ANNALY MORTGAGE MANAGEMENT, INC.
17,000,000 Shares
Common Stock
($0.01 Par Value)
UNDERWRITING AGREEMENT
April 24, 2001
UNDERWRITING AGREEMENT
April 24, 2001
UBS WARBURG LLC
as Managing Underwriter,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Annaly Mortgage Management, Inc., a Maryland corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters"), for whom UBS Warburg LLC ("UBSW") is acting
as Managing Underwriter, an aggregate of 17,000,000 shares (the "Firm Shares")
of Common Stock, $0.01 par value (the "Common Stock"), of the Company. In
addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 2,550,000 shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares." The Shares are described in the Prospectus which is
referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Securities Act"), with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-86401) (the "First Registration Statement"), a registration statement on
Form S-3 (File No. 333-58586) filed pursuant to Rule 462(b) under the Securities
Act with respect to the First Registration Statement (the "Second Registration
Statement") and a registration statement on Form S-3, including a prospectus
(File No. 333-58054), with respect to the Shares (the "Third Registration
Statement"), which incorporate by reference documents which the Company has
filed or will file in accordance with the provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (collectively,
the "Exchange Act"). The Company has prepared a prospectus supplement (the
"Prospectus Supplement") to the prospectus included as part of the Second
Registration Statement setting forth the terms of the offering, sale and plan of
distribution of the Shares and additional information concerning the Company and
its business. The Company has furnished to UBSW, for use by the Underwriters and
by dealers, copies of one or more preliminary prospectuses, containing the
prospectus included as part of the First Registration Statement, as supplemented
by a preliminary Prospectus Supplement, and including the documents incorporated
in such prospectus by reference (each, a "Preliminary Prospectus"), relating to
the Shares. Except where the context otherwise requires, the First Registration
Statement, the Second Registration Statement and the Third Registration
Statement, as amended when each became effective, including all documents filed
as part thereof or incorporated by reference therein, and including any
information contained in a Prospectus (as defined below) subsequently filed with
the Commission pursuant to Rule 424(b) under the Securities Act and also
including any other registration statement filed pursuant to Rule 462(b) under
the Securities Act, are herein called the "Registration Statements," and the
prospectus, including all documents incorporated therein by reference, included
in the Third Registration Statement, as supplemented by the Prospectus
Supplement, in the form filed by the Company with the Commission pursuant to
Rule 424(b) under the Securities Act on or before the second Business Day (as
defined below) following the date of this Agreement (or on such other day as the
parties may mutually
agree), is herein called the "Prospectus." Any reference herein to the
Registration Statements, the Prospectus, any Preliminary Prospectus or any
amendment or supplement thereto shall be deemed to refer to and include the
documents incorporated by reference therein, and any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the Registration
Statements, the Prospectus or any Preliminary Prospectus shall be deemed to
refer to and include the filing after the execution hereof of any document with
the Commission deemed to be incorporated by reference therein. For purposes of
this Agreement, all references to the Registration Statements, the Prospectus,
any Preliminary Prospectus or to any amendment or supplement thereto shall be
deemed to include any copy filed with the Commission pursuant to its Electronic
Data Gathering Analysis and Retrieval System ("▇▇▇▇▇"), and such copy shall be
identical in content to any Prospectus or Preliminary Prospectus delivered to
the Underwriters for use in connection with the offering of the Shares.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell the Firm Shares to the several Underwriters,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Company the respective number of Firm Shares (subject to such adjustment as
UBSW may determine to avoid fractional shares) set forth opposite the name of
such Underwriter in Schedule A annexed hereto at a purchase price of $10.34 per
Share. The Company is advised by UBSW that the Underwriters intend (i) to make a
public offering of the Shares as soon as the Underwriters deem advisable after
this Agreement has been executed and delivered and (ii) initially to offer the
Firm Shares upon the terms set forth in the Prospectus. The Underwriters may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as they may determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company ratably
in accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as UBSW shall determine to avoid fractional shares),
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by UBSW on behalf of the several
Underwriters at any time (but not more than once) on or before the thirtieth day
following the date hereof, by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the "additional time
of purchase"); provided, however, that the additional time of purchase shall not
be (i) earlier than the time of purchase (as defined below) or (ii) later than
the tenth Business Day (as defined below) after the date on which the option
shall have been exercised. The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same proportion to the aggregate
number of Additional Shares being purchased as the number of Firm Shares set
forth opposite the name of such Underwriter on Schedule A hereto bears to the
aggregate number of Firm Shares (subject, in each case, to such adjustment as
UBSW may determine to eliminate fractional shares). As used herein "Business
Day" shall mean a day on which the New York Stock Exchange is open for trading
or commercial banks in the City of New York are open for business.
2. Payment and Delivery. Payment of the purchase price for the Firm
Shares shall be made to the Company by federal funds wire transfer against
delivery of the certificates for the Firm Shares to UBSW through the facilities
of the Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on April 30, 2001 (unless another time shall be agreed to by UBSW and
the Company or unless postponed in
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accordance with the provisions of Section 8 hereof). The time at which such
payment and delivery are actually made is herein sometimes called the "time of
purchase." Certificates for the Firm Shares shall be delivered to UBSW, through
the facilities of DTC, in definitive form in such names and in such
denominations as UBSW shall specify no later than the second Business Day
preceding the time of purchase. For the purpose of expediting the checking of
the certificates for the Firm Shares by UBSW, the Company agrees to make such
certificates available to UBSW for such purpose at least one full Business Day
preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall be made
at the additional time of purchase in the same manner and at the same office as
the payment for the Firm Shares. Certificates for the Additional Shares shall be
delivered to UBSW, through the facilities of DTC, in definitive form in such
names and in such denominations as UBSW shall specify no later than the second
Business Day preceding the additional time of purchase. For the purpose of
expediting the checking of the certificates for the Additional Shares by UBSW,
the Company agrees to make such certificates available to UBSW for such purpose
at least one full Business Day preceding the additional time of purchase.
3. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statements have been filed with the Commission
and have been declared effective under the Securities Act. The Company has not
received, and has no notice of, any order of the Commission preventing or
suspending the use of the Registration Statements, or threatening or instituting
proceedings for that purpose. Any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statements or
the Prospectus or to be filed as exhibits to the Registration Statements have
been so described or filed. The Prospectus Supplement has been or will be so
prepared and will be filed pursuant to Rule 424(b) of the Securities Act on or
before the second Business Day following the date of this Agreement or on such
other day as the parties may mutually agree. The Preliminary Prospectus, at the
time of filing thereof, conformed in all material respects to the requirements
of the Securities Act. Copies of the Registration Statements, the Preliminary
Prospectus and the Prospectus, any such amendments or supplements and all
documents incorporated by reference therein that were filed with the Commission
on or prior to the date of this Agreement (including one fully executed copy of
each of the Registration Statements and of each amendment thereto for the
Underwriters) have been delivered to the Underwriters and their counsel. The
Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statements, the
Preliminary Prospectus, the Prospectus or any other materials, if any, permitted
by the Securities Act.
(b) Each part of the Registration Statements, when such part became or
becomes effective or was or are filed with the Commission, and the Prospectus
and any amendment or supplement thereto, on the date of filing thereof with the
Commission and at the time of purchase and, if applicable, at the additional
time of purchase, conformed or will conform in all material respects with the
requirements of the Securities Act. Each part of the Registration Statements,
when such part became or becomes effective or was or are filed with the
Commission, did not or will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission and at the
time of purchase and, if applicable, at the additional time of purchase, did not
or will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
foregoing shall not apply to statements in, or omissions from, any such document
in reliance upon, and in conformity with, written information concerning the
Underwriters that
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was furnished in writing to the Company by UBSW, on behalf of the several
Underwriters, specifically for use in the preparation thereof.
(c) The documents incorporated by reference in the Registration
Statements, the Prospectus or any amendment or supplement thereto, when they
became or become effective under the Securities Act or were or are filed with
the Commission under the Securities Act or the Exchange Act, as the case may be,
conformed or will conform in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable.
(d) The consolidated financial statements of the Company, together with
the related schedules and notes thereto, set forth or included or incorporated
by reference in the Registration Statements and Prospectus fairly present the
financial condition of the Company as of the dates indicated and the results of
operations, changes in financial position, stockholders' equity and cash flows
for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise stated therein). The selected financial and statistical
data included or incorporated by reference in the Registration Statements and
the Prospectus present fairly the information shown therein and, to the extent
based upon or derived from the financial statements, have been compiled on a
basis consistent with the financial statements presented therein. Any pro forma
financial statements of the Company, and the related notes thereto, included or
incorporated by reference in the Registration Statements and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the basis described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. No other financial statements are required to
be set forth or to be incorporated by reference in the Registration Statements
or the Prospectus under the Securities Act.
(e) The Preliminary Prospectus was, and the Prospectus delivered to the
Underwriters for use in connection with this offering will be, identical to the
versions of the Preliminary Prospectus and Prospectus, respectively, created to
be transmitted to the Commission for filing via ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland, with full
corporate power and authority to own, lease and operate its assets and conduct
its business as described in the Prospectus, to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby and the Company is duly qualified to do business as a foreign corporation
in and is in good standing in each jurisdiction where the ownership of its
assets or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business, assets, properties, prospects, financial
condition or results of operation of the Company taken as a whole (a "Material
Adverse Effect"), and the Company is in compliance in all material respects with
the laws, orders, rules, regulations and directives issued or administered by
such jurisdictions.
(g) The Company has no "significant subsidiaries" (as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the Securities Act) and
does not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity, except that it
owns a 33% ownership interest in Annaly International Money Management, Inc.,
which in turn owns a 51% ownership interest in ▇▇▇▇▇▇.▇▇▇, Inc. Complete and
correct copies of the articles of incorporation and of the bylaws of the Company
and all amendments thereto have been delivered to UBSW, and except as set forth
in the
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exhibits to the Registration Statements, no changes therein will be made
subsequent to the date hereof and prior to the time of purchase or, if
applicable, the additional time of purchase.
(h) The Company is not in breach of, or in default under (nor has any
event occurred which with notice, lapse of time, or both would result in any
breach of, or constitute a default under), (i) its charter or bylaws or (ii) in
the performance or observance of any obligation, agreement, covenant or
condition contained in any license, repurchase agreement, indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of indebtedness,
or any lease, contract or other agreement or instrument to which the Company is
a party or by which it or any of its assets or properties may be bound or
affected, the effect of which breach or default under clause (ii) could have a
Material Adverse Effect. The execution, delivery and performance of this
Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated hereby will not conflict with, or result in any breach
of or constitute a default under (nor constitute any event which with notice,
lapse of time, or both would result in any breach of, or constitute a default
under), any provision (i) of the charter or bylaws of the Company, (ii) under
any provision of any license, repurchase agreement, indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument to which the Company is a party
or by which it or its assets or properties may be bound or affected, the effect
of which could have a Material Adverse Effect, or (iii) under any federal,
state, local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company.
(i) As of December 31, 2000, as of the date of this Agreement and as of
the time of purchase, the Company had, has or will have an authorized, issued
and outstanding capitalization as set forth under the headings "Historical," "As
adjusted for the January 2001 offerings" and "As further adjusted for this
offering," respectively, in the section of the Prospectus Supplement entitled
"Capitalization." All of the issued and outstanding shares of capital stock,
including the Common Stock of the Company, have been duly and validly authorized
and issued and are fully paid and non-assessable, have been issued in compliance
with all federal and state securities laws and were not issued in violation of
any preemptive right, resale right, right of first refusal or similar right.
