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APEX MORTGAGE CAPITAL, INC.
(a Maryland corporation)
__________ Shares of Common Stock
U.S. PURCHASE AGREEMENT
-----------------------
Dated: November __, 1997
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TABLE OF CONTENTS
U.S. PURCHASE AGREEMENT................................................. 1
SECTION 1. Representations and Warranties......................... 3
(a) Representations and Warranties by the Company.......... 3
(i) Compliance with Registration Requirements...... 4
(ii) Independent Accountants........................ 4
(iii) Financial Statements........................... 4
(iv) No Material Adverse Change in Business......... 5
(v) Good Standing of the Company................... 5
(vi) Qualification as a REIT........................ 5
(vii) Capitalization................................. 5
(viii) Authorization of Agreement..................... 5
(ix) Management Agreement........................... 6
(x) Authorization and Description of Securities.... 6
(xi) Absence of Defaults and Conflicts.............. 6
(xii) Absence of Proceedings......................... 7
(xiii) Accuracy of Exhibits........................... 7
(xiv) Possession of Intellectual Property............ 7
(xv) Absence of Further Requirements................ 7
(xvi) Possession of Licenses and Permits............. 8
(xvii) Title to Property.............................. 8
(xviii) Investment Company Act......................... 8
(xix) Accounting Controls............................ 8
(xx) Registration Rights............................ 9
(b) Representations and Warranties by the Manager................. 9
(i) No Material Misstatements or Omissions......... 9
(ii) Good Standing.................................. 9
(iii) Authorization of Agreements.................... 10
(iv) No Material Adverse Change in Business......... 10
(v) Absence of Defaults and Conflicts.............. 10
(vi) Absence of Proceedings......................... 11
(vii) Absence of Further Requirements................ 11
(viii) Possession of Licenses and Permits............. 11
(ix) Investment Adviser............................. 11
(x) Financial Resources............................ 11
(c) Officer's Certificates................................. 12
SECTION 2. Sale and Delivery to Underwriters; Closing............. 12
(a) Initial Securities..................................... 12
(b) Option Securities...................................... 12
(c) Payment................................................ 12
(d) Denominations; Registration............................ 13
SECTION 3. Covenants.............................................. 13
(a) Covenants of the Company............................... 13
(b) Covenant of the Manager................................ 17
SECTION 4. Payment of Expenses.................................... 17
(a) Expenses........................................................ 17
(b) Termination of Agreement........................................ 18
SECTION 5. Conditions of U.S. Underwriters' Obligations.................... 18
(a) Effectiveness of Registration Statement......................... 18
(b) Opinions of Counsel for Company and the Manager................. 18
(c) Opinion of Maryland Counsel for the Company..................... 18
(d) Opinion of Counsel for U.S. Underwriters........................ 18
(e) Officers' Certificate of the Company............................ 19
(f) Officers' Certificate of the Manager............................ 19
(g) Accountant's Comfort Letter..................................... 19
(h) Bring-down Comfort Letter....................................... 20
(i) Approval of Listing............................................. 20
(j) No Objection.................................................... 20
(k) Lock-up Agreements.............................................. 20
(l) Insurance Policy................................................ 20
(m) Conditions to Purchase of U.S. Option Securities................ 20
(n) Additional Documents............................................ 21
(o) Termination of Agreement........................................ 21
SECTION 6. Indemnification................................................. 22
(a) Indemnification of U.S. Underwriters by the Company and the
Manager......................................................... 22
(b) Indemnification of the Company and the Manager, and their
Respective Directors and Officers............................... 23
(c) Actions against Parties; Notification........................... 23
(d) Settlement without Consent if Failure to Reimburse.............. 24
(e) Recourse Against the Manager.................................... 24
SECTION 7. Contribution.................................................... 25
SECTION 8. Representations, Warranties and Agreements to
Delivery........................................................ 26
SECTION 9. Termination of Agreement........................................ 26
(a) Termination; General............................................ 26
(b) Liabilities..................................................... 27
SECTION 10. Default by One or More of the U.S. Underwriters................. 27
SECTION 11. Notices......................................................... 27
SECTION 12. Parties......................................................... 28
SECTION 13. GOVERNING LAW AND TIME.......................................... 28
SECTION 14. Effect of Headings.............................................. 28
ii
SCHEDULES
Schedule A - List of Underwriters......................... Sch A-1
Schedule B - Pricing Information.......................... Sch B-1
Schedule C - List of Persons Subject to Lock-up........... Sch B-1
EXHIBITS
Exhibit A-1 - Form of Opinion of Counsel to the Company... A-1-1
Exhibit A-2 - Form of Opinion of Counsel to the Manager... A-2-1
Exhibit B - Form of Opinion of Maryland Counsel......... B-1
Exhibit C - Form of Lock-Up Letter...................... C-1
1
APEX MORTGAGE CAPITAL, INC.
(a Maryland corporation)
__________ Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
-----------------------
November __, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
PaineWebber Incorporated
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
Sutro & Co. Incorporated
as U.S. Representatives of the several U.S. Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Apex Mortgage Capital, Inc., a Maryland corporation (the "Company") and TCW
Investment Management Company, a California corporation (the "Manager"), confirm
their respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), PaineWebber Incorporated, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & Company, Incorporated, Sutro & Co. Incorporated and each of the other
Underwriters named in Schedule A hereto (collectively, the "U.S. Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, PaineWebber
Incorporated, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated and Sutro & Co.
Incorporated are acting as representatives (in such capacity, the "U.S.
Representatives"), with respect to the issue and sale by the Company and the
purchase by the U.S. Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.01 per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the U.S. Underwriters, acting severally and not jointly,
of the option described in Section 2(b) hereof to purchase all or any part of
_____________ additional shares of Common Stock to cover over-allotments, if
any. The aforesaid __________ shares of Common Stock (the "Initial
1
U.S. Securities") to be purchased by the U.S. Underwriters and all or any part
of the ___________ shares of Common Stock subject to the option described in
Section 2(b) hereof (the "U.S. Option Securities") are hereinafter called,
collectively, the "U.S. Securities".
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of __________ shares
of Common Stock (the "Initial International Securities") through arrangements
with ▇▇▇▇▇▇▇ ▇▇▇▇▇ International, PaineWebber International, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
Company, Incorporated and Sutro & Co. Incorporated (the "International
Managers") and the grant by the Company to the International Managers, acting
severally and not jointly, of an option to purchase all or any part of the
International Managers' pro rata portion of up to 300,000 shares of additional
Common Stock solely to cover overallotments, if any (the "International Option
Securities" and, together with the U.S. Option Securities, the "Option
Securities"). The Initial International Securities and the International Option
Securities are hereinafter called the "International Securities".
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (in
such capacity, the "Global Coordinator").
The Company and the U.S. Underwriters agree that up to 500,000 shares of
the Securities to be purchased by the U.S. Underwriters (the "Reserved
Securities") shall be reserved for sale by the U.S. Underwriters to directors,
officers and employees of the Company, The TCW Group, Inc. ("TCW") and its
affiliates as part of the distribution of the Securities by the U.S.
Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. (the "NASD") and all other applicable laws, rules and regulations.
To the extent that such Reserved Securities are not so purchased by such
persons, such Reserved Securities may be offered to the public as part of the
public offering contemplated hereby.
In consideration of the U.S. Underwriters entering into this Agreement and
the International Managers entering into the International Purchase Agreement,
respectively, and as a condition to their obligations hereunder and thereunder,
TCW has entered into a representation letter (the "Representation Letter") dated
the date hereof with the Underwriters.
The Company understands that the U.S. Underwriters propose to make a public
offering of the U.S. Securities as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.
2
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (No. 333-36069) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
Two forms of prospectus are to be used in connection with the offering and sale
of the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical
to the Form of U.S. Prospectus, except for the front cover and back cover pages
and the information under the caption "Underwriting". The information included
in any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of U.S. Prospectus and Form of International
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of U.S.
Prospectus and final Form of International Prospectus in the forms first
furnished to the Underwriters for use in connection with the offering of the
Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary prospectus dated November 10, 1997 and the preliminary
International Prospectus dated November 10, 1997, respectively, each together
with the applicable Term Sheet and all references in this Agreement to the date
of such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the U.S. Prospectus, the International Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
SECTION 1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Company. The Company represents
and warrants to each U.S. Underwriter as of the date hereof, as of the Closing
Time referred to in
3
Section 2(c) hereof, and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agrees with each U.S. Underwriter, as follows:
(i) Compliance with Registration Requirements. The Company meets
-----------------------------------------
the requirements for use of Form S-11 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any written request to the
Company or counsel to the Company, or any oral request to their knowledge,
on the part of the Commission for additional information has been complied
with or satisfied.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither of the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any such amendment or
supplement was issued and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
If Rule 434 is used, the Company will comply with the requirements of Rule
434 and the Prospectuses shall not be "materially different", as such term
is used in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or U.S. Prospectus made in reliance upon
and in conformity with information furnished to the Company in writing by
any U.S. Underwriter through the U.S. Representatives expressly for use in
the Registration Statement or U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and, each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
-----------------------
balance sheet included in the Registration Statement are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
4
(iii) Financial Statements. The balance sheet included in the
--------------------
Registration Statement and the Prospectuses, together with the related
notes, presents fairly the financial position of the Company at the date
indicated; said balance sheet has been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis.
(iv) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the Company,
other than those in the ordinary course of business, which are material
with respect to the Company, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
(v) Good Standing of the Company. The Company has been duly
----------------------------
organized and is validly existing as a corporation in good standing under
the laws of the State of Maryland and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its obligations
under this Agreement and the International Purchase Agreement; and the
Company is duly qualified as a foreign corporation to transact business and
is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect. The Company
has no subsidiaries.
(vi) Qualification as a REIT. The Company is organized in
-----------------------
accordance with the requirements for qualification as a real estate
investment trust under Sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code") and the rules and
regulations thereunder. The contemplated method of operation of the
Company's business as described in the Registration Statement will allow
the Company to satisfy the operational requirements for qualification as a
real estate investment trust under Sections 856 through 860 of the Internal
Revenue Code, and the rules and regulations thereunder.
(vii) Capitalization. The authorized, issued and outstanding capital
--------------
stock of the Company is as set forth in the Prospectuses in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectuses or
pursuant to the exercise of options referred to in the Prospectuses). The
shares of issued and outstanding capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock of the Company was issued
in violation of the preemptive or other similar rights of any security
holder of the Company.
5
(viii) Authorization of Agreement. This Agreement and the
--------------------------
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.
(ix) Management Agreement. The Management Agreement (the
--------------------
"Management Agreement") dated as of November __, 1997 between the Company
and the Manager has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting enforcement of
creditors' rights or by general equity principles.
(x) Indemnity Agreement. The letter agreement (the "Indemnity
-------------------
Agreement"), dated as of the date hereof, among the Company and the several
Underwriters that concerns the indemnification and contribution obligations
of the Company related to certain potential litigation, has been duly
authorized, executed and delivered by the Company and constitutes a valid
and binding agreement of the Company enforceable in accordance with its
terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by equitable principles of
general applicability.
(xi) Authorization and Description of Securities. The Securities
-------------------------------------------
to be purchased by the U.S. Underwriters and the International Managers
from the Company have been duly authorized for issuance and sale to the
U.S. Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement, respectively, and, when
issued and delivered by the Company pursuant to this Agreement and the
International Purchase Agreement, respectively, against payment of the
consideration set forth herein and in the International Purchase Agreement,
respectively, will be validly issued and fully paid and non-assessable; the
Common Stock conforms to all statements relating thereto contained in the
Prospectuses and such description conforms in all material respects to the
rights set forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being such a
holder; and the issuance of the Securities is not subject to the preemptive
or other similar rights of any security holder of the Company.
(xii) Absence of Defaults and Conflicts. The Company is not in
---------------------------------
violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which the Company is a
party or by which it may be bound, or to which any of the property or
assets of the Company is subject (collectively, for purposes of this
paragraph, "Agreements and Instruments") except for such defaults that
would not result in a Material Adverse Effect; and the execution, delivery
and performance of this Agreement, the International Purchase Agreement and
the Management Agreement and the consummation of the transactions
contemplated in this Agreement, the International Purchase Agreement and in
the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectuses
6
under the caption "Use of Proceeds") and compliance by the Company with its
obligations under this Agreement, the International Purchase Agreement and
the Management Agreement have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to, the Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not reasonably be expected to result in
a Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its assets, properties or
operations, except for such violations, which singly or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.
As used in this Section, a "Repayment Event" means any event or condition
which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company.
(xiii) Absence of Proceedings. There is no action, suit, proceeding,
----------------------
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company, which is
required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement, or the Management Agreement or the
performance by the Company of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the
Company is a party or of which any of its property or assets is the subject
which are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or documents
--------------------
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.
(xv) Possession of Intellectual Property. The Company owns or
-----------------------------------
possesses, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names
or other intellectual property (collectively, "Intellectual Property")
necessary to carry on its business as contemplated in the Prospectuses, and
the Company has not received any notice and is not otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to
7
protect the interest of the Company therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities under this Agreement and the International Purchase
Agreement or the consummation of the transactions contemplated by this
Agreement, the International Purchase Agreement or the Management
Agreement, except such as have been already obtained or as may be required
under the 1933 Act or the 1933 Act Regulations or state securities laws or
the regulations of the NASD.
(xvii) Possession of Licenses and Permits. The Company possesses
----------------------------------
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
its business as contemplated in the Prospectus, the Company is in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to possess or comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity
of such Governmental Licenses or the failure of such Governmental Licenses
to be in full force and effect would not have a Material Adverse Effect;
and the Company has not received any written notice, or any oral notice to
its knowledge, of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Effect.
(xviii) Title to Property. The Company owns no real property. The
-----------------
Company has good and marketable title to all other properties owned by it,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such as
(a) are described in the Prospectuses or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company; and all of the leases and subleases material to the business of
the Company and under which the Company holds properties described in the
Prospectuses, are in full force and effect, and the Company does not have
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company to
the continued possession of the leased or subleased premises under any such
lease or sublease.
