MFA MORTGAGE INVESTMENTS, INC. 40,000,000 SHARES CONTROLLED EQUITY OFFERINGSM SALES AGREEMENT
MFA
MORTGAGE INVESTMENTS, INC.
40,000,000
SHARES
CONTROLLED EQUITY
OFFERINGSM
December
12, 2008
CANTOR
▇▇▇▇▇▇▇▇▇▇ & CO.
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
MFA
MORTGAGE INVESTMENTS, INC., a Maryland corporation (the “Company”), confirms its agreement
(this “Agreement”) with Cantor ▇▇▇▇▇▇▇▇▇▇
& Co. (“CF&Co”), as follows:
1. Issuance and Sale of
Shares. The Company agrees that, from time to time during the
term of this Agreement, on the terms and subject to the conditions set forth
herein, it may issue and sell through CF&Co, acting as agent and/or
principal, up to 40 million shares of the Company’s common stock, par value
$0.01 per share (the “Common
Stock” or “Shares”). Notwithstanding anything
to the contrary contained herein, the parties hereto agree that compliance with
the limitations set forth in this Section 1 on the
number of Shares issued and sold under this Agreement shall be the sole
responsibility of the Company, and CF&Co shall have no obligation in
connection with such compliance. The issuance and sale of Shares
through CF&Co will be effected pursuant to the Registration Statement (as
defined below) filed by the Company and declared effective by the Securities and
Exchange Commission (the “Commission”).
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 Commission a registration statement on Form S-3 (File No.
333-146819), and a post-effective amendment thereto, including a base
prospectus, with respect to the Shares, which registration statement, as amended
by such post-effective amendment, 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”). Such registration statement, as amended by such
post-effective amendment, has become effective under the Securities
Act. The Company may file one or more additional registration
statements from time to time that will contain a base prospectus with respect to
the Shares. The Company shall prepare one or more prospectus supplements
(collectively, the “Prospectus
Supplement”) to the base prospectus included as part of each registration
statement containing a base prospectus with respect to the Shares. The Company
shall furnish to CF&Co, for use by CF&Co, copies of the
prospectus included as part of each such registration statement, as supplemented
by the Prospectus Supplement, relating to the Shares. Except where
the context otherwise requires, each such registration statement, as amended
(including by such post-effective amendment) 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 and or deemed to be part of each such registration statement
filed pursuant to Rule 430B of the Securities Act, is herein called the “Registration
Statement.” Each base prospectus, including all documents incorporated
therein by reference, included in the Registration Statement, as it may be
supplemented by the Prospectus Supplement, in the form in which such prospectus
and/or Prospectus Supplement have most recently been filed by the Company with
the Commission pursuant to Rule 424(b) under the Securities Act, together with
any “issuer free writing prospectus,” as defined in Rule 433 under the
Securities Act (“Rule
433”), if any, relating to the offering of the Shares,
which (i) is required to be filed with the Commission by the Company
or (ii) is exempt from filing pursuant to Rule 433(d)(5)(i), 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), is
herein called the “Prospectus”.
Any reference herein to the Registration Statement, the Prospectus or any
amendment or supplement thereto shall be deemed to refer to and include the
documents incorporated by reference therein, and any reference herein to the
terms “amend”, “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Agreement, all
references to the Registration Statement, the Prospectus, or to any amendment or
supplement thereto shall be deemed to include any copy filed with the Commission
pursuant to its Electronic Data Gathering Analysis and Retrieval System (“▇▇▇▇▇”).
2. Placements. Each
time that the Company wishes to issue and sell Shares hereunder (each, a “Placement”), it will notify CF&Co
by email notice (or other method mutually agreed to in writing by the parties)
containing the parameters in accordance with which it desires the Shares to be
sold, which shall, at a minimum, include the number of Shares to be issued (the
“Placement
Shares”), the time period during which sales are requested to be made,
any limitation on the number of Shares that may be sold in any one day and any
minimum price below which sales may not be made, (a “Placement
Notice”), a form
of which containing such minimum sales parameters necessary is attached hereto
as Schedule 1.
The Placement Notice shall originate from any of the individuals from the
Company set forth on Schedule 3 (with a
copy to each of the other individuals from the Company listed on such schedule),
and shall be addressed to each of the individuals from CF&Co set forth on
Schedule 3, as
such Schedule 3
may be amended from time to time. The Placement Notice shall be effective upon
receipt by CF&Co unless and until (i) in accordance with the notice
requirement set forth in Section 4, CF&Co declines to accept the terms
contained therein for any reason, in its sole discretion, (ii) the entire amount
of the Placement Shares have been sold, (iii) in accordance with the notice
requirements set forth in Section 4, the Company suspends or terminates the
Placement Notice, (iv) the Company issues a subsequent Placement Notice with
parameters superseding those on the earlier dated Placement Notice, or (v) the
Agreement has been terminated under the provisions of Section 11. The amount of
any discount, commission or other compensation to be paid by the Company to
CF&Co in connection with the sale of the Placement Shares shall be
calculated in accordance with the terms set forth in Schedule 2. It is
expressly acknowledged and agreed that neither the Company nor CF&Co will
have any obligation whatsoever with respect to a Placement or any Placement
Shares unless and until the Company delivers a Placement Notice to CF&Co and
CF&Co does not decline such Placement Notice pursuant to the terms set forth
above, and then only upon the terms specified therein and herein. In
the event of a conflict between the terms of this Agreement and the terms of a
Placement Notice, the terms of the Placement Notice will control.
2
3. Sale of Placement Shares by
CF&Co. Subject to the terms and conditions herein set
forth, upon the Company’s issuance of a Placement Notice, and unless the sale of
the Placement Shares described therein has been declined, suspended or otherwise
terminated in accordance with the terms of this Agreement, CF&Co., for the
period specified in the Placement Notice, will use its commercially reasonable
efforts consistent with its normal trading and sales practices to sell such
Placement Shares up to the amount specified, and otherwise in accordance with
the terms of such Placement Notice. CF&Co will provide written
confirmation to the Company pursuant to Section 2 no later than the opening of
the Trading Day (as defined below) immediately following the Trading Day on
which it has made sales of Placement Shares hereunder, setting forth the number
of Placement Shares sold on such day, the compensation payable by the Company,
with an itemization of deductions made by CF&Co (as set forth in Section 5
(a)) from the gross proceeds that it receives from such sales and the Net
Proceeds (as defined below) payable to the Company. CF&Co may sell Placement
Shares by any method permitted by law deemed to be an “at the market” offering
as defined in Rule 415 of the Securities Act, including, without limitation,
sales made directly on the New York Stock Exchange (the “Exchange”), on any other existing
trading market for the Common Stock or to or through a market
maker. CF&Co may also sell Placement Shares in privately
negotiated transactions. The Company acknowledges and agrees that (i)
there can be no assurance that CF&Co will be successful in selling Placement
Shares, and (ii) CF&Co will incur no liability or obligation to the Company
or any other person or entity if it does not sell Placement Shares for any
reason other than a failure by CF&Co to use its commercially reasonable
efforts consistent with its normal trading and sales practices to sell such
Placement Shares as required under this Section
3. For the purposes hereof, “Trading
Day” means any
day on which Common Stock is purchased and sold on the principal market on which
the Common Stock is listed or quoted.
4. Suspension of
Sales. The Company or CF&Co may, upon notice to the other
party in writing (including by email correspondence to each of the individuals
of the other party set forth on Schedule 3, if
receipt of such correspondence is actually acknowledged by any of the
individuals to whom the notice is sent, other than via auto-reply) or by
telephone (confirmed immediately by verifiable facsimile transmission or email
correspondence to each of the individuals of the other party set forth on Schedule 3), suspend
any sale of Placement Shares; provided, however, that such suspension shall not
affect or impair either party’s obligations with respect to any Placement Shares
sold hereunder prior to the receipt of such notice or sold at any point
thereafter once such suspension has been lifted. Each of the Parties
agrees that no such notice shall be effective against the other unless it is
made to one of the individuals named on Schedule 3 hereto, as
such Schedule may be amended from time to time.
3
5. Settlement.
(a) Settlement of Placement
Shares. Unless otherwise specified in the applicable Placement
Notice, settlement for sales of Placement Shares will occur on the third (3rd)
Business Day (or such earlier day as is industry practice for regular-way
trading) following the date on which such sales are made (each, a “Settlement
Date”). The amount of
proceeds to be delivered to the Company on a Settlement Date against the receipt
of the Placement Shares sold (the “Net
Proceeds”) will
be equal to the aggregate sales price at which such Placement Shares were sold,
after deduction for (i) CF&Co’s commission, discount or other
compensation for such sales payable by the Company pursuant to Section 2 hereof,
(ii) any other amounts due and payable by the Company to CF&Co hereunder
pursuant to Section
7(h) hereof, and (iii) any transaction fees imposed by any governmental
or self-regulatory organization in respect of such sales.