(j) This Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except to the extent that (i)
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
equitable principles and (ii) the indemnification and contribution provisions of
Section 9 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof.
(k) The capital stock of the Company, including the Shares, conforms in
all material respects to the description thereof contained in the Registration
Statements and Prospectus and the certificates for the Shares are in due and
proper form and the holders of the Shares will not be subject to personal
liability by reason of being such holders.
(l) The Shares have been duly and validly authorized by the Company for
issuance and sale pursuant to this Agreement and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued and
fully paid and non-assessable, free and clear of any pledge, lien, encumbrance,
security interest or other claim, and will be registered pursuant to Section 12
of the Exchange Act.
(m) No approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the issuance and sale of the
Shares or the consummation by the Company of the transaction contemplated hereby
other than (A) registration of the Shares under the Securities Act, (B) any
necessary qualification
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under the securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters, or (C) such approvals as have been
obtained in connection with the approval of the listing of the Shares on the New
York Stock Exchange.
(n) No person has the right, contractual or otherwise, to cause the
Company to issue to it any shares of capital stock or other securities of the
Company upon the issue and sale of the Shares to the Underwriters hereunder, nor
does any person have preemptive rights, co-sale rights, rights of first refusal
or other rights to purchase any of the Shares other than those that have been
expressly waived prior to the dates hereof.
(o) Deloitte & Touche, LLP, whose report on the consolidated financial
statements of the Company is filed with the Commission as part of the
Registration Statements and Prospectus, are and, during the periods covered by
their reports, were independent public accountants as required by the Securities
Act.
(p) The Company has all necessary licenses, authorizations, consents
and approvals and has made all necessary filings required under any federal,
state, local or foreign law, regulation or rule, and has obtained all necessary
authorizations, consents and approvals from other persons, in order to conduct
its business as described in the Prospectus, except as such as could not have a
Material Adverse Effect. The Company is not required by any applicable law to
obtain accreditation or certification from any governmental agency or authority
in order to provide the products and services which it currently provides or
which it proposes to provide as set forth in the Prospectus. The Company is not
in violation of, or in default under, any such license, authorization, consent
or approval or any federal, state, local or foreign law, regulation or rule or
any decree, order or judgment applicable to the Company, the effect of which
could have a Material Adverse Effect.
(q) The descriptions in the Registration Statements and the Prospectus
of the legal or governmental proceedings, contracts, leases and other legal
documents therein described present fairly the information required to be shown,
and there are no legal or governmental proceedings, contracts, leases, or other
documents of a character required to be described in the Registration Statements
or the Prospectus or to be filed as exhibits to the Registration Statements
which are not described or filed as required, all agreements between the Company
and third parties expressly referenced in the Prospectus are legal, valid and
binding obligations of the Company enforceable in accordance with their
respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and by general equitable principles.
(r) There are no actions, suits, claims, investigations or proceedings
pending or, to the best of the Company's knowledge, threatened to which the
Company or any of its officers or directors is a party or of which any of its
properties or other assets is subject at law or in equity, or before or by any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency which could result in a judgment, decree or order
having a Material Adverse Effect.
(s) During the period of at least the last 24 calendar months prior to
the date of this Agreement, the Company has timely filed with the Commission all
documents and other material required to be filed pursuant to Sections 13, 14
and 15(d) under the Exchange Act. During the period of at least the last 36
calendar months preceding the filing of the Third Registration Statement, the
Company has filed all reports required to be filed pursuant to Sections 13, 14
and 15(d) under the Exchange Act. As of the date of this Agreement, the
aggregate market value of the Company's voting stock held by nonaffiliates of
the Company was equal to or greater than $150 million.
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(t) Subsequent to the respective dates as of which information is given
in the Registration Statements and the Prospectus, there has not been (i) any
material adverse change, or any development which, in the Company's reasonable
judgment, is likely to cause a material adverse change, in the business,
properties or assets described or referred to in the Registration Statements or
Prospectus, or the results of operations, condition (financial or otherwise),
net worth, business or operations of the Company taken as a whole, (ii) any
transaction which is material to the Company, except transactions in the
ordinary course of business, (iii) any obligation, direct or contingent, which
is material to the Company taken as a whole, incurred by the Company, except
obligations incurred in the ordinary course of business, (iv) any change in the
capital stock or outstanding indebtedness of the Company, or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company. The Company has no material contingent obligation which is not
disclosed in the Registration Statements or Prospectus.
(u) There are no persons with registration or other similar rights to
have any equity or debt securities, including securities which are convertible
into or exchangeable for equity securities, registered pursuant to the
Registration Statements or otherwise registered by the Company under the
Securities Act.
(v) The Company (i) does not have any issued or outstanding preferred
stock or (ii) has not defaulted on any installment on indebtedness for borrowed
money or on any rental on one or more long term leases, which defaults would
have a Material Adverse Effect on the financial position of the Company. The
Company has not filed a report pursuant to Section 13(a) or 15(d) of the
Exchange Act, since the filing of its last Annual Report on Form 10-K,
indicating that it (i) has failed to pay any dividend or sinking fund
installment on preferred stock or (ii) has defaulted on any installment on
indebtedness for borrowed money or on any rental on one or more long term
leases, which defaults would have a Material Adverse Effect on the financial
position of the Company.
(w) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Common Stock to facilitate the sale of the Shares, or (ii) except
for the two public offerings completed in the first quarter of 2001, since the
filing of the Registration Statements (except pursuant to the Company's dividend
reinvestment and share purchase plan (the "DRSPP")) (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Shares or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(x) The Shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance.