(xix) Investment Company Act. The Company is not, and upon the
----------------------
issuance and sale of the Securities as contemplated herein and in the
International Purchase Agreement and the application of the net proceeds
from the sale of the Securities substantially as described in the
Prospectuses will not be, an "investment company" or an entity
8
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xx) Accounting Controls. As of the Closing Time, the Company has
-------------------
or will maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (A) transactions are executed in
accordance with transaction's general or specific authorization and (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for
assets.
(xxi) Registration Rights. There are no persons with registration
-------------------
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under
the 1933 Act.
(xxii) Offering Materials. Neither the Company nor any its officers,
-------------------
directors, employees or agents, including TCW Brokerage Services, Inc.,
have distributed or will distribute any written material in connection with
the offering and sale of the Securities other than the preliminary
prospectuses dated November 10, 1997, the Prospectuses, the Registration
Statement and a letter to prospective purchasers of Reserved Securities, a
copy of which has been provided to the Underwriters (the "Reserved
Securities Letter"), in form and substance permitted by the 1933 Act and
the 1933 Act Regulations.
(b) Representations and Warranties by the Manager. As an inducement to
each U.S. Underwriter and to the Company to enter into this Agreement and to
complete the transactions contemplated hereby in connection with the
consummation of the issuance, sale and delivery of the U.S. Securities, the
Manager hereby represents and warrants to each U.S. Underwriter and to the
Company as follows:
(i) No Material Misstatements or Omissions. At the respective
--------------------------------------
times the Registration Statement, any Rule 462(b) Registration Statement
and any post-effective amendments thereto became effective and at the
Closing Time (and, if any U.S. Option Securities are purchased, at the Date
of Delivery), the Registration Statement, the Rule 462(b) Registration
Statement and any amendments and supplements thereto, did not and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and neither the Prospectuses, nor any amendments of
supplements thereto, at the time the Prospectuses or any such amendment or
supplement thereto was issued and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery) did not and will
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or U.S.
Prospectus made in reliance upon and in conformity with information
furnished to the Company or the Manager in writing by any U.S. Underwriter
through the U.S. Representatives expressly for use in the Registration
Statement or U.S. Prospectus.
9
(ii) Good Standing. The Manager has been duly organized and is
-------------
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its obligations
under this Agreement, the International Purchase Agreement and the
Management Agreement; the Manager is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, except where the
failure to so qualify or be in good standing would not result in a Material
Adverse Effect. All of the issued and outstanding capital stock of the
Manager has been duly authorized and validly issued, is fully paid and non-
assessable and is owned by TCW, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(iii) Authorization of Agreements. This Agreement, the
---------------------------
International Purchase Agreement and the Management Agreement have each
been duly authorized, executed and delivered by the Manager. The Management
Agreement constitutes the valid and binding agreement of the Manager,
enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency or other laws
relating to or affecting enforcement of creditors' rights or by general
equity principles.
(iv) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Manager, whether or
not arising in the ordinary course of business and (B) there have been no
transactions entered into by the Manager, other than those in the ordinary
course of business, which are material in the context of the transactions
contemplated in this Agreement, the International Purchase Agreement or the
Management Agreement.
(v) Absence of Defaults and Conflicts. The Manager is not in
---------------------------------
violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound, or to which any of its property or assets is subject
(collectively, for purposes of this paragraph, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement, the International Purchase Agreement and the Management
Agreement and the consummation of the transactions contemplated herein, in
the International Purchase Agreement, in the Management Agreement and in
the Registration Statement, and compliance by the Manager with its
obligations hereunder and under the International Purchase Agreement and
the Management Agreement, have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Manager pursuant to, the Agreements and
Instruments
10
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or by-
laws of the Manager or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Manager or any of its assets, properties or operations, except for such
violations which, singly or in the aggregate, would result in a Material
Adverse Effect. As used in this Section, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Manager.
(vi) Absence of Proceedings. There is no action, suit,
----------------------
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Manager, threatened against or affecting the Manager,
which is required to be disclosed in the Registration Statement (other than
as disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement or the Management Agreement or the
performance by the Manager of its obligations hereunder or under the
International Purchase Agreement or the Management Agreement; the aggregate
of all pending legal or governmental proceedings to which the Manager is a
party or of which any of its property or assets is the subject which are
not described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(vii) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Manager of its
obligations hereunder or under the International Purchase Agreement or the
Management Agreement.
(viii) Possession of Licenses and Permits. The Manager possesses
----------------------------------
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
its business as contemplated in the Prospectuses; the Manager is in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and the
Manager has not received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
11
(ix) Investment Adviser. The Manager is not prohibited by the
------------------
Investment Advisers Act of 1940, as amended (the "Advisers Act"), or the
rules and regulations thereunder, from acting under the Management
Agreement as contemplated by the Prospectuses.
(x) Financial Resources. The Manager has the financial resources
-------------------
available to it necessary for the performance of its services and
obligations as contemplated in the Prospectuses.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or the Manager delivered to the Global Coordinator, the U.S.
Representatives or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company or the Manager to each U.S.
Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each U.S. Underwriter, severally and not jointly, and
each U.S. Underwriter, severally and not jointly, agrees to purchase from the
Company, at the price per share set forth in Schedule B, the number of Initial
U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter, plus any additional number of Initial Securities which such U.S.
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof bears to the total number of Initial U.S. Securities, subject,
in each case, to such adjustments among the U.S. Underwriters as the Global
Coordinator in its sole discretion shall make to eliminate any sales or
purchases of fractional securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional ___________ shares of
Common Stock at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising the option and the
time and date of payment and delivery for such U.S. Option Securities. Any such
time and date of delivery for the U.S. Option Securities (a "Date of Delivery")
shall be determined by the Global Coordinator, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of U.S. Option Securities then being purchased which the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter bears to the total number of Initial U.S. Securities, subject in
each case
12
to such adjustments as the Global Coordinator in its discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
O'Melveny & ▇▇▇▇▇ LLP, Embarcadero Center West, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed upon
by the Global Coordinator and the Company, at 7:00 A.M. (California time) on the
third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given
day) business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Global Coordinator and the
Company (such time and date of payment and delivery being herein called "Closing
Time").
In addition, in the event that any or all of the U.S. Option Securities are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants.
---------
(a) Covenants of the Company. The Company covenants with each U.S.
Underwriter as follows:
13
(i) Compliance with Securities Regulations and Commission
-----------------------------------------------------
Requests. The Company, subject to Section 3(a)(ii), will comply with the
--------
requirements of Rule 430A or Rule 434, as applicable, and will notify the
Global Coordinator as soon as reasonably practicable, and confirm the
notice in writing, (A) when any post-effective amendment to the
Registration Statement, shall become effective, or any supplement to the
Prospectuses or any amended Prospectuses shall have been filed, (B) of the
receipt of any comments from the Commission, (C) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectuses or for additional information, and (D) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the U.S. Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 424(b) was received for filing by the Commission and,
in the event that it was not, it will promptly file such prospectus. The
Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(ii) Filing of Amendments. The Company will give the Global
--------------------
Coordinator notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectuses
included in the Registration Statement at the time it became effective or
to the Prospectuses and will furnish the U.S. Representatives with copies
of any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such
document to which the U.S. Representatives or counsel for the U.S.
