
any one action or series of related actions in the same jurisdiction (other than
local counsel in any such jurisdiction) representing the indemnified parties who
are parties to such action). Anything in this paragraph to the contrary
notwithstanding, the Underwriter shall not be liable for any settlement of any
such claim or action effected without the written consent of the Underwriter,
which consent shall not be unreasonably withheld or delayed.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under subsections (a), (b) and (c) of this
Section 8 in respect of any losses, expenses, liabilities, damages or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, expenses,
liabilities, damages or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Underwriter from
the offering of the Shares or (ii) if (but only if) the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and of the
Underwriter, on the other hand, in connection with the statements or omissions
which resulted in such losses, expenses, liabilities, damages or claims, as well
as any other relevant equitable considerations. The relative benefits received
by the Company, on the one hand, and the Underwriter, on the other hand, shall
not be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company bear to the underwriting discounts and
commissions received by the Underwriter. The relative fault of the Company, on
the one hand, and of the Underwriter, on the other hand, shall be determined by
reference to, among other things, which party had an opportunity to correct the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission and the parties' relative intent, knowledge and access to
information. The amount paid or payable by a party as a result of the losses,
claims, damages and liabilities referred to above shall be deemed to include any
reasonable, out-of-pocket legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any claim or action.
(e) The Company and the Underwriter agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation which does not take account
the equitable considerations referred to in Subsection 8(d)(i) and, if
applicable 8(d)(ii), above. Notwithstanding the provisions of this Section 8,
the Underwriter shall not be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by the
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
-18-
9. Survival: The indemnity and contribution agreements contained in
--------
Section 8 and the covenants, warranties and representations of the Company
contained in Sections 3, 4 and 5 of this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Underwriter, or any person who controls the Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and shall
survive any termination of this Agreement or the sale and delivery of the
Shares. The Company and the Underwriter agree promptly to notify the other of
the commencement of any litigation or proceeding against it and, in the case of
the Company, against any of the Company's officers and directors, in connection
with the sale and delivery of the Shares, or in connection with the Registration
Statement or Prospectus.
10. Notices: Except as otherwise herein provided, all statements,
-------
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriter, shall be sufficient in all respects if delivered to ▇▇▇▇▇▇
Merchant Partners, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: Syndicate Department; if to the Company, shall be
sufficient in all respects if delivered to the Company at the offices of the
Company at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
11. Governing Law; Headings: THIS AGREEMENT SHALL BE GOVERNED BY,
-----------------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this Agreement
have been inserted as a matter of convenience of reference and are not a part of
this Agreement.
The parties in interest irrevocably submit to the exclusive
jurisdiction of any United States federal court sitting in New York, New York in
respect of any suit, action, or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby and hereby irrevocably agree
that all claims in respect of any such suit, action or proceeding shall be held
and determined in any such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such action, suit or proceeding in such
court.
12. Parties in Interest: The agreement herein set forth has been and
-------------------
is made solely for the benefit of the Underwriter, the Company and the
controlling persons, directors and officers referred to in Sections 8 and 9
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from the Underwriter) shall acquire or have any right under
or by virtue of this Agreement.
13. Counterparts and Facsimile Signatures: This Agreement may be
-------------------------------------
signed by the parties in counterparts which together shall constitute one and
the same agreement among the parties. A facsimile signature shall constitute an
original signature for all purposes.
-19-
If the foregoing correctly sets forth the understanding between the
Company and the Underwriter, please so indicate in the space provided below for
the purpose, whereupon this Agreement shall constitute a binding agreement
between the Company and the Underwriter.
Very truly yours,
APEX MORTGAGE CAPITAL, INC.
--------------------------------------
By:
Title:
Accepted and agreed to as
of the date first above written:
▇▇▇▇▇▇ MERCHANT PARTNERS, INC.