(y) Neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act, or (ii) directly or indirectly through one or more intermediaries,
controls or has any other association with (within the meaning of Article I of
the Bylaws of the National Association of Securities Dealers ("NASD")) any
member firm of the NASD.
(z) The Company has not relied upon UBSW or legal counsel for UBSW for
any legal, tax or accounting advice in connection with the offering and sale of
the Shares.
(aa) Any certificate signed by any officer of the Company delivered to
UBSW or to counsel for the Underwriters pursuant to or in connection with this
Agreement shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
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(bb) As of the date of this Agreement, the investment portfolio of the
Company (i) consists entirely of mortgage-backed securities guaranteed, as to
payments of principal and interest, by either the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association or the Government
National Mortgage Association and (ii) all of such mortgage-backed securities
are REIT (as defined below) eligible assets. As of the date of this Agreement,
the Company has no plan or intention to materially alter (i) its capital
investment policy or (ii) the percentage of its investment portfolio that is
invested in mortgage-backed securities which are guaranteed, as to payments of
principal and interest, by either the Federal Home Loan Mortgage Corporation,
the Federal National Mortgage Association or the Government National Mortgage
Association. The Company has good and marketable title to all of the properties
and assets owned by it, in each case free and clear of any security interests,
liens, encumbrances, equities, claims and other defects (except for any security
interest, lien, encumbrance or claim that may otherwise exist under any
applicable repurchase agreement), except such as do not have a Material Adverse
Effect and do not interfere with the use made or proposed to be made of such
property by the Company, and except as described in or contemplated by the
Prospectus. The Company owns no real property. Any real property and buildings
held under lease by the Company are held under valid, existing and enforceable
leases, with such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the use made or proposed to be made of such
property and buildings by the Company.
(cc) The Company has filed all federal, state and foreign income and
franchise tax returns required to be filed on or prior to the date hereof and
has paid taxes shown as due thereon, other than taxes which are being contested
in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles. The Company has no
knowledge, after due inquiry, of any tax deficiency which has been asserted or
threatened against the Company. To the knowledge of the Company, there are no
tax returns of the Company that are currently being audited by federal, state or
local taxing authorities or agencies which would have a Material Adverse Effect.
(dd) The Company owns or possesses adequate license or other rights to
use all patents, trademarks, service marks, trade names, copyrights, software
and design licenses, trade secrets, manufacturing processes, other intangible
property rights and know-how (collectively, "Intangibles") necessary to entitle
the Company to conduct its business as described in the Prospectus, and the
Company has not received notice of infringement of or conflict with (and the
Company knows of no such infringement of or conflict with) asserted rights of
others with respect to any Intangibles which could have a Material Adverse
Effect.
(ee) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ff) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged. The Company has no reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.
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(gg) The Company is not in violation, and has not received notice of
any violation with respect to, any applicable environmental, safety or similar
law applicable to the business of the Company. The Company has received all
permits, licenses or other approvals required of them under applicable federal
and state occupational safety and health and environmental laws and regulations
to conduct its business, and the Company is in compliance with all terms and
conditions of any such permit, license or approval, except any such violation of
law or regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals which could not, singly or in the aggregate, have a
Material Adverse Effect.
(hh) The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated,
except as may otherwise exist with respect to the Underwriters pursuant to this
Agreement.
(ii) There are no existing or threatened labor disputes with the
employees of the Company which are likely to have individually or in the
aggregate a Material Adverse Effect.
(jj) Neither the Company nor, to the knowledge of the Company, any
employee or agent of the Company, has made any payment of funds of the Company
or received or retained any funds in violation of any law, rule or regulation or
of a character required to be disclosed in the Prospectus.
(kk) The Company has continuously been organized and operated in
conformity with the requirements for qualification and taxation as a "real
estate investment trust" (a "REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"), for all taxable years
commencing with its taxable year ended December 31, 1997. The Company has filed
an election to be taxable as a REIT for its taxable year ended December 31,
1997, and such election has not been terminated. The Company's method of
operation will permit it to continue to meet the requirements for qualification
and taxation as a REIT under the Code. The Company intends to continue to
operate in a manner which would permit it to qualify as a REIT under the Code.
The Company has no intention of changing its operations or engaging in
activities which would cause it to fail to qualify, or make economically
undesirable its continued qualification, as a REIT.
(ll) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
4. Certain Covenants of the Company. The Company hereby covenants and
agrees with each of the Underwriters that:
(a) The Company will furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such jurisdictions (both domestic and foreign) as
UBSW may designate and to maintain such qualifications in effect so long as
required for the distribution of the Shares, provided that the Company shall not
be required to qualify as a foreign corporation or to consent to the service of
process under the laws of any such state (except service of process with respect
to the offering and sale of the Shares). The Company will promptly advise UBSW
of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(b) The Company will prepare the Prospectus in a form approved by the
Underwriters and file such Prospectus with the Commission pursuant to Rule
424(b) under the Securities Act not later than 10:00 A.M. (New York City time),
on or before the second Business Day following the date of this
9
Agreement or on such other day as the parties may mutually agree and to furnish
promptly (and with respect to the initial delivery of such Prospectus, not later
than 10:00 A.M. (New York City time) on or before the second Business Day
following the date of this Agreement or on such other day as the parties may
mutually agree) to the Underwriters copies of the Prospectus (or of the
Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Third
Registration Statement) in such quantities and at such locations as the
Underwriters may reasonably request for the purposes contemplated by the
Securities Act, which Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the version created to be
transmitted to the Commission for filing via ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(c) The Company will advise UBSW immediately, confirming such advice in
writing, of (i) the receipt of any comments from the Commission relating to any
filing of the Company under the Securities Act or the Exchange Act, (ii) any
request by the Commission for amendments or supplements to the Registration
Statements or Prospectus or for additional information with respect thereto,
(iii) the issuance by the Commission of any stop order suspending the
effectiveness of any one of the Registration Statements or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, (iv) the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, (v) the initiation, threatening or contemplation of
any proceedings for any of such purposes and, if the Commission or any other
governmental agency or authority should issue any such order, the Company will
make every reasonable effort to obtain the lifting or removal of such order as
soon as possible. The Company will advise UBSW promptly of any proposal to amend
or supplement the Registration Statements or Prospectus including by filing any
documents that would be incorporated therein by reference and to file no such
amendment or supplement to which UBSW shall object to in writing.