Underwriters shall reasonably object.
(iii) Delivery of Registration Statements. The Company has
-----------------------------------
furnished or will deliver to the U.S. Representatives and counsel for the
U.S. Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith) and signed copies of all consents and
certificates of experts, and will also deliver to the U.S. Representatives,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the U.S. Underwriters. The copies of the Registration Statement and
each amendment thereto furnished to the U.S. Underwriters will be identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(iv) Delivery of Prospectuses. The Company has delivered to
------------------------
each U.S. Underwriter, without charge, as many copies of each preliminary
prospectus as such U.S. Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each U.S. Underwriter, without
charge, during the period when the U.S. Prospectus is required to
14
be delivered under the 1933 Act or the Securities Exchange Act of 1934 (the
"1934 Act"), such number of copies of the U.S. Prospectus (as amended or
supplemented) as such U.S. Underwriter may reasonably request. The U.S.
Prospectus and any amendments or supplements thereto furnished to the U.S.
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(v) Continued Compliance with Securities Laws. The Company
-----------------------------------------
will comply with the 1933 Act and the 1933 Act Regulations so as to permit
the completion of the distribution of the Securities as contemplated in
this Agreement, the International Purchase Agreement and in the
Prospectuses. If at any time when a prospectus is required by the 1933 Act
to be delivered in connection with sales of the Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in the
reasonable opinion of counsel for the U.S. Underwriters or for the Company,
to amend the Registration Statement or amend or supplement any Prospectus
in order that the Prospectuses will not include any untrue statements of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the reasonable opinion of such counsel, at any such time to
amend the Registration Statement or amend or supplement any Prospectus in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(a)(ii), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements,
and the Company will furnish to the U.S. Underwriters such number of copies
of such amendment or supplement as the U.S. Underwriters may reasonably
request.
(vi) Blue Sky Qualifications. The Company will use its
-----------------------
commercially reasonable efforts, in cooperation with the U.S. Underwriters,
to take such action as the Global Coordinator may reasonably request to
qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or
foreign) as the Global Coordinator may designate in writing to the Company
and to maintain such qualifications in effect for a period of not less than
one year from the later of the effective date of the Registration Statement
and any Rule 462(b) Registration Statement; provided, however, that the
Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities
have been so qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
(vii) Rule 158. The Company will timely file such reports
--------
pursuant to the 1934 Act as are necessary in order to make generally
available to its security holders as
15
soon as practicable an earnings statement for the purposes of, and to
provide the benefits contemplated by, the last paragraph of Section 11(a)
of the 1933 Act.
(viii) Use of Proceeds. The Company will use the net proceeds
---------------
received by it from the sale of the Securities substantially in the manner
specified in the Prospectuses under "Use of Proceeds".
(ix) Listing. The Company will use its best efforts to effect
-------
the listing of the Common Stock (including the Securities) on the New York
Stock Exchange.
(x) Restriction on Sale of Securities. During a period of 180
---------------------------------
days from the date of the Prospectuses, the Company will not, without the
prior written consent of the Global Coordinator, in its discretion
reasonably exercised, (A) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
or file any registration statement under the 1933 Act with respect to any
of the foregoing or (B) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock, whether any such
swap or transaction described in clause (A) or (B) above is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to (A) the Securities to be sold
hereunder or under the International Purchase Agreement, (B) any shares of
Common Stock issued by the Company upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectuses, (C) any shares of Common Stock issued or
options to purchase Common Stock granted pursuant to existing employee
benefit plans of the Company referred to in the Prospectuses or (D) any
shares of Common Stock issued pursuant to any non-employee director stock
plan or dividend reinvestment plan.
(xi) Reporting Requirements. The Company, during the period
----------------------
when the Prospectuses are required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by the
1934 Act and the rules and regulations of the Commission thereunder.
(xii) REIT Qualification. The Company will use its best efforts
------------------
to meet the requirements to qualify, commencing with its taxable year
ending December 31, 1997, as a "real estate investment trust" under the
Code.
(xiii) Compliance with NASD Rules. The Company hereby agrees
--------------------------
that it will require that the holders of Reserved Securities execute lock-
up agreements that provide that such securities will be restricted as
required by the NASD or the NASD rules from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date of
this Agreement. The U.S. Underwriters will notify the Company in writing
as to which persons will need to be so restricted. At the request of the
U.S.
16
Underwriters, the Company will direct the transfer agent to place a stop
transfer restrictions upon such securities for such period of time.
(xiv) Insurance Policy. The Company agrees to provide, without
----------------
expense to the Underwriters, not later than the Closing Date, an insurance
policy (the "Insurance Policy") providing for coverage, among other things,
of the Company's and the Manager's indemnity and contribution obligations
pursuant to Section 6 and Section 7 of this Agreement and the International
Purchase Agreement. The form of such policy shall be in the form
previously provided to the Underwriters and approved by ▇▇▇▇▇▇▇ ▇▇▇▇▇.
Such policy shall be for a minimum of three years and shall be prepaid.
The Company and the Manager, on the one hand, and the Underwriters, on the
other, respectively, acknowledge and agree that they shall not change, or
permit to be changed, any provision of such policy negatively affecting the
Company and/or the Manager, on the one hand, or the Underwriters, on the
other, respectively, without the prior written authorization of the other
party.
(b) Covenant of the Manager. The Manager covenants with each U.S.
Underwriter and with the Company that, during the period when the U.S.
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, it
shall notify you and the Company of the occurrence of any material events
respecting its activities, affairs or condition, financial or otherwise, and, if
as a result of any such event it is necessary, in the opinion of counsel, to
amend or supplement the Prospectuses in order to make the Prospectuses not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Manager will forthwith supply such information to
the Company as shall be necessary for the Company to prepare an amendment or
supplement to the Prospectuses so that, as so amended or supplemented, the
Prospectuses will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a purchaser,
not misleading.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
-------------------
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the U.S.
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the U.S. Securities to the U.S. Underwriters,
including any stock or other transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of the U.S. Securities to the U.S.
Underwriters and the transfer of the U.S. Securities between the U.S.
Underwriters and the International Managers, (iv) the fees and disbursements of
the Company's counsel, accountants and other advisors, (v) the qualification of
the U.S. Securities under securities laws in accordance with the provisions of
Section 3(a)(vi) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the U.S. Underwriters in connection therewith and
in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the U.S. Underwriters of copies of
each preliminary prospectus, any Term Sheets and of the U.S. Prospectus and any
amendments or supplements thereto, (vii) the cost of the Insurance
17
Policy, (viii) the preparation, printing and delivery to the U.S. Underwriters
of copies of the Blue Sky Survey and any supplement thereto, (ix) the fees and
expenses of any transfer agent or registrar for the Securities and (x) the
filing fees incident to, and the reasonable fees and disbursements actually
incurred by counsel to the U.S. Underwriters in connection with, the review by
the NASD of the terms of the sale of the Securities and (xi) the fees and
expenses incurred in connection with the listing of the Securities on the New
York Stock Exchange and (xii) all costs and expenses of the U.S. Underwriters,
including the reasonable fees and disbursements of counsel for the U.S.