(b) Delivery of
Shares. On or before each Settlement Date, the Company will,
or will cause its transfer agent to, electronically transfer the Placement
Shares being sold by crediting CF&Co’s or its designee’s account at The
Depository Trust Company through its Deposit and Withdrawal at Custodian System
or by such other means of delivery as may be mutually agreed upon by the parties
hereto and, upon receipt of such Placement Shares, which in all cases shall be
freely tradable, transferable, registered shares in good deliverable form,
CF&Co will deliver the related Net Proceeds in same day funds delivered to
an account designated by the Company prior to the Settlement Date. The Company
agrees that if the Company defaults on its obligation to deliver Placement
Shares on a Settlement Date, the Company agrees that in addition to and in no
way limiting the rights and obligations set forth in Section 9(a) hereto,
it will (i) hold CF&Co harmless against any loss, claim, damage, or expense
(including reasonable legal fees and expenses), as incurred, arising out of or
in connection with such default by the Company and (ii) pay to CF&Co any
commission, discount, or other compensation to which it would otherwise have
been entitled absent such default.
6. Representations and
Warranties of the Company. The Company represents and warrants
to, and agrees with, CF&Co that as of the date of this Agreement and as of
each Representation Date (as defined in Section 7(m) below)
on which a certificate is required to be delivered pursuant to Section 7(m) of this
Agreement, as the case may be:
(a) The
Company meets the requirements for use of Form S-3 under the Securities Act. The
Registration Statement has been filed with the Commission and has been declared
effective under the Securities Act. The Company has prepared or will prepare the
Prospectus Supplement that names CF&Co as an underwriter, acting as
principal and/or agent, in the section entitled “Plan of
Distribution.” 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. Copies of the Registration
Statement, the Prospectus, and 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 have been delivered, or made
available, to CF&Co and their counsel. The Company has not distributed and
will not distribute any offering material in connection with the offering or
sale of the Placement Shares other than the Registration Statement and the
Prospectus. The Common Stock is currently listed on the Exchange
under the trading symbol “MFA.”
4
(b) Each
part of the Registration Statement, when such part became or becomes effective
or was or is filed with the Commission, and the Prospectus, and any amendment or
supplement thereto, on the date of filing thereof with the Commission and at
each Settlement Date, 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
each Settlement Date, 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 made in reliance upon, and in conformity with,
written information concerning CF&Co that was furnished in writing to the
Company by CF&Co, specifically for use in the preparation
thereof.
(c) The
documents incorporated by reference in the Registration Statement, the
Prospectus or any amendment or supplement thereto, when they became or become
effective under the Securities Act or were or are filed with the Commission
under the Securities Act or the Exchange Act, as the case may be, conformed or
will conform in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable.
(d)
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 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. Any pro forma financial statements of the Company,
and the related notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission’s rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the basis described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. The Company and, to the Company’s knowledge, the Subsidiaries (as
defined below) do not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), not disclosed in the
Registration Statement and the Prospectus. 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.
5
(e) The
Prospectus delivered to CF&Co for use in connection with the sale of
Placement Shares pursuant to this Agreement will be identical to the versions of
the Prospectus created to be transmitted to the Commission for filing via ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(f) The
Company has been duly formed and incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland and 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 operations of the
Company and the Subsidiaries taken as a whole (a “Material
Adverse Effect”) and has full corporate power and authority necessary to
own, hold, lease and/or operate its assets and properties, to conduct the
business in which it is engaged and as described in the Registration Statement
and 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 any jurisdictions in which
it owns or leases property or conducts business.
(g) The
Company has no “significant subsidiaries” (as such term is defined in Rule 1-02
of Regulation S-X promulgated under the Securities Act) 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 that it owns (a)
(i) a 100% ownership interest in PF One Corporation, a Nebraska corporation
(“PF
One”), which in turn owns an 1.766% ownership interest in ▇▇▇▇▇▇▇ Place,
LLC, a Georgia limited liability company (“▇▇▇▇▇▇▇”
or, as the case may be, the “Property
Entities”), (ii) a 100% ownership interest in Retirement Centers
Corporation, a Delaware corporation (“RCC”),
which in turn owns a 88.3% ownership interest in ▇▇▇▇▇▇▇, (iii) a 100% ownership
interest in MFA ▇▇▇▇▇▇ ▇▇▇▇▇, Inc., a Delaware corporation (“MFA
Owings”), which in turn owns a 1% general partner interest in ▇▇▇▇▇▇
▇▇▇▇▇ Limited Partnership, a Maryland limited partnership (“▇▇▇▇▇▇
▇▇▇▇▇”), which in turn owns a 9.934% ownership interest in ▇▇▇▇▇▇▇, (iv)
a 99% limited partner interest in ▇▇▇▇▇▇ ▇▇▇▇▇, (v) a 100% ownership interest in
MFA Spartan, Inc., a Delaware corporation (“Spartan
Inc.”), which in turn owns a 100% ownership interest in MFA Spartan I,
LLC, a Delaware limited liability company (“Spartan I
LLC”), and a 100% ownership interest in MFA Spartan II, LLC a Delaware
limited liability company (“Spartan
II LLC”), (vi) a 100% ownership interest in MFA Acquisition I, Inc., a
Delaware corporation (“Acquisition
I”), which in turn owns a 100% ownership interest in MFA Acquisition II,
Inc., a Delaware corporation (“Acquisition
II”), (vii) a 100% ownership interest in MFA Spartan (Incentive), LLC, a
Delaware limited liability company (“Spartan (Incentive)”), (viii)
a 100% ownership interest in MFResidential Assets I, LLC, a Delaware limited
liability company (“MFR
LLC”), (ix) a 100% ownership interest in MFA Spartan Manager, LLC, a
Delaware limited liability company (“Spartan Manager”), (x) a 100%
ownership interest in MFResidential Investments, Inc., a Maryland corporation
(“MFR INC.”), which in
turn owns a 100% interest in MFR Operating Partnership, LP, a Delaware limited
partnership (“MFR OP”),
which in turn owns a 100% ownership interest in each of (A) MFR Asset, Inc., a
Delaware corporation (“Asset
Inc.”), (B) MFR Asset I, LLC, a Delaware limited liability company
(“Asset I, LLC”) and (C)
MFR Asset II, LLC, a Delaware limited liability company (“Asset II, LLC” and, together
with PF One, RCC, MFA Owings, ▇▇▇▇▇▇ ▇▇▇▇▇, Spartan Inc., Spartan I LLC, Spartan
II LLC, Acquisition I, Acquisition II, Spartan (Incentive), MFR LLC, Spartan
Manager, MFR INC., MFR OP, Asset Inc. and Asset I, LLC, the “Subsidiaries”);
(b) the securities comprising the Investment Portfolio (as defined below); and
(c) as otherwise disclosed in the Registration Statement and/or Prospectus.
Complete and correct copies of the articles of incorporation and of the bylaws
or other formation documents of the Company and each of the Subsidiaries, as
applicable, and all amendments thereto have been made available to CF&Co
and/or its counsel. To the Company’s knowledge, each Subsidiary has
been duly formed and incorporated or organized and is validly existing as a
corporation, partnership or limited liability company in good standing under the
laws of the jurisdiction of its incorporation or formation or organization and
is duly qualified to do business and is in good standing as a foreign
corporation, partnership or limited liability company 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 would
not have a Material Adverse Effect and, to the Company’s knowledge, each
Subsidiary has full corporate, partnership or limited liability power and
authority, as applicable, necessary to own, hold, lease and/or operate its
assets and properties and to conduct its business in which it is engaged and as
described in the Registration Statement and the Prospectus, and, to the
Company’s knowledge, each Subsidiary is in compliance in all material respects
with the laws, orders, rules, regulations and directives issued or administered
by jurisdictions in which it owns or leases property or conducts business; to
the Company’s knowledge, all of the outstanding shares of capital stock or other
equity interests, as the case may be, of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable with respect to
the corporate Subsidiaries, and 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 and are not subject
to any security interest, other encumbrance or adverse claims; and to the
Company’s knowledge, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligation into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.
6
(h) Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries is in
breach or violation of or in default under (nor has any event occurred which
with notice, lapse of time or both would result in any breach or violation of or
constitute a default under or give the holder of any indebtedness (or a person
acting on such holder’s behalf) the right to require the repurchase, redemption
or repayment of all or a part of such indebtedness under) (i) its respective
charter, bylaws, certificate of formation, partnership agreement or limited
liability company agreement, as the case may be, or (ii) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their properties may be bound or affected the effect of which
breach, violation or default under clause (ii) could reasonably be expected to
result in a Material Adverse Effect, and the execution, delivery and performance
of this Agreement, the issuance and sale of the Placement Shares and the
consummation of the transactions contemplated hereby will not conflict with,
result in any breach or violation of or constitute a default under (nor
constitute any event which with notice, lapse of time or both would result in
any breach or violation of or constitute a default under) (x) the charter,
bylaws, certificate of formation, partnership agreement or limited liability
company agreement, as the case may be, of the Company or, to the Company’s
knowledge, any of the Subsidiaries, or (y) any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the Company
or, to the Company’s knowledge, any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound or affected, the
effect of which breach, violation or default under clause (y) could reasonably
be expected to result in a Material Adverse Effect or (z) any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or, to the Company’s knowledge, any of the
Subsidiaries.
(i) As
of December 31, 2007, the Company had an authorized, issued and outstanding
capitalization as set forth in its consolidated statements of financial
condition included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2007. All of the issued and outstanding shares of
capital stock of the Company have been duly and validly authorized and issued
and are fully paid and nonassessable, 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.