(d) The Company will advise UBSW promptly and, if requested by UBSW,
will confirm such advice in writing when any post-effective amendment to any one
of the Registration Statements becomes effective under the Securities Act.
(e) The Company will furnish to UBSW and, upon request, to each of the
other Underwriters for a period of five years from the date of this Agreement
(i) copies of any reports or other communications which the Company shall send
to its stockholders or shall from time to time publish or publicly disseminate,
(ii) copies of all annual, quarterly and current reports filed with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar form as may be
designated by the Commission, (iii) copies of documents or reports filed with
any national securities exchange on which any class of securities of the Company
is listed, and (iv) such other information as UBSW may reasonably request
regarding the Company, in each case as soon as such communications, documents or
information become available.
(f) The Company will advise the Underwriters promptly of the happening
of any event known to the Company within the time during which a Prospectus
relating to the Shares is required to be delivered under the Securities Act
which, in the judgment of the Company or in the reasonable opinion of UBSW or
counsel for the Underwriters, would require the making of any change in the
Prospectus then being used, or in the information incorporated by reference
therein, so that the Prospectus would not include an untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend or supplement the Prospectus to comply with any law and, during such time,
to promptly prepare and furnish to the Underwriters copies of the proposed
amendment or supplement before filing any such amendment or supplement with the
Commission and thereafter promptly furnish, at the Company's own expense, to the
Underwriters and to dealers copies in such quantities and at such locations as
UBSW may from time to time reasonably
10
request of an appropriate amendment to the Registration Statements or supplement
to the Prospectus so that the Prospectus as so amended or supplemented will not,
in the circumstances when it is so delivered, be misleading or so that the
Prospectus will comply with the law.
(g) The Company will make generally available to its stockholders as
soon as practicable, and in the manner contemplated by Rule 158 of the
Securities Act but in any event not later than 15 months after the end of the
Company's current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period beginning after the date upon which the
Prospectus Supplement is filed pursuant to Rule 424(b) under the Securities Act
that shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder and will advise the Underwriters in writing when such
statement has been made available.
(h) The Company will furnish to UBSW a signed copy of the Registration
Statements, as initially filed with the Commission, and of all amendments
thereto (including all exhibits thereto and documents incorporated by reference
therein) and such number of conformed copies of the foregoing (other than
exhibits) as UBSW may reasonably request.
(i) The Company will apply the net proceeds from the sale of the Shares
in the manner set forth under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will furnish to UBSW, not less than two Business Days
before a filing with the Commission during the period referred to in paragraph
(f) above, a copy of any document proposed to be filed pursuant to Section 13,
14 or 15(d) of the Exchange Act and during such period to file all such
documents in a manner and within the time periods required by the Exchange Act.
(k) The Company will not sell, offer, contract to sell, pledge, grant
any option to purchase or otherwise dispose of, directly or indirectly, any
shares of capital stock, or any securities convertible into, or exercisable,
exchangeable or redeemable for shares of capital stock, except for the
registration of the Shares and the sales to the Underwriters pursuant to this
Agreement and except for issuances of Common Stock upon the exercise of
outstanding options, for a period of 90 days after the date hereof, without the
prior written consent of UBSW. The foregoing sentence shall not apply to (i) the
Shares to be sold hereunder, (ii) any shares of Common Stock issued by the
Company upon the exercise of an option outstanding on the date hereof and
referred to in the Prospectus, (iii) shares of Common Stock issued pursuant to
the DRSPP or (iv) the grant of awards pursuant to the Company's Long-Term Stock
Incentive Plan or issuances pursuant to the exercise of employee stock options
or other awards.
(l) The Company will use its best efforts to cause each officer and
director of the Company to furnish to UBSW, prior to the time of purchase, a
letter or letters, substantially in the form of Exhibit A hereto, pursuant to
which each such person shall agree not to sell, offer, contract to sell, pledge,
grant any option to purchase or otherwise dispose of, directly or indirectly,
any shares of capital stock, or any securities convertible into, or exercisable,
exchangeable or redeemable for shares of capital stock of the Company for a
period of 90 days after the date hereof, without the prior written consent of
UBSW.
(m) The Company will use its best efforts to cause the Shares to be
listed on the New York Stock Exchange and to maintain such listing and to file
with the New York Stock Exchange all documents and notices required by the New
York Stock Exchange of companies that have securities that are listed on the New
York Stock Exchange.
(n) The Company will engage and maintain, at its expense, a registrar
and transfer agent for the Shares.
11
(o) The Company will pay all expenses, fees and taxes (other than any
transfer taxes and fees and disbursements of counsel for the Underwriters,
except as set forth under Section 5 hereof or (iii) or (iv) below) in connection
with (i) the preparation and filing of the Registration Statements, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (ii) the
issuance, sale and delivery of the Shares by the Company, (iii) the word
processing and/or printing of this Agreement, any Agreement among the
Underwriters, any dealer agreements, any Statements of Information, the Custody
Agreement and the Powers of Attorney, as applicable, and the reproduction and/or
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state laws and the determination of their
eligibility for investment under state law as aforesaid (including the legal
fees and filing fees and other disbursements of counsel to the Underwriters) and
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (v) any listing of the
Shares on the New York Stock Exchange and any registration thereof under the
Exchange Act, (vi) the filing, if any, for review of the public offering of the
Shares by the NASD, and (vii) the performance of the Company's other obligations
hereunder.