Underwriters, in connection with matters related to the Reserved Securities
which are designated by the Company for sale to directors, officers and
employees of the Company, TCW and its affiliates.
(b) Termination of Agreement. If this Agreement is terminated by the U.S.
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company or the Manager shall reimburse the U.S. Underwriters
for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the U.S. Underwriters.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The obligations
--------------------------------------------
of the several U.S. Underwriters hereunder are subject to the accuracy in all
material respects of the representations and warranties of the Company and the
Manager contained in Section 1 hereof or in certificates of any officer of the
Company or the Manager delivered pursuant to the provisions hereof, to the
performance by each of the Company or the Manager of its respective covenants
and other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the U.S.
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a post-
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if
the Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinions of Counsel for Company and the Manager. At Closing
Time, the U.S. Representatives shall have received the favorable opinions,
dated as of Closing Time, of O'Melveny & ▇▇▇▇▇ LLP, as counsel for the
Company and of O'Melveny & ▇▇▇▇▇ LLP or _________________, as counsel for
the Manager, in form and substance reasonably satisfactory to counsel for
the U.S. Underwriters, together with signed or reproduced copies of each
such letter for each of the other U.S. Underwriters to the effect set forth
in Exhibit A hereto.
(c) Opinion of Maryland Counsel for the Company. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated
as of Closing Time, of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, special Maryland
counsel for the Company, in form
18
and substance reasonably satisfactory to counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the
other U.S. Underwriters to the effect set forth in Exhibit B hereto.
(d) Opinion of Counsel for U.S. Underwriters. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇ & ▇▇▇▇ llp, counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the
other U.S. Underwriters with respect to the matters set forth in clauses
(i), (ii), (vii), (viii) (solely as to preemptive or other similar rights
arising by operation of law or under the charter or by-laws of the
Company), (ix), (x), (xi), (xviii) and (xxi), (solely as to the information
in the Prospectuses under "Description of Capital Stock--Common Stock") and
the penultimate paragraph of Exhibit A-1 hereto. In giving such opinion
▇▇▇▇▇ & Wood llp may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal
law of the United States, upon the opinions of counsel satisfactory to the
U.S. Representatives. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and the Manager and
certificates of public officials.
(e) Officers' Certificate of the Company. At Closing Time, there
shall not have been, since the date hereof or since the respective dates as
of which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business, and the U.S. Representatives
shall have received a certificate of the President or a Vice President of
the Company and of the chief financial or chief accounting officer of the
Company, dated as of Closing Time, to the effect that (i) there has been no
such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct in all material respects with the
same force and effect as though expressly made at and as of Closing Time,
(iii) the Company has, in all material respects, complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to such persons'
knowledge, are pending or are contemplated by the Commission.
(f) Officers' Certificate of the Manager. At Closing Time, there
shall not have been, since the date hereof or since the respective dates of
which information is given in the Prospectuses, any material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Manager, whether or not arising in the
ordinary course of business, and the U.S. Representatives shall have
received a certificate of the President or a Vice President of the Manager
and of the chief financial or chief accounting officer of the Manager,
dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties of the
Manager contained in Section 1(b) hereof are true and correct with the same
force and effect as though expressly made at and as of Closing Time, and
(iii) the
19
Manager has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the U.S. Representatives shall have received from Deloitte &
Touche LLP a letter dated such date, in form and substance reasonably
satisfactory to the U.S. Representatives, together with signed or
reproduced copies of such letter for each of the other U.S. Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectuses.
(h) Bring-down Comfort Letter. At Closing Time, the U.S.
Representatives shall have received from Deloitte & Touche LLP a letter,
dated as of Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (h) of this Section,
except that the specified date referred to shall be a date not more than
three business days prior to Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the U.S.
Representatives shall have received an agreement in the form of Exhibit C
hereto signed by the persons listed on Schedule C hereto.
(l) Insurance Policy. At Closing Time, the Insurance Policy shall be
in full force and effect in the form and upon the terms and conditions
agreed to by the Underwriters by letter agreement with the other insured
parties thereunder prior to the delivery and execution hereof.
(m) Conditions to Purchase of U.S. Option Securities. In the event
that the U.S. Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company and the Manager contained
herein and the statements in any certificates furnished by the Company or
the Manager hereunder shall be true and correct in all material respects as
of each Date of Delivery and, at the relevant Date of Delivery, the U.S.
Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
---------------------
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the
20
Closing Time pursuant to Section 5(f) hereof remains true and correct
as of such Date of Delivery.
(ii) Officers' Certificates. A certificate, dated such Date of
----------------------
Delivery, of the President or a Vice President of the Manager and of
the chief financial or chief accounting officer of the Manager
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(g) hereof remains true and correct as of such Date of
Delivery.
(iii) Opinions of Counsel for Company and the Manager. The
-----------------------------------------------
favorable opinion of O'Melveny & ▇▇▇▇▇ LLP, as counsel for the Company
and O'Melveny & ▇▇▇▇▇ LLP or__________, as counsel for the Manager, in
form and substance satisfactory to counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the U.S. Option Securities to
be purchased on such Date of Delivery and otherwise to the same effect
as the opinions required by Section 5(b) hereof.
(iv) Opinion of Maryland Counsel for the Company. The favorable
-------------------------------------------
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, special Maryland counsel
for the Company, in form and substance satisfactory to counsel for the
U.S. Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by Section 5(c)
hereof.
(v) Opinion of Counsel for Underwriters. The favorable opinion of
-----------------------------------
▇▇▇▇▇ & Wood llp, counsel for the U.S. Underwriters, dated such Date
of Delivery, relating to the U.S. Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(d) hereof.
(vi) Bring-down Comfort Letter. A letter from Deloitte & Touche
-------------------------
LLP, in form and substance satisfactory to the U.S. Representatives
and dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the U.S. Representatives pursuant
to Section 5(g) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.
(n) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished with
such documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained (provided, however, that neither the Company, the Manager
nor their counsel shall be required to provide any further information,
documents, assurances or opinions with respect to the Insurance Policy not
specified herein); and all proceedings taken by the Company or the Manager
in connection with the issuance and sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to the
U.S. Representatives and counsel for the U.S. Underwriters.
21
(o) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant U.S.
Option Securities, may be terminated by the U.S. Representatives by notice
to the Company at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7 and 8 shall survive any such termination
and remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of U.S. Underwriters by the Company and the Manager.