(j) This
Agreement has been duly authorized, executed and delivered by the Company and is
a legal, valid and binding agreement of the Company enforceable in accordance
with its terms, except to the extent that (i) enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles and (ii) the
indemnification and contribution provisions of Section 9 hereof may be limited
by federal or state securities laws and public policy considerations in respect
thereof.
(k) The
common stock of the Company, including the Placement Shares, conforms in all
material respects to the description thereof contained in the Registration
Statement and the Prospectus and such description conforms to the rights set
forth in the instruments defining the same. The certificates for the Placement
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.
(l) The
Placement 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 nonassessable, free and clear of any pledge, lien, encumbrance,
security interest or other claim, including any statutory or contractual
preemptive rights, resale rights, rights of first refusal or other similar
rights, and will be registered pursuant to Section 12 of the Exchange
Act.
(m) 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 Placement Shares or
the consummation by the Company of the transactions contemplated hereby other
than (i) registration of the Placement Shares under the Securities Act, (ii) any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Placement Shares are being offered by CF&Co, or
(iii) such approvals obtained in connection with the approval of the listing of
the Placement Shares on the Exchange.
7
(n) Except
as set forth in the Registration Statement and the Prospectus, (i) 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 or sell
to such Person any shares of Common Stock or shares of any other capital stock
or other securities of the Company, (ii) no Person has any preemptive rights,
resale rights, rights of first refusal, or any other rights (whether pursuant to
a “poison pill” provision or otherwise) to purchase any shares of Common Stock
or shares of any other capital stock or other securities of the Company, and
(iii) no Person has the right to act as an underwriter or as a financial advisor
to the Company in connection with the offer and sale of the Shares, in the case
of each of the foregoing clauses (i), (ii) and (iii), whether as a result of the
filing or effectiveness of the Registration Statement or the sale of the
Placement Shares as contemplated hereby or otherwise; except for registration
rights granted to certain former shareholders of America First Mortgage Advisory
Corporation, a Maryland corporation (“America
First”), in connection with the consummation of the transactions
contemplated in that certain Agreement and Plan of Merger, dated September 24,
2001, among the Company, America First and the other parties thereto (the “Merger
Agreement”), no Person has the right, contractual or otherwise, to
require the Company to register under the Securities Act any shares of Common
Stock or shares of any other capital stock or other securities of the Company,
or to include any such shares or other securities in the Registration Statement
or the offering contemplated thereby, whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the Placement Shares
as contemplated thereby or otherwise.
(o) Ernst
& Young LLP, whose report on the consolidated financial statements of the
Company is filed with the Commission as part of the Registration Statement and
the Prospectus, was during the periods covered by its report an independent
public accountant as required by the Securities Act.
(p) The
descriptions in the Registration Statement and the Prospectus of the legal or
governmental proceedings, affiliate transactions, off-balance sheet
transactions, contracts, leases and other legal documents therein described
present fairly the information required to be shown, and there are no legal or
governmental proceedings, affiliate transactions, off-balance sheet
transactions, contracts, leases, or other documents of a character required to
be described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not described or filed as
required. All agreements between the Company and third parties expressly
referenced in the Registration Statement and the 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.
(q) There
are no actions, suits, claims, investigations, inquiries or proceedings pending
or, to the best of the Company’s knowledge, threatened to which either the
Company or, to the Company’s knowledge, any Subsidiaries or any of their
respective officers or directors is a party or of which any of their respective
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 individually or in the aggregate a Material Adverse Effect or prevent, or
interfere in any material respect with the consummation of the transactions
contemplated hereby.
8
(r) During
the 24 calendar months prior to the date of this Agreement, the Company has
timely filed with the Commission all documents and other material required to be
filed pursuant to Sections 13, 14 and 15(d) under the Exchange Act. During the
36 calendar months preceding the filing of the Registration Statement, the
Company filed all reports required to be filed pursuant to Sections 13, 14 and
15(d) under the Exchange Act. As of the date of this Agreement, the aggregate
market value of the Company’s voting stock held by nonaffiliates of the Company
was equal to or greater than $150 million.
(s) Subsequent
to the respective dates as of which information is given in, or incorporated by
reference into, the Registration Statement and the Prospectus, there has not
been (i) any material adverse change, or any development which is likely to
cause a material adverse change, in the business, properties, management or
assets described or referred to in the Registration Statement or the Prospectus,
or the results of operations, condition (financial or otherwise), net worth,
business or operations of the Company and the Subsidiaries taken as a whole,
(ii) any transaction which is material to the Company and the Subsidiaries taken
as a whole, except transactions in the ordinary course of business consistent
with past practices, (iii) any obligation, direct or contingent (including
off-balance sheet obligations), which is material to the Company and the
Subsidiaries taken as a whole, except transactions in the ordinary course of
business consistent with past practices or (iv) any change in the number of
authorized shares of capital stock or, except obligations incurred in the
ordinary course of business, outstanding indebtedness of the
Company. The Company has no material contingent obligation (including
off-balance sheet obligations) which is not disclosed in the Registration
Statement or the Prospectus.
(t) The
Company 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. 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.
(u) Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries nor any of
their respective directors, officers or controlling persons has taken, directly
or indirectly, any action designed, or which has constituted or might reasonably
be expected to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Placement Shares.
(v) At
the time of purchase, the Placement Shares will be approved for listing on the
Exchange, subject to official notice of issuance, or the Company will have filed
an application for listing of the Shares on the Exchange.
9
(w) 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, Inc) any member of the Financial
Industry Regulatory Authority (“FINRA”).
(x) The
Company has not relied upon CF&Co or legal counsel for CF&Co for any
legal, tax or accounting advice in connection with the offering and sale of the
Placement Shares.
(y) On
each Representation Date (as defined in Section 7(m) below),
the Company shall be deemed to have confirmed (i) the accuracy and completeness,
as of such date, of each representation and warranty made by it in this
Agreement; and (ii) that the Company has complied with all of the agreements to
be performed by it hereunder at or prior to such date.
(z) Any
certificate signed by any officer of the Company delivered to CF&Co or to
counsel for CF&Co pursuant to or in connection with this Agreement shall be
deemed a representation and warranty by the Company to CF&Co as to the
matters covered thereby.
(aa) As
of September 30, 2008, the investment portfolio (the “Investment
Portfolio”) of
the Company consisted of approximately (x) 93.4% hybrid and adjustable-rate
mortgage-backed securities issued or guaranteed by an agency of the U.S.
government such as the ▇▇▇▇▇▇ ▇▇▇ or a Federally chartered corporation such as
▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ ▇▇▇ and the related mortgage-backed securities
receivables, (y) 2.0% hybrid and adjustable-rate mortgage-backed securities
rated AAA by Standard & Poor’s Corporation and the related mortgage-backed
securities receivables and (z) 4.1% cash and cash equivalents. As of the
date of this Agreement and except as otherwise disclosed in the Prospectus, the
Company has no current plan or intention to materially alter its stated
investment policies and operating policies and strategies, as such are described
in the Registration Statement and the Prospectus, if any; the Company and, to
the Company’s knowledge, the Subsidiaries have good and marketable title to all
properties and assets owned directly by them, in each case free and clear of all
liens, security interests, pledges, charges, encumbrances, mortgages and defects
(except for any security interest, lien encumbrance or claim that may otherwise
exist under any applicable repurchase agreement or as otherwise disclosed in the
Registration Statement and the Prospectus), except such as do not interfere with
the use made or proposed to be made of such asset or property by the Company or
any Subsidiary, as the case may be; the Company does not directly own any real
property; any real property and buildings held under lease directly by the
Company are held under valid, existing and enforceable leases, with such
exceptions, liens, security interests, pledges, charges, encumbrances, mortgages
and defects, as are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company.
(bb) The
Company and, to the Company’s knowledge, each of the Subsidiaries has filed on a
timely basis (taking into account all applicable extensions) all necessary
federal, state, local and foreign income and franchise tax returns, if any such
returns were required to be filed, through the date hereof and have paid all
taxes shown as due thereon; and no tax deficiency has been asserted against the
Company or, to the Company’s knowledge, any of the Subsidiaries, nor does the
Company know of any tax deficiency which is likely to be asserted against any
such entity which, if determined adversely to any such entity, could have a
Material Adverse Effect; all tax liabilities, if any, are adequately provided
for on the books of the Company and, to the Company’s knowledge, the
Subsidiaries.
10
(cc) The
Company and, to the Company’s knowledge, each Subsidiary 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, if any
(collectively, “Intangibles”),
necessary to entitle the Company and, to the Company’s knowledge, each
Subsidiary to conduct its business as described in the Prospectus, and neither
the Company nor, to the Company’s knowledge, any Subsidiary has received notice
of infringement of or conflict with (and 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.