(p) The Company will not (i) take, directly or indirectly, prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares, or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company.
(q) The Company will not invest in futures contracts, options on
futures contracts or options on commodities unless the Company is exempt from
the registration requirements of the Commodity Exchange Act, as amended, or
otherwise complies with the Commodity Exchange Act, as amended. In addition, the
Company will not engage in any activities which might be subject to the
Commodity Exchange Act, as amended, unless such activities are exempt from that
Act or otherwise comply with that Act or with an applicable no-action letter to
the Company from the Commodities Futures Trading Commission.
(r) The Company will comply with all of the provisions of any
undertakings in the Registration Statements.
(s) The Company has been organized and operated in conformity with the
requirements for qualification and taxation of the Company as a REIT under the
Code, and the Company's proposed methods of operation will enable the Company to
continue to meet the requirements for qualification and taxation as a REIT under
the Code for subsequent taxable years.
(t) The Company has retained Deloitte & Touche LLP as its qualified
accountants and qualified tax experts (i) to test procedures and conduct annual
compliance reviews designed to determine compliance with the REIT provisions of
the Code and the Company's exempt status under the Investment Company Act and
(ii) to otherwise assist the Company in monitoring appropriate accounting
systems and procedures designed to determine compliance with the REIT provisions
of the Code and the Company's exempt status under the Investment Company Act.
5. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to the default by one or more of the Underwriters in its or their respective
obligations hereunder, the Company shall, in addition to paying the
12
amounts described in Section 4(o) hereof, reimburse the Underwriters for all of
their out-of-pocket expenses, including the fees and disbursements of their
counsel.
6. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof and at the time of
purchase (and the several obligations of the Underwriters at the additional time
of purchase are subject to the accuracy of the representations and warranties on
the part of the Company on the date hereof, at the time of purchase (unless
previously waived) and at the additional time of purchase, as the case may be),
the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Company shall furnish to UBSW at the time of purchase and at
the additional time of purchase, as the case may be, an opinion of ▇▇▇▇▇ & ▇▇▇▇
LLP, counsel for the Company, addressed to the Underwriters, and dated the time
of purchase or the additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in form satisfactory to
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Underwriters, substantially
in the form of Exhibit B attached hereto.
(b) UBSW shall have received from Deloitte & Touche, LLP, letters
dated, respectively, the date of this Agreement and the time of purchase and the
additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by UBSW relating to the financial statements, including any
pro forma financial statements of the Company and such other matters customarily
covered by comfort letters issued in connection with a registered public
offering.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (i) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless UBSW
deems such explanation unnecessary, and (ii) such changes, decreases or
increases do not, in the sole judgment of UBSW, make it impractical or
inadvisable to proceed with the purchase and delivery of the Shares as
contemplated by the Registration Statements and the Prospectus.
(c) UBSW shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the favorable opinion of
▇▇▇▇▇▇▇▇ Chance ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Underwriters, dated the time
of purchase or the additional time of purchase, as the case may be,
substantially in the form of Exhibit C hereto.
(d) No amendment or supplement to the Registration Statements or
Prospectus, including documents deemed to be incorporated by reference therein,
shall be filed to which the Underwriters object in writing.
(e) Prior to the time of purchase or the additional time of purchase,
as the case may be, (i) no stop order with respect to the effectiveness of any
one of the Registration Statements shall have been issued under the Securities
Act or proceedings initiated under Section 8(d) or 8(e) of the Securities Act;
(ii) the Registration Statements and all amendments thereto, or modifications
thereof, if any, shall not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and (iii) the Prospectus and all
amendments or supplements thereto, or modifications thereof, if any, shall not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
13
(f) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the time of purchase or the additional time
of purchase, as the case may be, shall have been made within the applicable time
period prescribed for such filing by Rule 424.
(g) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, (i) no material
and unfavorable change, financial or otherwise (other than as referred to in the
Registration Statements and Prospectus), in the business, condition, net worth
or prospects of the Company shall occur or become known and (ii) no transaction
which is material and unfavorable to the Company shall have been entered into by
the Company.
(h) The Company will, at the time of purchase or additional time of
purchase, as the case may be, deliver to UBSW a certificate of two of its
executive officers to the effect that the representations and warranties of the
Company as set forth in this Agreement are true and correct as of each such
date, that the Company shall perform such of its obligations under this
Agreement as are to be performed at or before the time of purchase and at or
before the additional time of purchase, as the case may be, and that the
conditions set forth in paragraphs (e) and (g) of this Section 6 have been met.
(i) The Company shall have furnished to UBSW such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statements and the Prospectus as of the time of purchase and the
additional time of purchase, as the case may be, as UBSW may reasonably request.
(j) The Shares shall have been approved for listing on the New York
Stock Exchange, subject only to notice of issuance at or prior to the time of
purchase or the additional time of purchase, as the case may be.
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) UBSW shall have received lock-up agreements from the Company and
its officers and directors, in the form of Exhibit A attached hereto, and such
letter agreements shall be in full force and effect.
(m) Between the time of execution of this Agreement and the time of
purchase or additional time of purchase, as the case may be, there shall not
have occurred any downgrading, nor shall any notice or announcement have been
given or made of (i) any intended or potential downgrading or (ii) any review or
possible change that does not indicate an improvement, in the rating accorded
any securities of or guaranteed by the Company by any "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
under the Securities Act.