The Company and the Manager (subject to Section 6(e) below), jointly and
severally, agree to indemnify and hold harmless each U.S. Underwriter and each
person, if any, who controls any U.S. Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company;
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
(iv) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of the failure of directors, officers
and employees of the Company, TCW and its affiliates to pay for and accept
delivery of Reserved Securities, which by the
22
end of the first business day following the date of this Agreement, were
subject to a properly confirmed agreement to purchase; and
(v) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement of a material
fact included in the Reserved Securities Letter distributed in connection
with the reservation and sale of the Reserved Securities to directors,
officers and employees of the Company, TCW and its affiliates or the
omission or alleged omission therefrom of a material fact necessary to make
the statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading.
provided, however, that this indemnity agreement shall not apply to any loss,
-------- -------
liability, claim, damage or expense (A) to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) or (B)
that results solely from an untrue statement of a material fact contained in, or
the omission of a material fact from, the preliminary prospectus, which untrue
statement or omission was corrected in its entirety in the Prospectuses (as then
amended or supplemented).
(b) Indemnification of the Company and the Manager, and their Respective
Directors and Officers. Each U.S. Underwriter severally agrees to indemnify and
hold harmless the Company and the Manager, and their respective directors, each
of the Company's officers who signed the Registration Statement, and each
person, if any, who controls the Company or the Manager within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such U.S. Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectuses (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An
23
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested in writing an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement. Notwithstanding the immediately preceding
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, an indemnifying party shall not be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its consent if such
indemnifying party (i) reimburses such indemnified party in accordance with such
request to the extent it considers such request to be reasonable and (ii)
provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement.
(e) Recourse Against the Manager. Notwithstanding anything herein to the
contrary, the Underwriters' recourse against the Manager with respect to (i) the
matters set forth in this Agreement (including, without limitation, Sections 6
and 7 of this Agreement), (ii) any matters in the Registration Statement, (iii)
any matters arising as a matter of law, or (iv) any other matters whatsoever,
shall be expressly limited as follows:
(i) first, the Underwriters shall have fully and finally exhausted
all of their rights and remedies under the Insurance Policy;
(ii) second, the Underwriters, as their sole and exclusive remedy,
may thereafter assert any claims they may have against the Manager directly
against the Manager to the limited extent of the gross compensation (not
reimbursement of expenses) paid (not payable) by the
24
Company to the Manager solely in respect of the three-year period commencing at
the Closing Time;
(iii) the Manager shall have no other liability to the Underwriters
whatsoever; and
(iv) the Underwriters' shall have no rights, remedies or claims
whatsoever against the Manager, directly or indirectly.
provided, however, that the foregoing limitations set forth in this subsection
-------- -------
(e) shall not apply to any claim that the Underwriters may have against the
Manager as to which there is a final adjudication of actual, intentional and
deliberate fraud on the part of the Manager.
SECTION 7. Contribution.
------------
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Manager (collectively, the
"Company Parties"), on the one hand and the U.S. Underwriters, on the other
hand, from the offering of the U.S. Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company Parties, on the one hand, and of the U.S. Underwriters on the other
hand, in connection with the statements or omissions.
The relative benefits received by the Company Parties, on the one hand, and
the U.S. Underwriters, on the other hand, in connection with the offering of the
U.S. Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the U.S. Securities as set forth on
such cover.
The relative fault of the Company Parties, on the one hand, and the U.S.
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company Parties, on the one hand, or by the U.S.
Underwriters, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company, the Manager and the U.S. Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the U.S. Underwriters were treated as one entity
for such purpose) or by any other method of
25
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the U.S. Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
U.S. Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company or the Manager, each officer of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company or the Manager within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company and the Manager, respectively. The U.S. Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial U.S. Securities set forth opposite their respective
names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or the Manager submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company or the Manager, and shall survive
delivery of the Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by written notice to the Company, at any time at or prior to Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the U.S.
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business, or any such
adverse change with respect to the Manager which is material in the context of
the transactions contemplated by this Agreement, or (ii) if there has occurred
any material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
26
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the U.S. Representatives, impracticable to market the Securities or
to enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the NASD
or any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If one or
-----------------------------------------------
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the U.S. Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the U.S.
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-
defaulting U.S. Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which occurs after the Closing Time, the obligation of
the U.S. Underwriters to purchase and of the Company to sell the U.S.
Option Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting U.S.
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the U.S. Representatives or the
27
Company shall have the right to postpone Closing Time or the relevant Date of
Delivery, as the case may be, for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectuses or in
any other documents or arrangements. As used herein, the term "U.S.
Underwriter" includes any person substituted for a U.S. Underwriter under this
Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower, World
Financial Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ attention of
Corporate and Institutional Client Group; and notices to the Company shall be
directed to it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ with a copy to O'Melveny & ▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Esq.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the U.S. Underwriters, the Company and the Manager and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the U.S. Underwriters, the Company and the Manager and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the U.S.
Underwriters, the Company and the Manager and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from any U.S. Underwriter shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
28
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the U.S. Underwriters, the Manager and the Company, in accordance with its
terms.
Very truly yours,
APEX MORTGAGE CAPITAL, INC.
By _______________________________________
Title:
TCW INVESTMENT MANAGEMENT COMPANY
By _______________________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
PAINEWEBBER INCORPORATED
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & COMPANY, INCORPORATED
SUTRO & CO. INCORPORATED
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By ________________________________________
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.
SCHEDULE A
Number of
Initial U.S.
Name of U.S. Underwriter Securities
------------------------ ----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.................................
PaineWebber Incorporated.....................................
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated.....................
Sutro & Co. Incorporated.....................................
---------
Total........................................................ =========
Sch A-1
SCHEDULE B
APEX MORTGAGE CAPITAL, INC.
________ Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $.
2. The purchase price per share for the Securities to be paid by
the several U.S. Underwriters shall be $., being an amount equal to the
initial public offering price set forth above less $. per share; provided
that the purchase price per share for any U.S. Option Securities purchased
upon the exercise of the over-allotment option described in Section 2(b)
shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial U.S.
Securities but not payable on the U.S. Option Securities.
Sch B-1
SCHEDULE C
List of persons and entities
subject to lock-up
Sch C-1
Exhibit A-1
FORM OF OPINION OF COUNSEL TO THE COMPANY
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland.
(ii) The Company has the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement, respectively.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) The Company is organized in accordance with the requirements for
qualification as a real estate investment trust under Sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code")
and the rules and regulations thereunder. The contemplated method of
operation of the Company's business as described in the Registration Statement
will satisfy the operational requirements for qualification as a real estate
investment trust under Sections 856 through 860 of the Internal Revenue Code,
and the rules and regulations thereunder.
(v) The Company is not, and upon the issuance and sale of the U.S.
Securities as contemplated in the U.S. Purchase Agreement and the
International Securities as contemplated in the International Purchase
Agreement and the application of the net proceeds from the sale of the
Securities as described in the Prospectuses will not be, an "investment
company" or an entity "controlled" by an "investment company," as such terms
are defined in the 1940 Act.