(dd) Except
as otherwise disclosed in the Registration Statement and the Prospectus, neither
the Company nor, to the Company’s knowledge, any of the Property Entities has
authorized or conducted or has knowledge of the generation, transportation,
storage, presence, use, treatment, disposal, release, or other handling of any
hazardous substance, hazardous waste, hazardous material, hazardous constituent,
toxic substance, pollutant, contaminant, asbestos, radon, polychlorinated
biphenyls, petroleum product or waste (including crude oil or any fraction
thereof), natural gas, liquefied gas, synthetic gas or other material defined,
regulated, controlled or potentially subject to any remediation requirement
under any environmental law (collectively, “Hazardous
Materials”), on, in, under or affecting any real property currently
leased or owned or by any means controlled by the Company or any Property
Entity, including any real property underlying any loan held by any Property
Entity (collectively, the “Real
Property”), except in material compliance with applicable laws; to the
knowledge of the Company, the Real Property, and the Company’s and the Property
Entities’ operations with respect to the Real Property, are in compliance with
all federal, state and local laws, ordinances, rules, regulations and other
governmental requirements relating to pollution, control of chemicals,
management of waste, discharges of materials into the environment, health,
safety, natural resources, and the environment (collectively, “Environmental
Laws”), and the Company and, to the Company’s knowledge, the Property
Entities are in material compliance with all licenses, permits, registrations
and government authorizations necessary to operate under all applicable
Environmental Laws; except as otherwise disclosed in the Prospectus, neither the
Company nor, to the Company’s knowledge, the Property Entities has received any
written or oral notice from any governmental entity or any other Person and
there is no pending or threatened claim, litigation or any administrative agency
proceeding that: alleges a violation of any Environmental Laws by the Company or
any of the Property Entities; or that the Company or any of the Property
Entities is a liable party or a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
§§. 9601, et seq., or
any state superfund law; has resulted in or could result in the attachment of an
environmental lien on any of the Real Property; or alleges that the Company or
any of the Property Entities is liable for any contamination of the environment,
contamination of the Real Property, damage to natural resources, property
damage, or personal injury based on their activities or the activities of their
predecessors or third parties (whether at the Real Property or elsewhere)
involving Hazardous Materials, whether arising under the Environmental Laws,
common law principles, or other legal standards.
11
(ee) The
Company has established and maintains and evaluates “disclosure controls and
procedures” (as such term is defined in Rules 13a-15 and 15d-15 under the
Exchange Act) and “internal control over financial reporting” (as such term is
defined in Rules 13a-15 and 15d-15 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information
relating to the Company, including its consolidated subsidiaries, is made known
to the Company’s Chief Executive Officer and its Chief Financial Officer by
others within those entities, and such disclosure controls and procedures are
effective to perform the functions for which they were established; the
principal executive officers (or their equivalents) and principal financial
officers (or their equivalents) of the Company have made all certifications
required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”) and any
related rules and regulations promulgated by the Commission, and the statements
contained in each such certification are complete and correct; the Company, the
Subsidiaries and the Company’s directors and officers are each in compliance in
all material respects with all applicable effective provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations of the Commission and the NYSE
promulgated thereunder.
(ff) The
Company and, to the Company’s knowledge, each of the Subsidiaries maintains
insurance (issued by insurers of recognized financial responsibility) of the
types and in the amounts generally deemed adequate, if any, for their respective
businesses and consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to, insurance
covering real and personal property owned or leased by the Company and the
Subsidiaries against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect.
(gg) Neither
the Company nor, to the Company’s knowledge, any Subsidiary is in violation, and
none of them has received notice of any violation with respect to, any
applicable environmental, safety or similar law applicable to its business and
which, in the case of the Property Entities, could reasonably expect to result
in a Material Adverse Effect. The Company and, to the Company’s knowledge, each
Subsidiary have 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 their businesses, and the Company
and, to the Company’s knowledge, each Subsidiary 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.
(hh)
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 CF&Co pursuant to this
Agreement.
(ii) There
are no existing or threatened labor disputes with the employees of the Company
or, to the Company’s knowledge, any Subsidiary which are likely to have
individually or in the aggregate a Material Adverse Effect.
(jj) None
of the Company or, to the Company’s knowledge, any Subsidiary or any employee or
agent of the Company or any Subsidiary, has made any payment of funds or
received or retained any funds in violation of any law, rule or regulation or of
a character required to be disclosed in the Registration Statement or the
Prospectus. No relationship, direct or indirect, exists between or among the
Company or, to the Company’s knowledge, any Subsidiary or any affiliate of any
of them, on the one hand, and the directors, officers and stockholders of the
Company or, to the Company’s knowledge, any Subsidiary, on the other hand, which
is required by the Securities Act to be described in the Registration Statement
or the Prospectus that is not so described.
12
(kk) The
Company has been, and upon the sale of the Placement 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, 1998.
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.
(ll) Neither
the Company nor PF One or RCC, or to the knowledge of the Company, the Property
Entities, after giving effect to the offering and sale of the Placement Shares,
will be an “investment company” or an entity “controlled” by an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as
amended (the “Investment
Company Act”).
(mm) No
relationship, direct or indirect, exists between or among the Company or any
Subsidiary or any affiliate of them, on the one hand, and the directors,
officers, stockholders or directors of the Company or any Subsidiary, on the
other hand, which is required by the rules of the FINRA to be described in the
Registration Statement or the Prospectus which is not so described. Except as
otherwise disclosed in the Registration Statement or the Prospectus, there are
no material outstanding loans or advances or material guarantees of indebtedness
by the Company or, to the Company’s knowledge, any Subsidiary or any affiliate
of them to or for the benefit of any of the officers or directors of the Company
or any Subsidiary or any of the members of the families of any of
them.
(nn) Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries has
sustained since the date of the last audited financial statements included in
the Registration Statement and the Prospectus any loss or interference with its
respective business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, in each case which is likely either individually or in
the aggregate to have a Material Adverse Effect.
(oo) The
Company has retained Ernst & Young LLP as its independent accountants and
independent tax experts (i) to test procedures and conduct annual compliance
reviews designed to determine compliance with the REIT provisions of the Code
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.
13
(pp) The
Company is not a party to any agreement with an agent or underwriter for any
other “at-the-market” or continuous equity transaction.
(qq) The
Company acknowledges and agrees that CF&Co has informed the Company that
CF&Co may, to the extent permitted under the Securities Act and the Exchange
Act, purchase and sell shares of Common Stock for its own account while this
Agreement is in effect provided that (i) no such purchase or sales shall take
place while a Placement Notice is in effect (except to the extent CF&Co may
engage in sales of Placement Shares purchased or deemed purchased from the
Company as a “riskless principal” or in a similar capacity) and (ii) the Company
shall not be deemed to have authorized or consented to any such purchases or
sales by CF&Co.
7. Covenants of the
Company. The Company covenants and agrees with CF&Co
that:
(a) After
the date of this Agreement and during any period in which a Prospectus relating
to the Placement Shares is required to be delivered by CF&Co under the
Securities Act, (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under Securities Act), (i) the Company will
notify CF&Co promptly of the time when any subsequent amendment to the
Registration Statement has been filed with the Commission and/or has become
effective or any subsequent supplement to the Prospectus has been filed and of
any request by the Commission for any amendment or supplement to the
Registration Statement or Prospectus or for additional information, (ii) the
Company will prepare and file with the Commission, promptly upon CF&Co's
request, any amendments or supplements to the Registration Statement or
Prospectus that, in CF&Co's reasonable judgment, may be necessary or
advisable in connection with the distribution of the Placement Shares by
CF&Co (provided, however, that the
failure of CF&Co to make such request shall not relieve the Company of any
obligation or liability hereunder, or affect CF&Co's right to rely on the
representations and warranties made by the Company in this Agreement other than
to the extent any such amendment or supplement is necessary or advisable due to
information that must be disclosed strictly with regard as to CF&Co), (iii)
the Company will not file any amendment or supplement to the Registration
Statement or Prospectus relating to the Placement Shares unless a copy thereof
has been submitted to CF&Co a reasonable period of time before the filing
and CF&Co has not reasonably objected thereto (provided, however, that the
failure of CF&Co to make such objection shall not relieve the Company of any
obligation or liability hereunder, or affect CF&Co's right to rely on the
representations and warranties made by the Company in this Agreement except to
the extent such objection would have been necessary or advisable due to
information that must be disclosed strictly with regard as to CF&Co); (iv)
the Company will furnish to CF&Co at the time of filing thereof a copy of
any document that upon filing is deemed to be incorporated by reference into the
Registration Statement or Prospectus, except for those documents available via
▇▇▇▇▇; and (v) the Company will cause each amendment or supplement to the
Prospectus to be filed with the Commission as required pursuant to the
applicable paragraph of Rule 424(b) of the Securities Act or, in the case of any
document to be incorporated therein by reference, to be filed with the
Commission as required pursuant to the Exchange Act, within the time period
prescribed (the determination to file or not file any amendment or supplement
with the Commission under this Section 7(a), based on the Company’s reasonable
opinion or reasonable objections, shall be made exclusively by the
Company).
14
(b) The
Company will advise CF&Co, promptly after it receives notice or obtains
knowledge thereof, of the issuance or threatened issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement, of
the suspension of the qualification of the Placement Shares for offering or sale
in any jurisdiction, or of the initiation or threatening of any proceeding for
any such purpose; and it will promptly use its reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such a stop order
should be issued.