7. Termination. The obligations of the several Underwriters hereunder
shall be subject to termination in the absolute discretion of UBSW, at any time
prior to the time of purchase or, if applicable, the additional time of
purchase, (i) if any of the conditions specified in Section 6 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, (ii) if
any material adverse and unfavorable change (financial or otherwise), or any
development involving a material adverse and unfavorable change (financial or
otherwise) (in each case, other than as disclosed in, or incorporated by
reference into, the Registration Statements and Prospectus), in the operations,
business, net worth, condition or prospects of the Company, or a material change
in management of the Company, whether or not arising in the ordinary course of
business, which would, in UBSW's sole judgment, make it impracticable to market
the Shares, (iii) if the United States shall have declared war in accordance
with its constitutional processes or there has occurred an outbreak or
escalation of hostilities or other national or
14
international calamity or crisis or change in economic, political or other
conditions the effect of which on the financial markets of the United States is
such as to make it, in the sole judgment of UBSW, impracticable to market the
Shares or enforce contracts for the sale of the Shares, (iv) if trading in any
securities of the Company has been suspended by the Commission or by the New
York Stock Exchange, or if trading generally on the New York Stock Exchange has
been suspended (including automatic halt in trading pursuant to market-decline
triggers other than those in which solely program trading is temporarily
halted), or limitations on or minimum prices for trading (other than limitations
on hours or numbers of days of trading) shall have been fixed, or maximum ranges
for prices for securities have been required, by such exchange or the NASD or
Nasdaq or by order of the Commission or any other governmental authority, (v) if
a banking moratorium shall have been declared by New York or United States
authorities, (vi) if there shall have occurred any downgrading, or any notice or
announcement shall have been given or made of (a) any intended or potential
downgrading or (b) any review or possible change that does not indicate an
improvement, in the rating accorded any securities of or guaranteed by the
Company by any "nationally recognized statistical rating organization," as that
term is defined in Rule 436(g)(2) under the Securities Act, (vii) if any federal
or state statute, regulation, rule or order of any court or other governmental
authority has been enacted, published, decreed or otherwise promulgated which,
in the reasonable opinion of UBSW, materially adversely affects or will
materially adversely affect the business or operations of the Company, or (viii)
if any action has been taken by any federal, state or local government or agency
in respect of its monetary or fiscal affairs which, in the reasonable opinion of
UBSW, has a material adverse effect on the securities markets in the United
States.
If UBSW elects to terminate this Agreement as provided in this Section
7, the Company and each other Underwriter shall be notified promptly by
telephone, which shall be promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(o), 5 and 9 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments. If any Underwriter shall
default in its obligation under this Agreement to take up and pay for the Shares
to be purchased by it under this Agreement (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 7 hereof), UBSW shall have the right, within 36 hours after such
default, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Shares which such Underwriter shall have agreed but failed to take up and
pay for (the "Defaulted Shares"). Absent the completion of such arrangements
within such 36 hour period, (i) if the total number of Defaulted Shares does not
exceed 10% of the total number of Shares to be purchased at the time or purchase
or the additional time of purchase, as the case may be, each non-defaulting
Underwriter shall take up and pay for (in addition to the number of Shares which
it is otherwise obligated to purchase on such date pursuant to this Agreement)
the number of Shares agreed to be purchased by all such defaulting Underwriters
in such amount or amounts as UBSW may designate with the consent of each
Underwriter so designated or, in the event no such designation is made, such
Shares shall be taken up and paid for by all non-defaulting Underwriters pro
rata in proportion to the aggregate number of Firm Shares set opposite the names
of such non-defaulting Underwriters in Schedule A; and (ii) if the total number
of Defaulted Shares exceeds 10% of such total number of Shares to be purchased
at the time or purchase or the additional time of purchase, as the case may be,
and if neither the non-defaulting Underwriters nor the Company shall make
arrangements within the five Business Day period
15
from the date of default for the purchase of such Defaulted Shares, UBSW may
terminate this Agreement by notice to the Company, without liability of any
party to any other party except that the provisions of Sections 4(o), 5 and 9
shall at all times be effective and shall survive such termination. Nothing in
this paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that they
will not sell any Shares hereunder unless all of the Shares are purchased by the
Underwriters (or by substituted Underwriters selected by UBSW with the approval
of the Company or selected by the Company with UBSW's approval).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter or Underwriters in accordance with the foregoing provisions, the
Company or UBSW shall have the right to postpone the time of purchase for a
period not exceeding five Business Days from the date of substitution in order
that any necessary changes in the Registration Statements and Prospectus and
other documents may be effected.
The term Underwriter as used in this agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense, liability or claim
(including, but not limited to, the reasonable cost of investigation) which,
jointly or severally, any such Underwriter or any such person may incur under
the Securities Act, the Exchange Act, federal or state statutory law or
regulation, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statements (or in the Registration Statements as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented by the
Company), or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission, (ii) upon any omission or alleged omission to state in any such
document a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading or (iii) any act or failure to act or any alleged act or
failure to act by the Underwriters in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, damage, expense, liability, claim or action
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable under this clause (iii) to the
extent it is finally judicially determined by a court of competent jurisdiction
that such loss, damage, expense, liability, claim or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by the
Underwriters through their gross negligence or willful misconduct), except
insofar as any such loss, damage, expense, liability or claim arises out of or
is based upon any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in writing by or
on behalf of any Underwriter through UBSW to the Company expressly for use with
reference to such
16
Underwriter in the Third Registration Statement or such Prospectus or arises out
of or is based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in either the Third
Registration Statement or Prospectus or necessary to make such information not
misleading.