(vi) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectuses in the column entitled "Actual"
under the caption "Capitalization" (except for subsequent issuances, if any,
pursuant to the U.S. Purchase Agreement or the International Purchase
Agreement or pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectuses or pursuant to the exercise of options
referred to in the Prospectuses); the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are
fully paid and non-assessable
A-1-1
(vii) The Securities have been duly authorized for issuance and sale
to the U.S. Underwriters pursuant to the U.S. Purchase Agreement and to the
International Managers pursuant to the International Purchase Agreement
and, when issued and delivered by the Company pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement, respectively, against
payment of the consideration set forth in the U.S. Purchase Agreement and
the International Purchase Agreement, respectively, will be validly issued
and fully paid and non-assessable.
(viii) The issuance of the Securities is not subject to preemptive or
other similar rights of any security holder of the Company arising by
operation of law, under the charter or by-laws of the Company or, to the
best of our knowledge and information, otherwise.
(ix) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the charter and by-laws
of the Company.
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectuses pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and, to
the best of our knowledge, no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has
been issued under the 1933 Act and no proceedings for that purpose have
been instituted or are pending or threatened by the Commission.
(xi) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectuses and each amendment or
supplement to the Registration Statement and Prospectuses as of their
respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, as to which
we need express no opinion) complied as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations.
(xii) If Rule 434 has been relied upon, the Prospectuses were not
"materially different," as such term is used in Rule 434, from the
prospectuses included in the Registration Statement at the time it became
effective.
(xiii) All descriptions in the Registration Statement of contracts and
other documents to which the Company is a party are accurate in all
material respects; to the best of our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto, and the descriptions
thereof or references thereto are correct in all material respects.
(xiv) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which
the Company or the Manager is a party, or to which the property of the
Company or the Manager is subject, before or brought by any court or
A-1-2
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in the U.S.
Purchase Agreement, the International Purchase Agreement or the Management
Agreements, or the performance by the Company and the Manager of its
obligations thereunder.
(xv) To the best of our knowledge, the Company is not in violation
of its charter or by-laws and no default by the Company exists in the due
performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described
or referred to in the Registration Statement or the Prospectuses or filed
as an exhibit to the Registration Statement.
(xvi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and
the 1933 Act Regulations, which have been obtained, or as may be required
under the securities or blue sky laws of the various states, as to which we
need express no opinion) is necessary or required in connection with the
due authorization, execution and delivery of the U.S. Purchase Agreement,
the International Purchase Agreement or the Management Agreement by the
Company, or for the offering, issuance or sale of the Securities.
(xvii) The Company possesses such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct its business as contemplated in the
Prospectuses that we have, in the exercise of customary professional
diligence, recognized as applicable to the Company and, to our knowledge
and information, the Company is in compliance with the terms and conditions
of all such Governmental Licenses, except where the failure so to comply
would not, singly or in the aggregate, have a Material Adverse Effect.
(xviii) Each of the U.S. Purchase Agreement and the International
Purchase Agreement has been duly authorized, executed and delivered by the
Company.
(xix) The Management Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable against it in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(xx) The Indemnity Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as (A) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
A-1-3
creditors' rights generally and (B) the availability of equitable remedies
may be limited by equitable principles of general applicability.
(xxi) The execution, delivery and performance of the U.S. Purchase
Agreement, the International Purchase Agreement and the Management
Agreement, the consummation of the transactions contemplated therein and in
the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectuses under the caption "Use Of Proceeds") and the
compliance by the Company with its obligations under the U.S. Purchase
Agreement and the International Purchase Agreement, respectively, do not
and will not, whether with or without the giving of notice or lapse of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined in Section 1(a)(xi) of the U.S. Purchase Agreement and
International Purchase Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to us, to which the Company is a party or by which it may
be bound, or to which any of the property or assets of the Company is
subject (except for such conflicts, breaches or defaults or liens, charges
or encumbrances that would not have a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or by-
laws of the Company or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to us, of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its properties, assets or operations, except for such
violations, which singly or in the aggregate, would not result in a
Material Adverse Effect.
(xxii) The information in the Prospectuses under "Business and
Strategy--Legal Proceedings," "Federal Income Tax Consequences," "ERISA
Considerations," "Description of Capital Stock," "Certain Provisions of
Maryland Law and of the Company's Charter and Bylaws" and in Item 33 and
Item 34 of Part II of the Registration Statement, to the extent that it
constitutes matters of law, summaries of legal matters, the Company's
charter and bylaws or legal proceedings, or legal conclusions, has been
reviewed by us and is correct in all material respects; and our opinion set
forth under "Federal Income Tax Consequences" is confirmed.
(xxiii) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the Prospectuses that are
not described as required.
(xxiv) To the best of our knowledge, there are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered
by the Company under the 1933 Act.
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any amendment thereto, including the Rule
430A Information and Rule 434 Information (if applicable), (except for
financial statements and schedules and other financial data included
therein or omitted therefrom, as to which we need make no statement), at
the time such Registration Statement or any such amendment became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectuses or any
amendment or
A-1-4
supplement thereto (except for financial statements and schedules and other
financial data included therein or omitted therefrom, as to which we need
make no statement), at the time the Prospectuses were issued, at the time
any such amended or supplemented prospectuses were issued or at the Closing
Time, 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 the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of the laws of Maryland, upon the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, special counsel to the Company (which
opinion shall be dated and furnished to the Representatives at the Closing
Time, shall be satisfactory in form and substance to counsel for the
Underwriters and shall expressly state that the Underwriters may rely on
such opinion as if it were addressed to them), provided that O'Melveny &
▇▇▇▇▇ LLP shall state in their opinion that they believe that they and the
Underwriters are justified in relying upon such opinion, and (B), as to
matters of fact (but not as to legal conclusions) O'Melveny & ▇▇▇▇▇ LLP may
rely, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. Such opinion shall not state
that it is to be governed or qualified by, or that it is otherwise subject
to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF OPINION OF COUNSEL TO THE MANAGER
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Manager has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
California.
(ii) The Manager has the corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement, respectively.
(iii) The Manager is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(iv) All of the issued and outstanding capital stock of the Manager
has been duly authorized and validly issued, is fully paid and non-
assessable and is owned by TCW, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(v) The Manager is duly registered as an "investment adviser," as
such term is defined in the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and is not prohibited by the Advisers Act or the
rules and regulations thereunder from acting under the Management Agreement
as contemplated by the Prospectuses.
(vi) All descriptions in the Registration Statement of contracts and
other documents to which the Manager is a party are accurate in all
material respects.
(vii) To the best of my knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which the
Manager is a party, or to which the property of the Manager is subject,
before or brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement or the Management Agreement or the performance by the
Manager of its obligations thereunder.
A-2-1
(viii) To the best of my knowledge, the Manager is not in violation
of its charter or by-laws and no default by the Manager exists in the due
performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is described
or referred to in the Registration Statement or the Prospectuses or filed
as an exhibit to the Registration Statement.
(ix) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and
the 1933 Act Regulations, which have been obtained, is necessary or
required in connection with the due authorization, execution and delivery
by the Manager of the U.S. Purchase Agreement, the International Purchase
Agreement or the Management Agreement.