(c) During
any period in which a Prospectus relating to the Placement Shares is required to
be delivered by CF&Co under the Securities Act (including in circumstances
where such requirement may be satisfied pursuant to Rule 172 under the
Securities Act), the Company will comply so far as it is able with all
requirements imposed upon it by the Securities Act, as from time to time in
force, so far as necessary to permit the continuance of sales of the Placement
Shares during such period in accordance with the provisions hereof and the
Prospectus, and will file on or before their respective due dates all reports
and any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any
other provision of or under the Exchange Act. If during such period
any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or Prospectus to
comply with the Securities Act, the Company will promptly notify CF&Co to
suspend the offering of Placement Shares during such period and the Company will
promptly amend or supplement the Registration Statement or Prospectus (at the
expense of the Company) so as to correct such statement or omission or effect
such compliance.
(d) During
any period in which the Prospectus relating to the Placement Shares is required
to be delivered by CF&Co under the Securities Act (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act), the Company will use its best efforts to cause the
Placement Shares to be listed on the Exchange and to qualify the Placement
Shares for sale under the securities laws of such jurisdictions as CF&Co
reasonably designates and to continue such qualifications in effect so long as
required for the distribution of the Placement Shares; provided, however, that the
Company shall not be required in connection therewith to qualify as a foreign
corporation or dealer in securities, file a general consent to service of
process in any jurisdiction, or meet any other requirement in connection with
this Section 7(d) deemed by the Company to be unduly burdensome.
(e) The
Company will furnish to CF&Co and its counsel (at the expense of the
Company) copies of the Registration Statement, the Prospectus (including all
documents incorporated by reference therein) and all amendments and supplements
to the Registration Statement or Prospectus that are filed with the Commission
during any period in which a Prospectus relating to the Placement Shares is
required to be delivered under the Securities Act (including all documents filed
with the Commission during such period that are deemed to be incorporated by
reference therein), in each case as soon as reasonably practicable and in such
quantities as CF&Co may from time to time reasonably request and, at
CF&Co's request, will also furnish copies of the Prospectus to each exchange
or market on which sales of Shares may be made; provided, however, that the
Company shall not be required to furnish any document (other than the
Prospectus) to CF&Co to the extent such document is available on
▇▇▇▇▇.
15
(f) The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company's current fiscal quarter, an earnings statement covering a 12-month
period that satisfies the provisions of Section 11(a) and Rule 158 of the
Securities Act.
(g) The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, in accordance with the provisions of Section 11
hereunder, will pay all expenses incident to the performance of its obligations
hereunder, including, but not limited to, expenses relating to (i) the
preparation, printing and filing of the Registration Statement and each
amendment and supplement thereto, of each Prospectus and of each amendment and
supplement thereto, (ii) the preparation, issuance and delivery of the Placement
Shares, (iii) the qualification of the Placement Shares under securities laws in
accordance with the provisions of Section 7(d) of this
Agreement, including filing fees and any reasonable fees or disbursements of
counsel for CF&Co in connection therewith, (iv) the printing and delivery to
CF&Co of copies of the Prospectus and any amendments or supplements thereto,
and of this Agreement, (v) the fees and expenses incurred in connection with the
listing or qualification of the Placement Shares for trading on the Exchange, or
(vi) filing fees and expenses, if any, of the Commission and the FINRA Corporate
Finance Department.
(h) The
Company will use the Net Proceeds as described in the Prospectus.
(i) During
either the pendency of any Placement Notice given hereunder, or any period in
which the Prospectus relating to the Placement Shares is required to be
delivered by CF&Co, the Company shall provide CF&Co notice as promptly
as reasonably possible before it offers to sell, contracts to sell, sells,
grants any option to sell or otherwise disposes of any shares of Common Stock
(other than Placement Shares offered pursuant to the provisions of this
Agreement) or securities convertible into or exchangeable for Common Stock,
warrants or any rights to purchase or acquire Common Stock; provided, that such
notice shall not be required in connection with the (i) issuance or sale of
Common Stock, options to purchase shares of Common Stock or Common Stock
issuable upon the exercise of options, (ii) the issuance or
sale of Common Stock pursuant to the Company’s Discount Waiver, Direct Stock
Purchase and Dividend Reinvestment Plan, (iii) any Common Stock issuable upon
conversion of securities or the exercise of warrants, options or other rights in
effect or outstanding or (iv) the issuance or sale pursuant to the Company’s
2004 Equity Compensation Plan.
(j) The
Company will, at any time during the term of this Agreement, as supplemented
from time to time, advise CF&Co immediately after it shall have received
notice or obtained knowledge thereof, of any information or fact that would
alter or affect in any material respect any opinion, certificate, letter or
other document required to be provided to CF&Co pursuant to this
Agreement.
(k) The
Company will cooperate with any due diligence review conducted by CF&Co or
its agents, including, without limitation, providing information and making
available documents and senior corporate officers, as CF&Co may reasonably
request; provided, however, that the
Company shall be required to make available documents and senior corporate
officers only (i) at the Company's principal offices and (ii) during the
Company's ordinary business hours.
16
(l) The
Company agrees that on such dates as the Securities Act shall require, the
Company will (i) file a prospectus supplement with the Commission under the
applicable paragraph of Rule 424(b) under the Securities Act (each and every
filing under Rule 424(b), a "Filing
Date"), which
prospectus supplement will set forth, within the relevant period, the amount of
Placement Shares sold through CF&Co, the Net Proceeds to the Company and the
compensation payable by the Company to CF&Co with respect to such Placement
Shares, and (ii) deliver such number of copies of each such prospectus
supplement to each exchange or market on which such sales were effected as may
be required by the rules or regulations of such exchange or market.
(m) During
the term of this Agreement, each time the Company (i) files the Prospectus
relating to the Placement Shares or amends or supplements the Registration
Statement or the Prospectus relating to the Placement Shares (other than a
prospectus supplement filed in accordance with Section 7(l) of this Agreement)
by means of a post-effective amendment, sticker, or supplement but not by means
of incorporation of document(s) by reference to the Registration Statement or
the Prospectus relating to the Placement Shares; (ii) files an annual report on
Form 10-K under the Exchange Act; (iii) files its quarterly reports on Form 10-Q
under the Exchange Act; (iv) files a report on Form 8-K containing amended
financial information (other than either an earnings release or to “furnish”
information pursuant to Items 2.02 or 7.01 of Form 8-K) under the Exchange Act;
or (v) files a Form 8-K under the Exchange Act for any other purpose (other than
to “furnish” information) (each date of filing of one or more of the documents
referred to in clauses (i) through (v) shall be a "Representation
Date"); the
Company shall furnish CF&Co (but in the case of clause (v) above only if
CF&Co reasonably determines that the information contained in such Form 8-K
is material) with a certificate, in the form attached hereto as Exhibit
7(m).
(n) On
the date hereof and thereafter as of each Representation Date, the Company shall
cause to be furnished to CF&Co (but in the case of Section 7(m)(v) only if
requested by CF&Co in accordance with the provisions of Section 7(m)) with a
written opinion of ▇▇▇▇▇▇▇▇ Chance US LLP (the “Company
Counsel”), dated the Representation
Date, in substantially the form attached hereto as Exhibit 7(n)(1) (for the
filing of the Prospectus relating to the Placement Shares), and Exhibit 7(n)(2)
(for subsequent dates), but modified, as necessary, to relate to the
Registration Statement and the Prospectus as then amended or supplemented; provided, however, that in lieu
of such opinion, the Company Counsel may furnish CF&Co with a letter to the
effect that CF&Co may rely on a prior opinion delivered under this Section
7(n) to the same extent as if it were dated the date of such letter (except that
statements in such prior opinion shall be deemed to relate to the Registration
Statement and the Prospectus as amended or supplemented at such Representation
Date).
(o) On
the date hereof and thereafter as of each Representation Date, or any period in
which the Prospectus relating to the Placement Shares is required to be
delivered by CF&Co, each time that the Registration Statement is amended or
the Prospectus supplemented to include additional amended financial information
or there is filed with the Commission any document incorporated by reference
into the Prospectus which contains additional amended financial information, the
Company shall cause Ernst & Young LLP to furnish CF&Co letters (the
"Comfort
Letters"), dated
the date of each Representation Date, in form and substance satisfactory to
CF&Co, (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of such date, the conclusions
and findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings (the first such letter, the "Initial
Comfort Letter")
and (iii) updating the Initial Comfort Letter with any information which would
have been included in the Initial Comfort Letter had it been given on such date
and modified as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letter.
17
(p) The
Company will not, directly or indirectly take any action designed to cause or
result in, or that constitutes or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Placement Shares.
(q) The
Company acknowledges and agrees that CF&Co has informed the Company that
CF&Co may, to the extent permitted under the Securities Act and the Exchange
Act, purchase and sell Placement Shares for its own account at the same time as
Placement Shares are being sold by the Company pursuant to this Agreement,
provided that the Company shall not be deemed to have authorized or consented to
any such purchases or sales by CF&Co.
(r) The
Company and its Subsidiaries shall maintain, or caused to be maintained,
insurance in such amounts and covering such risks as is reasonable and customary
for companies engaged in similar businesses in similar industries.