--------------------------------------
By:
Title:
-20-
Schedule I
----------
Lock-Up Parties
---------------
[All Directors and Officers of the Company]
Schedule I-1
Exhibit A
---------
Lock-Up Agreement
-----------------
[Date]
▇▇▇▇▇▇ Merchant Partners, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Apex Mortgage Capital, Inc. (the "Company")
-------------------------------------------
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
common stock of the Company ("Common Stock") or securities convertible into,
exchangeable, or exercisable for Common Stock ("Securities"). The Company
proposes to carry out a public offering of Common Stock (the "Offering") for
which you will act as the underwriter. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you are relying on the representations and
agreements of the undersigned contained in this Lock-Up Agreement in carrying
out the Offering and in entering into the Underwriting Agreement and the other
underwriting arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of ▇▇▇▇▇▇ Merchant
Partners, Inc. (which consent may be withheld in its sole discretion), directly
or indirectly, sell, offer, contract, or grant any option to sell (including
without limitation any short sale), pledge, transfer, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Exchange Act") or otherwise dispose of any shares
of Securities (collectively, a "Disposition") currently or hereafter owned
either of record or beneficially (as defined in Rule 13d-3 under the Exchange
Act) by the undersigned, or publicly announce the undersigned's intention to do
any of the foregoing, for a period commencing on the date hereof and continuing
through the close of trading on the date [__________] days after the date of the
Prospectus (the "Lock-Up Period"). Notwithstanding the foregoing, the
undersigned shall have the right to consummate the following during the Lock-Up
Period or otherwise: (i) any transfer of all or part of the Securities as a
bona fide gift or gifts, provided the donee or donees thereof agree in writing
to be bound by the terms of this Lock-Up Agreement; (ii) any transfer of all or
part of the Securities to a trust the beneficiaries of which are exclusively the
undersigned, a member or members of his or her immediate family and/or a
charity, provided that the trust agrees in writing to be bound by the terms of
this Lock-Up Agreement; (iii) any transfer of all or part of the Securities as a
distribution to partners, shareholders or beneficiaries of such person, provided
that the distributees thereof agree in writing to be bound by the terms of this
Lock-Up Agreement;
Exhibit A-1
(iv) any transfer of Securities acquired on the open market; and (v) any
transfer of all or part of the Securities with the prior written consent of
▇▇▇▇▇▇ Merchant Partners, Inc.
Subject to clauses (i) through (v) above, the foregoing restrictions have
been expressly agreed to preclude the holder of the Securities from engaging in
any hedging or other transaction which is designed to or reasonably expected to
lead to or result in a Disposition of Securities during the Lock-Up Period, even
if such Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale, or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that included, relates to, or derives any significant
part of its value from Securities. Subject to clauses (i) through (v) above,
the undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or Securities held by the undersigned except
in compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, of any Common Stock owned
either of record or beneficially by the undersigned, including any rights to
receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned. If the Underwriting Agreement is not executed and delivered by the
Company and you on or before September 30, 2001, this Lock-Up Agreement shall be
of no further force or effect. Nothing in this Lock-Up Agreement shall
constitute an obligation to sell or purchase shares of Common Stock or
Securities of the Company.
-----------------------------------
Printed Name of Holder
By:
--------------------------------
Signature
-----------------------------------
Printed Name of Person Signing
Exhibit A-2
Exhibit B
---------
Manager's Representation Letter
-------------------------------
September __, 2001
▇▇▇▇▇▇ MERCHANT PARTNERS, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with that certain Underwriting Agreement, dated September __,
2001, (the "Underwriting Agreement," and all capitalized terms herein shall have
the meanings ascribed to them in the Underwriting Agreement unless otherwise
defined herein) by and between Apex Mortgage Capital, Inc., a Maryland
corporation (the "Company"), and ▇▇▇▇▇▇ Merchant Partners, Inc. (the
"Underwriter"), and for good and valuable consideration, the sufficiency of
which is hereby acknowledged, TCW Investment Management Company (the
"Management") represents and warrants the following to the Underwriter as of the
date hereof:
1. The Manager has been duly incorporated and is validly existing and in
good standing under the laws of the State of California with the requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as now conducted, and to perform its obligations under the
Management Agreement.