(x) The Manager possesses such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct its business as contemplated in the
Prospectuses that we have, in the exercise of customary professional
diligence, recognized as applicable to the Manager and, to our knowledge
and information, the Manager is in compliance with the terms and conditions
of all such Governmental Licenses, except where the failure so to comply
would not, singly or in the aggregate, have a Material Adverse Effect.
(xi) Each of the U.S. Purchase Agreement and the International
Purchase Agreement has been duly authorized, executed and delivered by the
Manager.
(xii) The Management Agreement has been duly authorized, executed
and delivered by the Manager and constitutes a valid and binding obligation
of the Manager enforceable against it in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(xiii) The execution, delivery and performance of the U.S. Purchase
Agreement, the International Purchase Agreement and the Management
Agreement, the consummation of the transactions contemplated therein and in
the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectuses under the caption "Use Of Proceeds") and the
compliance by the Manager with its obligations under the U.S. Purchase
Agreement and the International Purchase Agreement, respectively, do not
and will not, whether with or without the giving of notice or lapse of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined in Section 1(b)(v) of the U.S. Purchase Agreement and
International Purchase Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Manager pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to us, to which the Manager is a party or by which it may
be bound, or to which any of the property or assets of the Manager is
subject (except for such conflicts, breaches or defaults or liens, charges
or encumbrances that
A-2-2
would not have a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of the Manager or
any applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to us, of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Manager or any of
its properties, assets or operations, except for such violations, which
singly or in the aggregate, would not result in a Material Adverse Effect.
(xiv) To the best of my knowledge and information, the description of
the Manager in the Registration Statement and the Prospectuses does 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.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions) [ ] may rely, to the extent they deem
proper, on certificates of responsible officers of the Manager and public
officials. Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law
(1991).
A-2-3
Exhibit B
FORM OF OPINION OF
SPECIAL MARYLAND COUNSEL TO THE COMPANY
TO BE DELIVERED PURSUANT TO SECTION 5(c)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of Maryland.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement, respectively.
(iii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectuses in the column entitled "Actual"
under the caption "Capitalization" (except for subsequent issuances, if
any, pursuant to the U.S. Purchase Agreement and the International Purchase
Agreement or pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectuses or pursuant to the exercise of options
referred to in the Prospectuses); the shares of issued and outstanding
capital stock of the Company have been duly authorized and validly issued
and are fully paid and non-assessable; and none of the outstanding shares
of capital stock of the Company was issued in violation of the preemptive
or other similar rights of any securityholder of the Company, either
pursuant to the charter or by-laws of the Company or Maryland law.
(iv) The Securities have been duly authorized for issuance and sale
to the U.S. Underwriters pursuant to the U.S. Purchase Agreement and to the
International Managers pursuant to the International Purchase Agreement
and, when issued and delivered by the Company pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement, respectively, against
payment of the consideration set forth in the U.S. Purchase Agreement and
the International Purchase Agreement, respectively, will be validly issued
and fully paid and non-assessable and no holder of the Securities is or
will be subject to personal liability by reason of being such a holder.
(v) The issuance of the Securities is not subject to preemptive or
other similar rights of any securityholder of the Company, either pursuant
to the charter or by-laws of the Company or Maryland law.
(vi) Each of the U.S. Purchase Agreement and the International
Purchase Agreement has been duly authorized, executed and delivered by the
Company.
(vii) The Management Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable against it in accordance with its terms, except
as enforcement thereof may be limited
B-1
by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the enforcement of creditors' rights generally and
by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(viii) The Insurance Policy has been duly authorized, executed and
delivered and is in full force and effect and enforceable in accordance
with its terms.
(ix) The form of certificate used to evidence the Common Stock
complies in all material respects with Maryland law and with any applicable
requirements of the charter and by-laws of the Company.
(x) The information in the Prospectus under "Description of
Capital Stock," "Certain Provisions of Maryland Law and of the Company's
Charter and Bylaws," and "Federal Income Tax Consequences," to the extent
that it constitutes matters of Maryland law or the Company's charter and
bylaws, has been reviewed by us and is correct in all material respects.
(xi) To the best of our knowledge, there are no statutes or
regulations of the State of Maryland that are required to be described in
the Prospectuses that are not described as required.
(xii) To the best of our knowledge, the Company is not in violation
of its charter or by-laws and no default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease
or other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectuses or filed as an exhibit to the
Registration Statement.
(xiii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency of the State of Maryland is necessary or required in
connection with the due authorization, execution and delivery of the U.S.
Purchase Agreement, the International Purchase Agreement and the Management
Agreement or for the offering, issuance or sale of the Securities.
(xiv) The execution, delivery and performance of the U.S. Purchase
Agreement, the International Purchase Agreement and the Management
Agreement, the consummation of the transactions contemplated therein and in
the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectuses under the caption "Use Of Proceeds") and the
compliance by the Company with its obligations under the U.S. Purchase
Agreement, the International Purchase Agreement and the Management
Agreement do not and will not, whether with or without the giving of notice
or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(xi) of the U.S.
Purchase Agreement and the International Purchase Agreement) under or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or any other agreement or instrument, known to us, to which the Company is
a party or by which it, or to which any of the property or assets of the
Company, is subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that
B-2
would not have a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of the Company or
any applicable Maryland law, statute, rule, regulation, judgment, order,
writ or decree, known to us, of any government, government instrumentality
or court of the State of Maryland or any of its properties, assets or
operations, except for such violations, which singly or in the aggregate,
would not result in a Material Adverse Effect.
B-3
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5(L)]
Exhibit C
November __, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated,
PaineWebber Incorporated
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated
Sutro & Company Incorporated
as U.S. Representatives of the several
U.S. Underwriters to be named in the
U.S. Purchase Agreement
PaineWebber International (U.K.) Ltd.
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering by Apex Mortgage Capital, Inc.
-------------------------------------------------------
Dear Sirs:
The undersigned, a stockholder [and an officer and/or director] of Apex
Mortgage Capital, Inc., a Maryland corporation (the "Company"), understands that
(1) ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇"), PaineWebber Incorporated, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company,
Incorporated and Sutro & Company, Incorporated propose to enter into a U.S.
Purchase Agreement (the "U.S. Purchase Agreement") with the Company and TCW
Investment Management Company (the "Manager") and (2) ▇▇▇▇▇▇▇ ▇▇▇▇▇
International, PaineWebber International (U.K.) Ltd., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
Company, Incorporated and Sutro & Company, Incorporated propose to enter into a
International Purchase Agreement (the "International Purchase Agreement" and
together with the U.S. Purchase Agreement, the "Purchase Agreements") with the
Company and the Manager providing for the public offering of shares (the
"Securities") of the Company's common stock, par value $.01 per share (the
"Common Stock"). In recognition of the benefit that such an offering will
confer upon the undersigned as a stockholder [and an officer and/or director] of
the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreements that, during a period of 180
days from the date of the Purchase Agreements, the undersigned will not, without
the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Company's
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock, whether now owned or hereafter acquired by the
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undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or file any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.
Very truly yours,
Signature:
Print Name:
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