(s) The
Company and each of its Subsidiaries shall maintain, or cause to be maintained,
all material environmental permits, licenses and other authorizations required
by federal, state and local law in order to conduct their businesses as
described in the Prospectus, and the Company and each of its Subsidiaries shall
conduct their businesses, or cause their businesses to be conducted, in
substantial compliance with such permits, licenses and authorizations and with
applicable environmental laws, except where the failure to maintain or be in
compliance with such permits, licenses and authorizations would not have a
Material Adverse Effect.
(t) Each
authorization or Placement Notice issued by the Company to CF&Co to solicit
offers to purchase Placement Shares shall be deemed to be an affirmation that
the representations and warranties made by it in this Agreement are true and
correct in all material respects at the time such Placement Notice is issued,
and that the Company has complied in all material respects with all of the
agreements to be performed by it hereunder at or prior to such
time.
(u) 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.
(v) No
Offer to Sell. Other than a “free writing prospectus” (as defined in
Rule 405 under the Securities Act) approved in advance by the Company and
CF&Co in its capacity as principal or agent hereunder, neither CF&Co nor
the Company (including its agents and representatives, other than CF&Co in
its capacity as such) will make, use, prepare, authorize, approve or refer to
any “written communication” (as defined in Rule 405 under the Securities Act),
required to be filed with the Commission, that constitutes an offer to sell or
solicitation of an offer to buy Shares hereunder
18
(w)
The Company will not be or become, at any time prior to the expiration of three
years after the termination of this Agreement, an “investment company,” as such
term is defined in the Investment Company Act.
(x) 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 Placement Shares as
contemplated by the provisions hereof and the Prospectus.
(y) The
Company will maintain such controls and other procedures, including, without
limitation, those required by Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ 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.
8. Conditions to CF&Co’s
Obligations. The obligations of CF&Co hereunder with respect to a
Placement will be subject to the continuing accuracy and completeness of the
representations and warranties made by the Company herein, to the due
performance by the Company of its obligations hereunder, to the completion by
CF&Co of a due diligence review satisfactory to CF&Co in its reasonable
judgment, and to the continuing satisfaction (or waiver by CF&Co in its sole
discretion) of the following additional conditions:
(a) The
Registration Statement shall have become effective and shall be available for
the sale of (i) all Placement Shares issued pursuant to all prior Placements and
not yet sold by CF&Co and (ii) all Placement Shares contemplated to be
issued by the Placement Notice relating to such Placement.
(b) None
of the following events shall have occurred and be continuing: (i)
receipt by the Company of any request for additional information from the
Commission or any other federal or state governmental authority during the
period of effectiveness of the Registration Statement, the response to which
would require any amendments or supplements to the Registration Statement or the
Prospectus; (ii) the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Placement
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the occurrence of any event that makes any
statement made in the Registration Statement or the Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in the Registration
Statement, related prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any 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 (v) the Company’s reasonable determination
that a post-effective amendment to the Registration Statement would be
appropriate.
19
(c) CF&Co
shall not have advised the Company that the Registration Statement or
Prospectus, or any amendment or supplement thereto, contains an untrue statement
of fact that in CF&Co’s opinion is material, or omits to state a fact that
in CF&Co’s opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(d) Except
as contemplated in the Prospectus, or disclosed in the Company’s reports filed
with the Commission, there shall not have been any material change, on a
consolidated basis, in the authorized capital stock of the Company or any
Material Adverse Effect, or any development that may reasonably be expected to
cause a Material Adverse Effect, or a downgrading in or withdrawal of the rating
assigned to any of the Company’s securities by any rating organization or a
public announcement by any rating organization that it has under surveillance or
review its rating of any of the Company’s securities, the effect of which, in
the case of any such action by a rating organization described above, in the
sole judgment of CF&Co (without relieving the Company of any obligation or
liability it may otherwise have), is so material as to make it impracticable or
inadvisable to proceed with the offering of the Placement Shares on the terms
and in the manner contemplated in the Prospectus.
(e) CF&Co
shall have received the opinion of Company Counsel required to be delivered
pursuant Section
7(n) on or before the date on which such delivery of such opinion is
required pursuant to Section
7(n).
(f) CF&Co
shall have received the Comfort Letter required to be delivered pursuant Section 7(o) on or
before the date on which such delivery of such opinion is required pursuant to
Section
7(o).
(g) CF&Co
shall have received the certificates required to be delivered pursuant to Section 7(m) on
or before the date on which delivery of such opinion is required pursuant to
Section
7(m).
(h) Trading
in the Common Stock shall not have been suspended on the Exchange.
(i) On
each date on which the Company is required to deliver a certificate pursuant to
Section 7(m),
the Company shall have furnished to CF&Co such appropriate further
information, certificates and documents as CF&Co may reasonably request. All
such opinions, certificates, letters and other documents will be in compliance
with the provisions hereof. The Company will furnish CF&Co with such
conformed copies of such opinions, certificates, letters and other documents as
CF&Co shall reasonably request.
20
(j)
Prior to the giving of any Placement Notice, (i) no stop order with respect to
the effectiveness of the Registration Statement shall have been issued under the
Securities Act or proceedings initiated under Section 8(d) or 8(e) of the
Securities Act; (ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) the
Prospectus and all amendments or supplements thereto, or modifications thereof,
if any, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
(k) All
filings with the Commission required by Rule 424 under the Securities Act to
have been filed prior to the giving of any Placement Notice hereunder shall have
been made within the applicable time period prescribed for such filing by Rule
424.
(l) The
Placement Shares shall either have been (i) approved for listing on the
Exchange, subject only to notice of issuance, or (ii) the Company shall have
filed an application for listing of the Placement Shares on the Exchange at, or
prior to, the giving of any Placement Notice.
(m) There
shall not have occurred any event that would permit CF&Co to terminate this
Agreement pursuant to Section
11(a).
9. Indemnification and
Contribution.
(a) The
Company agrees to indemnify and hold harmless CF&Co, the directors,
officers, partners, employees and agents of CF&Co and each person, if any,
who (i) controls CF&Co within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under
common control with CF&Co (a “CF&Co
Affiliate”) from and against any and all losses, claims, liabilities,
expenses and damages (including, but not limited to, any and all investigative,
legal and other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as and when
incurred, to which CF&Co, or any such person, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based, directly or
indirectly, on (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, or in
any application or other document executed by or on behalf of the Company or
based on written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Placement Shares under the securities
laws thereof or filed with the Commission, (ii) the omission or alleged omission
to state in such document a material fact required to be stated in it or
necessary to make the statements in it not misleading or (iii) any breach by any
of the indemnifying parties of any of their respective representations,
warranties and agreements contained in this Agreement; provided, however, that this
indemnity agreement shall not apply to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Placement Shares
pursuant to this Agreement and is caused directly by an untrue statement or
omission made in reliance on and in conformity with information relating to
CF&Co and furnished in writing to the Company by CF&Co expressly stating
that such information is intended for inclusion in any document described in
clause (a)(i) above. This indemnity agreement will be in addition to any
liability that the Company might otherwise have.
21
(b) CF&Co
agrees to indemnify and hold harmless the Company and its directors and each
officer of the Company who signed the Registration Statement, and each person,
if any, who (i) controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or
is under common control with the Company (a “Company
Affiliate”) against any and all loss, liability, claim, damage and
expense described in the indemnity contained in Section 9(a), as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendments thereto) or the Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information and relating to
CF&Co furnished to the Company by CF&Co expressly stating that such
information is intended for use in the Registration Statement (or any amendment
thereto) or the Prospectus (or any amendment or supplement
thereto).
(c) Any
party that proposes to assert the right to be indemnified under this Section 9 will,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim is to be made against an indemnifying party or
parties under this Section 9, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from (i) any liability that it might
have to any indemnified party otherwise than under this Section 9 and (ii)
any liability that it may have to any indemnified party under the foregoing
provision of this Section 9 unless, and
only to the extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not, in any event, be liable for any settlement of any
action or claim effected without its written consent. No indemnifying
party shall, without the prior written consent of each indemnified party, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding relating to the matters contemplated by
this Section 9
(whether or not any indemnified party is a party thereto), unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of such
claim, action or proceeding. Notwithstanding any other provision of this Section 9(c), if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel for which it is
entitled to reimbursement pursuant to this Section 9(c), such
indemnifying party agrees that it shall be liable for any settlement 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; provided, however, that an
indemnifying party shall not be liable for any such settlement effected without
its consent if such indemnifying party, at least five days prior to the date of
such settlement, (1) reimburses such indemnified party in accordance with
such request for the amount of such fees and expenses of counsel as the
indemnifying party believes in good faith to be reasonable and (2) provides
written notice to the indemnified party that the indemnifying party disputes in
good faith the reasonableness of the unpaid balance of such fees and
expenses.