2. The Manager is duly qualified or registered to transact business in
each jurisdiction in which it conducts its business, except where the failure to
be so qualified or registered could not reasonably be expected to have a
Material Adverse Effect.
3. The Manager is not in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the Manager is a
party or by which it is bound or its properties are subject, except for such
violations or defaults which could not be reasonably expected not to have a
Material Adverse Effect.
4. The execution and delivery of the Management Agreement did not, and the
performance of the Management Agreement and consummation of the transactions
contemplated therein do not and will not conflict with or constitute a breach
of, or default under or result in the creation or imposition of a lien, charge
or encumbrance upon any property or asset of the Manager pursuant to any
material contract, indenture, mortgage, deed of trust, loan or credit
Exhibit B-1
agreement, note, lease or other agreement or instrument to which the Manager is
a party or by which it is bound or its properties are subject, except for such
conflicts, breaches or defaults, liens, charges or encumbrances which could not
reasonably be expected to have a Material Adverse Effect, nor will such action
result in any violation of the provisions of the charter or by-laws of the
Manager, or any applicable law or any judgment, order, writ or decree of any
government, governmental instrumentality or court having jurisdiction over the
Manager or any of its properties or operations, except for such violations which
could not reasonably be expected to have a Material Adverse Effect.
5. The Management Agreement was duly authorized, executed and delivered by
the Manager and constitutes a valid and binding agreement of the Manager
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, by general principles of equity, and by federal or
state securities laws and public policy considerations in respect thereof.
6. No filing with or authorization, approval, consent, license or order of
any governmental authority or agency is required in connection with the
performance by the Manager of its obligations under the Management Agreement.
7. The information set forth under the captions "The Manager and Our
Executive Officers," "Risks Related to Conflicts of Interest" and "Our Company-
Overview" in the Preliminary Prospectus and the Prospectus (to the extent such
statements relate to the Manager) (i) does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated in the
Registration Statement, or necessary to make the statements made therein not
misleading, and (ii) does not contain any untrue statement of a material fact
required to be stated in the Preliminary Prospectus and the Prospectus 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.
The Manager possesses such licenses, approvals, consents and other
authorizations issued by appropriate regulatory agencies or bodies necessary to
conduct its business, except where the failure to possess such licenses,
approvals, consents and other authorizations could not reasonably be expected to
have a Material Adverse Effect.There is no action, suit, proceeding, inquiry or
investigation pending or, to the Manager's knowledge, threatened against the
Manager which if determined adversely to the Manager could reasonably be
expected to result in a Material Adverse Effect and which could materially
affect the consummation of the transactions contemplated by the Underwriting
Agreement.
The Manager is not prohibited by the Investment Advisers Act of 1940, as
amended or the rules and regulations thereunder, from acting under the
Management Agreement.
THIS REPRESENTATION LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The parties hereto irrevocably submit to the exclusive jurisdiction
of any United States federal sitting in New York, New York, in respect of any
suit, action or proceeding arising out of or relating to this Representation
Letter, and hereby irrevocably agree that all claims in respect of any such
suit, action or proceeding shall be held and determined in any such court. Each
of the parties hereto irrevocably waives
Exhibit B-2
any objection to the laying of the venue of any such suit, action or proceeding
brought in any such court.
TCW INVESTMENT MANAGEMENT COMPANY
By:
--------------------------------------
Name:
Title:
Accepted and agreed to as
of the date first written above:
▇▇▇▇▇▇ MERCHANT PARTNERS, INC.
----------------------------------
Name:
Title:
Exhibit B-3
Exhibit C
---------
Legal Opinion Respecting Securities Law
---------------------------------------
Exhibit C-1
Exhibit D
---------
Legal Opinion Respecting Maryland Law
-------------------------------------
Exhibit D-1
Exhibit E
---------
Legal Opinion Respecting Tax Matters
------------------------------------
Exhibit E-1