If any action, suit or proceeding (together, a "Proceeding") is brought
against an Underwriter or any such person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such Underwriter
or such person shall promptly notify the Company in writing of the institution
of such Proceeding and the Company shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission
to so notify the Company shall not relieve the Company from any liability which
the Company may have to any Underwriter or any such person or otherwise. Such
Underwriter or such controlling person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or of such person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Company (in which case the Company shall not have
the right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Company and paid as incurred (it being understood, however, that the
Company shall not be liable for the expenses of more than one separate counsel
(in addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). The Company shall not be liable for any
settlement of any such Proceeding effected without its written consent (which
shall not be unreasonably withheld) but if settled with the written consent of
the Company, the Company agrees to indemnify and hold harmless any Underwriter
and any such person from and against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 Business Days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party
shall have given the indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, any person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
director of the Company and each officer of the Company who signed the
Registration Statements from and against any loss, damage, expense, liability or
claim (including, but not limited to, the reasonable cost of investigation)
which, jointly or severally, the Company or any such person may incur under the
Securities Act, the Exchange Act, federal or state statutory law or regulation,
the common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any (i) untrue statement or alleged untrue
statement of a material fact contained in, and in
17
conformity with information furnished in writing by or on behalf of such
Underwriter through UBSW to the Company expressly for use with reference to such
Underwriter in, the Registration Statements (or in the Registration Statements
as amended by or on behalf of any post-effective amendment thereof by the
Company) or in a Prospectus, or in any documents filed under the Exchange Act
and deemed to be incorporated by reference into the Prospectus, or in any
application or other document executed by or on behalf of the Company or based
on written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares under the securities or blue sky
laws thereof or filed with the Commission or (ii) omission or alleged omission
to state in any such document a material fact in connection with such
information required to be stated therein or necessary to make the statement
therein, in the light of the circumstances under which they were made, not
misleading.
If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter, from any liability
which such Underwriter may have to the Company or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct
the defense of such Proceeding on behalf of the indemnified party or parties,
but such Underwriter may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne by
such Underwriter and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). No Underwriter shall be liable for
any settlement of any such Proceeding effected without the written consent of
such Underwriter but if settled with the written consent of such Underwriter,
such Underwriter agrees to indemnify and hold harmless the Company and any such
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 Business Days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least 30 days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened Proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, damage, expenses, liabilities or claims
referred to therein, then in order to provide just and equitable contribution in
such circumstance,
18
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, damages, expenses, liabilities or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if, but only if, the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and of the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be in the
same respective proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the total underwriting discounts and commissions received by
the Underwriters, bear to the aggregate public offering price is the shares. The
relative fault of the Company on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating, preparing to defend or defending any claim or
Proceeding.
(d) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be liable or responsible
for, or be required to contribute, any amount pursuant to this Section 9 in
excess of the amount by which the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to their
respective underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this Section
9 and the covenants, warranties and representations of the Company contained in
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, its directors and
officers or any person (including each partner, officer or director of such
person) who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors or officers or any person who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and shall survive any termination of this Agreement or the issuance and
delivery of the Shares. The Company and each Underwriter agree promptly to
notify each other commencement of any Proceeding against it and, in the case of
the Company, against any of the Company's officers or directors in connection
with the issuance and sale of the Shares, or in connection with the Registration
Statements or Prospectus.
10. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Warburg LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, Attention:
Syndicate Department, and if to the Company, shall be sufficient in all respects
if delivered or sent to the
19
Company at the offices of the Company at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇.
11. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement (a "Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may
be commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction, service and venue
in any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against UBSW or any indemnified party.
Each of UBSW and the Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) waives all right
to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final judgment in any such action,
proceeding or counterclaim brought in any such court shall be conclusive and
binding upon the Company and may be enforced in any other courts in the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company and to the extent
provided in Section 9 hereof the controlling persons, directors and officers
referred to in such Section, and their respective successors, assigns, heirs,
pursuant representatives and executors and administrators. No other person,
partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
16. Miscellaneous. UBS Warburg LLC, an indirect, wholly owned
subsidiary of UBS AG, is not a bank and is separate from any affiliated bank,
including any U.S. branch or agency of UBS AG. Because UBS Warburg LLC is a
separately incorporated entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales and
purchases of securities. Securities sold, offered or recommended by UBS Warburg
LLC are not deposits, are not insured by the Federal Deposit Insurance
Corporation, are not guaranteed by a branch or agency, and are not otherwise an
obligation or responsibility of a branch or agency.
A lending affiliate of UBS Warburg LLC may have lending relationships
with issuers of securities underwritten or privately placed by UBS Warburg LLC.
To the extent required under the securities laws, prospectuses and other
disclosure documents for securities underwritten or privately placed by UBS
Warburg LLC will disclose the existence of any such lending relationships and
whether the proceeds of the issue will be used to repay debts owed to affiliates
of UBS Warburg LLC.
20
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
ANNALY MORTGAGE MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
Accepted and agreed to as of the date
first above written, on behalf of
itself and the other several
Underwriters named in Schedule A
UBS WARBURG LLC
By: UBS WARBURG LLC
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
21
SCHEDULE A
Number of
Underwriter Firm Shares
----------- -----------
UBS Warburg LLC 7,255,000
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. 3,627,500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated 3,627,500
Cantor ▇▇▇▇▇▇▇▇▇▇ & Co. 280,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. 280,000
First Union Securities, Inc. 280,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated 280,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated 280,000
Prudential Securities Incorporated 280,000
Advest, Inc. 90,000
▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ Inc. 90,000
▇▇▇▇▇ Partners, Inc. 90,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC 90,000
▇▇▇▇▇▇ Merchant Partners 90,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Incorporated 90,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. 90,000
Suntrust Equitable Securities Corporation 90,000
Wedbush ▇▇▇▇▇▇ Securities Inc. 90,000
----------
Total: 17,000,000
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