22
(d) In
order to provide for just and equitable contribution in circumstances in which
the indemnification provided for in the foregoing paragraphs of this Section 9 is
applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or CF&Co, the Company and CF&Co will
contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Company from persons other than CF&Co, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed the Registration Statement and directors of the Company, who also may
be liable for contribution) to which the Company and CF&Co may be subject in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and CF&Co on the other. The relative
benefits received by the Company on the one hand and CF&Co on the other hand
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
compensation (before deducting expenses) received by CF&Co from the sale of
Placement Shares on behalf of the Company. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and CF&Co, on the other, with respect to the statements or omission which
resulted in such loss, claim, liability, expense or damage, or action in respect
thereof, as well as any other relevant equitable considerations with respect to
such offering. Such relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or CF&Co, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and CF&Co agree that it would not be
just and equitable if contributions pursuant to this Section 9(d) were to
be determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense, or damage, or action in respect thereof, referred to above
in this Section 9(d)
shall be deemed to include, for the purpose of this Section 9(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim to the
extent consistent with Section 9(c)
hereof. Notwithstanding the foregoing provisions of this Section 9(d),
CF&Co shall not be required to contribute any amount in excess of the
commissions received by it under this Agreement and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9(d), any
person who controls a party to this Agreement within the meaning of the
Securities Act, and any officers, directors, partners, employees or agents of
CF&Co, will have the same rights to contribution as that party, and each
officer of the Company who signed the Registration Statement will have the same
rights to contribution as the Company, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for
contribution may be made under this Section 9(d), will
notify any such party or parties from whom contribution may be sought, but the
omission to so notify will not relieve that party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section
9(d) except to the extent that the failure to so notify such other party
materially prejudiced the defenses of the party from whom contribution is
sought. Except for a settlement entered into pursuant to the last sentence of
Section 9(c)
hereof, no party will be liable for contribution with respect to any action or
claim settled without its written consent if such consent is required pursuant
to Section 9(c)
hereof.
10. Representations and
Agreements to Survive Delivery. All representations and
warranties of the Company herein or in certificates delivered pursuant hereto
shall survive, as of their respective dates, regardless of (i) any investigation
made by or on behalf of CF&Co, any controlling persons, or the Company (or
any of their respective officers, directors or controlling persons), (ii)
delivery and acceptance of the Placement Shares and payment therefor or (iii)
any termination of this Agreement.
23
11. Termination.
(a) CF&Co
shall have the right by giving notice as hereinafter specified at any time to
terminate this Agreement if (i) any Material Adverse Effect, or any development
that has actually occurred and that is reasonably expected to cause a Material
Adverse Effect has occurred which, in the reasonable judgment of CF&Co, may
materially impair the investment quality of the Placement Shares, (ii) the
Company shall have failed, refused or been unable to perform any agreement on
its part to be performed hereunder; provided, however, in the case
of any failure of the Company to deliver (or cause another person to deliver)
any certification, opinion, or letter required under Sections 7(m), 7(n), or 7(o), CF&Co’s
right to terminate shall not arise unless such failure to deliver (or cause to
be delivered) continues for more than thirty (30) days from the date of such
Representation Date pursuant to which such delivery was required; provided, further, that, CF&Co shall
have the right to suspend its obligations hereunder, regardless of whether a
Placement Notice is pending, beginning on the sixth (6th) day
after the date of any Representation Date if any certification, opinion, or
letter referenced in the foregoing proviso has not yet been (or caused to be)
delivered; (iii) any other condition of CF&Co’s obligations hereunder is not
fulfilled, or (iv) any suspension or limitation of trading in the Placement
Shares or in securities generally on the Exchange shall have
occurred. Any such termination shall be without liability of any
party to any other party except that the provisions of Section 7(g), Section 7(v), Section 9, Section 10, Section 16 and Section 17 hereof
shall remain in full force and effect notwithstanding such
termination. If CF&Co elects to terminate this Agreement as
provided in this Section 11, CF&Co
shall provide the required notice as specified herein.
(b) The
Company shall have the right, by giving twenty (20) days notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time following the period of three (3) months
after the date of this Agreement. Any such termination shall
be without liability of any party to any other party except that the provisions
of Section
7(g), Section
7(v), Section
9, Section
10, Section
16 and Section
17 hereof shall remain in full force and effect notwithstanding such
termination.
(c) CF&Co
shall have the right, by giving twenty (20) days notice as hereinafter specified
to terminate this Agreement in its sole discretion
at any time following the period of three (3) months after the date of this
Agreement. Any such termination shall be without liability of
any party to any other party except that the provisions of Section 7(g), Section 7(v), Section 9, Section 10, Section 16 and Section 17 hereof
shall remain in full force and effect notwithstanding such
termination.
(d) This
Agreement shall remain in full force and effect unless terminated pursuant to
Sections 11(a),
(b), or (c) above or
otherwise by mutual agreement of the parties; provided, however, that any
such termination by mutual agreement shall in all cases be deemed to provide
that Section
7(g), Section
7(v), Section
9, Section
10, Section
16 and Section
17 shall remain in full force and effect.
(e) Any
termination of this Agreement shall be effective on the date specified in such
notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of
receipt of such notice by CF&Co or the Company, as the case may be. If such
termination shall occur prior to the Settlement Date for any sale of Placement
Shares, such Placement Shares shall settle in accordance with the provisions of
this Agreement.
24
12. Notices.
All
notices or other communications required or permitted to be given by any party
to any other party pursuant to the terms of this Agreement shall be in writing
and if sent to CF&Co, shall be delivered to CF&Co at Cantor ▇▇▇▇▇▇▇▇▇▇
& Co., ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, fax no. (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: Capital Markets Execution, with copies to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, General
Counsel, at the same address, and DLA Piper LLP (US), ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, fax no. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇; or if sent to the Company, shall be delivered to MFA Mortgage
Investments, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, phone: (▇▇▇)
▇▇▇-▇▇▇▇, fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attention ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel and
Senior Vice President-Business Development with a copy to ▇▇▇▇▇▇▇▇ Chance US
LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. Each party to this
Agreement may change such address for notices by sending to the parties to this
Agreement written notice of a new address for such purpose. Each such
notice or other communication shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 4:30 p.m., New York City time, on a Business Day or, if such day is
not a Business Day, on the next succeeding Business Day, (ii) on the next
Business Day after timely delivery to a nationally-recognized overnight courier
and (iii) on the Business Day actually received if
deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid). For purposes of this Agreement, “Business
Day” shall mean any day on which the Exchange and commercial banks in the
City of New York are open for business.
13. Successors and
Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company and CF&Co and their respective successors and the
affiliates, controlling persons, officers and directors referred to in Section 9 hereof.
References to any of the parties contained in this Agreement shall be deemed to
include the successors and permitted assigns of such party. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Neither party may
assign its rights or obligations under this Agreement without the prior written
consent of the other party.
14. Adjustments for Stock
Splits. The parties acknowledge and agree that all share
related numbers contained in this Agreement shall be adjusted to take into
account any stock split, stock dividend or similar event effected with respect
to the Placement Shares.
15. Entire Agreement; Amendment;
Severability. This Agreement (including all schedules and
exhibits attached hereto and placement notices issued pursuant hereto)
constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended except pursuant to a written instrument
executed by the Company and CF&Co. In the event that any one or
more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
25
16. Applicable Law; Consent to
Jurisdiction. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York without regard to
the principles of conflicts of laws. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection with any transaction contemplated hereby, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return
receipt requested) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.
17. Waiver of Jury
Trial. The Company and CF&Co each hereby irrevocably
waives any right it may have to a trial by jury in respect of any claim based
upon or arising out of this agreement or any transaction contemplated
hereby.
18. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Delivery of an executed Agreement by one party to the other may be
made by facsimile transmission.
19. Absence of Fiduciary
Relationship. The Company acknowledges and agrees
that:
(a) CF&Co
has been retained solely to act as underwriter in connection with the sale of
the Shares and that no fiduciary, advisory or agency relationship between the
Company and CF&Co has been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether CF&Co has advised or
is advising the Company on other matters;
(b) the
Company is capable of evaluating and understanding and understands and accepts
the terms, risks and conditions of the transactions contemplated by this
Agreement;
(c) the
Company has been advised that CF&Co and its affiliates are engaged in a
broad range of transactions which may involve interests that differ from those
of the Company and that CF&Co has no obligation to disclose such interests
and transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; and
(d) the
Company waives, to the fullest extent permitted by law, any claims it may have
against CF&Co, for breach of fiduciary duty or alleged breach of fiduciary
duty related to the transactions contemplated by this Agreement and agrees that
CF&Co shall have no liability (whether direct or indirect) to the Company in
respect of such a fiduciary claim or to any person asserting such a fiduciary
duty claim on behalf of or in right of the Company, including stockholders,
employees or creditors of the Company.
[Remainder
of Page Intentionally Blank]
26
If the
foregoing correctly sets forth the understanding between the Company and
CF&Co, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and CF&Co.
Very
truly yours,
MFA
MORTGAGE INVESTMENTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
General
Counsel and Senior Vice
President
– Business Development
ACCEPTED
as of the date
first-above
written:
CANTOR
▇▇▇▇▇▇▇▇▇▇ & CO.
By: /s/ ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇
Managing
Director
27
SCHEDULE
1
FORM OF PLACEMENT
NOTICE
|
From:
|
[
|
]
|
|
Cc:
|
[
|
]
|
|
To:
|
[
|
]
|
Subject: Controlled
Equity Offering—Placement Notice
Gentlemen:
Pursuant
to the terms and subject to the conditions contained in the Controlled Equity
OfferingSM Sales Agreement between
MFA MORTGAGE INVESTMENTS, INC., (the “Company”) and Cantor ▇▇▇▇▇▇▇▇▇▇ & Co.
(“CF&Co”)
dated December 12, 2008 (the “Agreement”), I hereby
request on behalf of the Company that CF&Co sell up to [ ] shares of the
Company’s common stock, par value $0.01 per share, at a minimum market price of
$_______ per share.
ADDITIONAL
SALES PARAMETERS MAY BE ADDED, SUCH AS THE TIME PERIOD IN WHICH SALES ARE
REQUESTED TO BE MADE, SPECIFIC DATES THE SHARES MAY NOT BE SOLD ON, THE MANNER
IN WHICH SALES ARE TO BE MADE BY CF&CO, AND/OR THE CAPACITY IN WHICH
CF&CO MAY ACT IN SELLING SHARES (AS PRINCIPAL, AGENT, OR BOTH).
SCHEDULE
2
Compensation
The
amount of any discount, commission or other compensation to be paid by the
Company to CF&Co shall be of an amount up to two and one-half percent (2.5%) of the gross proceeds
with respect to sales actually effected by CF&Co.
SCHEDULE
3
CANTOR ▇▇▇▇▇▇▇▇▇▇ &
CO.
▇▇▇▇
▇▇▇▇▇ (▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇)
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇)
▇▇▇▇▇▇
▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇)
MFA MORTGAGE INVESTMENTS,
INC.
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇▇.▇▇▇)
▇▇▇▇▇▇▇
▇▇▇▇▇ (▇▇▇▇▇▇@▇▇▇-▇▇▇▇.▇▇▇)
▇▇▇▇▇▇▇
▇▇▇▇▇ (▇▇▇▇▇▇▇@▇▇▇.▇▇▇)
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇▇.▇▇▇)
Exhibit
7(m)
OFFICER
CERTIFICATE
The
undersigned, the duly qualified and elected _______________________, of MFA MORTGAGE INVESTMENTS, INC.
(“Company”), a Maryland
corporation, does hereby certify in such capacity and on behalf of the Company,
pursuant to Section
7(m) of the Sales Agreement dated December 12, 2008 (the “Sales Agreement”)
between the Company and Cantor ▇▇▇▇▇▇▇▇▇▇ & Co., that to the best of the
knowledge of the undersigned.
(i) Except
for non-material exceptions, the representations and warranties of the Company
in Section 6 of
the Sales Agreement are true and correct on and as of the date hereof, with the
same force and effect as if expressly made on and as of the date hereof;
and
(ii) The
Company has complied in all material respects with all material agreements and
satisfied all conditions on its part to be performed or satisfied pursuant to
the Sales Agreement at or prior to the date hereof to the extent not waived by
CF&Co.
By:
Name:
Title:
Date:
Exhibit
7(n)
MATTERS
TO BE COVERED BY INITIAL OPINION
OF
▇▇▇▇▇▇▇▇
CHANCE US LLP
1. As
of December 31, 2007, the Company had an authorized capitalization as set forth
in its consolidated statements of financial condition included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2007. All of the
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable and conform, in all material respects, to
the description thereof contained in the Prospectus.
2. The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Maryland. The Company
has full corporate power and authority to own its assets and to conduct its
business as described in the Prospectus.
3. The
Company is duly qualified as a foreign corporation to transact business in each
jurisdiction set forth on Schedule A to this opinion. To the best of our
knowledge, other than the Company’s interests in the Subsidiaries, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any limited
liability company, partnership, joint venture or other association.
4. The
execution, delivery and performance of the Sales Agreement by the Company and
the consummation by the Company of the transactions contemplated thereby do 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) the charter or by-laws of the Company, (ii) to
the best of our knowledge, violate any U.S. federal or New York State law or
regulation binding upon or applicable to the Company or any of its properties or
assets, (iii) violate any decree, judgment or order known to us to be applicable
to the Company, or (iv) 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), any provision of any of the agreements
and contracts of the Company filed as Exhibit 10 to the Company’s Form 10-K for
the year ended December 31, 2007 and Form 10-Q for the quarter ended September
30, 2008, except in the case of clauses (ii) and (iv) for such violations,
conflicts, breaches or defaults which individually or in the aggregate would not
be reasonably expected to have a material adverse effect on the assets,
operations or financial condition, taken as a whole, of the Company and the
Subsidiaries.
5. The
Company has full corporate power and authority to enter into, and to perform its
obligations under, the Sales Agreement and to consummate the transactions
contemplated therein. The execution and delivery of the Sales Agreement has been
duly authorized by all necessary corporate action of the Company and the Sales
Agreement has been duly executed and delivered by the Company.
6. No
approval, authorization, consent or order of, or filing with, any U.S. federal
or New York State governmental or regulatory commission, board, body, authority
or agency is required in connection with the execution, delivery and performance
of the Sales Agreement and the consummation of the transactions contemplated
therein, including the sale and delivery of the Placement Shares by the Company
as contemplated therein, other than such as have been obtained or made under the
Securities Act or the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (the “Exchange Act”) (except that we express no
opinion as to any necessary qualification under the state securities, blue sky
or real estate syndication laws of the various jurisdictions in which the
Placement Shares are being offered by the Underwriters or under the rules and
regulations of the FINRA).
7. The
Placement Shares have been approved for listing on the New York Stock
Exchange.
8. The
Placement Shares have been duly authorized by the Company for issuance and sale
pursuant to the Sales Agreement. The Placement Shares, when issued and delivered
by the Company in accordance with such authorization and pursuant to the Sales
Agreement against payment of the consideration specified in the Sales Agreement,
will be validly issued, fully paid and nonassessable under the MGCL and, to the
best of our knowledge, except for any action that may have been taken by the
holder thereof, free and clear of any pledge, lien, encumbrance, security
interest or other claim.
9. The
issuance and sale of the Placement Shares by the Company is not subject to
preemptive or other similar rights arising by operation of the MGCL, under the
charter or by-laws of the Company or under any agreement known to us to which
the Company is a party.
10. To
the best of our knowledge, except as otherwise described in the Registration
Statement, the Prospectus, the documents incorporated therein by reference or
the exhibits filed in connection therewith, there are no persons with
registration or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under the
Securities Act.
11. The
Registration Statement, at the last deemed effective date of the Registration
Statement with respect to the Sales Agent pursuant to Rule 430B(f)(2) of the
Securities Act, and Prospectus, as of the date of this letter, complied as to
form in all material respects with the requirements of the Securities Act (it
being understood that we express no belief with respect to the financial
statements, related schedules and other data derived from such financial
statements, schedules and other financial information and other data derived
from such financial information included or incorporated by reference therein or
excluded therefrom).
12. The
statements under the caption “Description of Common Stock and Preferred Stock”
in the Prospectus, insofar as such statements purport to summarize or describe
matters of law and legal conclusions, constitute accurate summaries thereof in
all material respects.
13. To
the best of our knowledge, there are no actions, suits or proceedings,
inquiries, or investigations pending or threatened against the
Company or any of its officers or directors which are required to be described
in the Registration Statement or the Prospectus but are not so
described.
14. The
Company is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
In
addition, we have participated in the preparation of the Registration Statement
and the Prospectus and in discussions with officers, directors, employees and
other representatives of the Company, with representatives of its independent
public accountants, and with you and your representatives, at which time the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and we have reviewed certain company records, documents and
proceedings. On the basis of the foregoing, nothing has come to our attention
that leads us to believe that (1) each part of the Registration Statement, at
the last deemed effective date of the Registration Statement with respect to the
Sales Agent pursuant to Rule 430(B)(f)(2) of the Securities Act, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (2) the Prospectus, as of date of this letter, 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 (it being understood
that we express no belief with respect to the financial statements, related
schedules and other data derived from such financial statements, schedules and
other financial information included or incorporated by reference therein or
excluded therefrom).
The
limitations inherent in the independent verification of factual matters and the
character of determinations involved in the preparation of a disclosure document
are such, however, that (other than with respect to paragraph 12 above) we do
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus or any
amendments or supplements to them (including any of the documents incorporated
by reference in them).
We have
been informed by the Commission that the Registration Statement is effective
under the Securities Act and, to the best of our knowledge, (i) no stop order
suspending the effectiveness of the Registration Statement has been issued under
the Securities Act and (ii) no proceedings seeking the issuance of such a stop
order have been initiated or threatened by the Commission.
Exhibit
7(n)(2)
Matters to be covered by
subsequent Company Counsel Opinions
The
Registration Statement has become effective under the Securities Act and, to the
best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been instituted by the Commission.
In
addition, we have participated in the preparation of the Registration Statement
and the Prospectus and in discussions with officers, directors, employees and
other representatives of the Company, with representatives of its independent
public accountants, and with you and your representatives, at which time the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and we have reviewed certain company records, documents and
proceedings. On the basis of the foregoing, nothing has come to our attention
that leads us to believe that (1) each part of the Registration Statement, at
the last deemed effective date of the Registration Statement with respect to the
Sales Agent pursuant to Rule 430(B)(f)(2) of the Securities Act, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (2) the Prospectus, as of date of this letter, 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 (it being understood
that we express no belief with respect to the financial statements, related
schedules and other data derived from such financial statements, schedules and
other financial information included or incorporated by reference therein or
excluded therefrom).