EXHIBIT 1.1
ANWORTH MORTGAGE ASSET CORPORATION
13,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
November ___, 2001
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
ADVEST, INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Anworth Mortgage Asset Corporation, a Maryland corporation (the "Company"),
confirms its agreement with each of the Underwriters listed on Schedule I hereto
(collectively, the "Underwriters"), for whom you are acting as representatives
(in such capacity, the "Representatives"), with respect to (i) the sale by the
Company of Thirteen Million (13,000,000) shares (the "Initial Shares") of Common
Stock, par value $.01 per share, of the Company ("Common Stock") and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of shares of Common Stock set forth opposite the names of the
Underwriters in Schedule I hereto, and (ii) the grant of the option to the
Underwriters described in Section 1(b) hereof to purchase all or any part of One
Million Nine Hundred Fifty Thousand (1,950,000) additional shares of Common
Stock to cover overallotments (the "Option Shares"), if any, as set forth in
Schedule I hereto. The 13,000,000 shares of Common Stock to be purchased by the
Underwriters and all or any part of the 1,950,000 shares of Common Stock subject
to the option described in Section l(b) hereof are hereinafter called,
collectively, the "Shares".
The Company understands that the Underwriters propose to offer the Shares
for sale to the public as set forth in the Prospectus (as defined below).
The Company has filed with the Securities and Exchange Commission (the
Commission"), a registration statement on Form S-2 (No. 333-71786) and a related
preliminary prospectus for the registration of 13,000,000 of the Shares under
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been declared effective
under the Securities Act by the Commission. The registration statement as
amended at the time it became effective (including all information deemed
(whether by incorporation by reference or otherwise) to be a part of the
registration statement at the time it became effective pursuant to Rule 430A(b)
of the Securities Act Regulations) is hereinafter called the "Registration
Statement," except that, if the Company files a post-effective amendment to such
registration statement which becomes effective prior to
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the Closing Time (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Any registration
statement filed pursuant to Rule 462(b) of the Securities Act Regulations is
hereinafter called the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the 462(b) Registration
Statement. Each prospectus included in the registration statement, or amendments
thereof or supplements thereto, before it became effective under the Securities
Act and any prospectus filed with the Commission by the Company with the consent
of the Underwriters pursuant to Rule 424(a) of the Securities Act Regulations is
hereinafter called the "Preliminary Prospectus." The term "`Prospectus" means
the final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Securities Act Regulations, and any amendments
thereof or supplements thereto. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
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(a) Initial Shares. Upon the basis of the warranties and representations
and other terms and conditions herein set forth, at the purchase price per share
of $________ for the Common Stock, the Company agrees to sell to each
Underwriter the number of Initial Shares set forth in Schedule I opposite its
name, and each Underwriter agrees, severally and not jointly, to purchase from
the Company the number of Initial Shares set forth in Schedule I opposite such
Underwriter's name, plus any additional number of Initial Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof, subject in each case, to such adjustments among the
Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company hereby grants an option
to purchase One Million Nine Hundred Fifty Thousand (1,950,000) shares of Common
Stock to the Underwriters, acting severally and not jointly, in the respective
numbers of shares of Common Stock set forth opposite the names of the
Underwriters in Schedule I hereto, plus any additional number of Option Shares
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof. 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 Shares upon notice by the
Representatives to the Company setting forth the number of Option Shares as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Shares. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives, but
shall not be later than three full business days (or earlier, without the
consent of the Company, than two full business days) after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined.
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2. Payment and Delivery:
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(a) Initial Shares. Payment of the purchase price for the Initial Shares
shall be made to the Company by wire transfer of immediately available funds or
certified or official bank check payable in federal (same-day) funds at the
offices of Xxxxxxxx & Xxxxxxxx, LLP, Underwriters' Counsel located at 000 Xxxx
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, 00000 (unless another place
shall be agreed upon by the Representatives and the Company) against delivery of
the certificates for the Initial Shares to the Representatives for the
respective accounts of the Underwriters. Such payment and delivery shall be made
at 9:30 a.m., New York City time, on the third (fourth, if pricing occurs after
4:30 p.m., New York City time) business day after the date hereof (unless
another time, not later than ten business days after such date, shall be agreed
to by the Representatives and the Company). The time at which such payment and
delivery are actually made is hereinafter sometimes called the "Closing Time."
Certificates for the Initial Shares shall be delivered to the Representatives in
definitive form registered in such names and in such denominations as the
Representatives shall specify. For the purpose of expediting the checking of the
certificates for the Initial Shares by the Representatives, the Company agrees
to make such certificates available to the Representatives for such purpose at
least one full business day preceding the Closing Time.
(b) Option Shares. In addition, payment of the purchase price for the
Option Shares shall be made to the Company by wire transfer of immediately
available funds or certified or official bank check payable in federal
(same-day) funds at the offices of Underwriters' Counsel located at the location
indicated in Section 2(a) above (unless another place shall be agreed upon by
the Representatives and the Company), against delivery of the certificates for
the Option Shares to the Representatives for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 9:30 a.m., New York
City time, on each Date of Delivery determined pursuant to Section 1(b) above.
Certificates for the Option Shares shall be delivered to the Representatives in
definitive form registered in such names and in such denominations as the
Representatives shall specify. For the purpose of expediting the checking of the
certificates for the Option Shares by the Representatives, the Company agrees to
make such certificates available to the Representatives for such purpose at
least one full business day preceding the relevant Date of Delivery.
3. Representations and Warranties of the Company: The Company represents
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and warrants to the Underwriters that:
(a) the Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization"; all of the outstanding shares of
capital stock of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable; except as disclosed in the Prospectus,
there are no outstanding (i) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the Company, (ii)
warrants, rights or options to subscribe for or purchase from the Company any
such capital stock or any such convertible or exchangeable securities or
obligations, or (iii) obligations of the Company to issue any shares of capital
stock, any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options;
(b) the Company has no subsidiaries;
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(c) 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 its properties, to conduct its business as
described in the Registration Statement and Prospectus and to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
(d) the Company is duly qualified or licensed by each jurisdiction in which
it conducts its business and in which the failure to be so qualified or licensed
could have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company, and the Company is duly qualified, and in good standing, in each
jurisdiction in which it owns or leases real property or maintains an office and
in which such qualification is necessary, except where the failure to be so
qualified and in good standing would not have a material adverse effect on the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company; other than as disclosed in the
Prospectus, the Company does not own, directly or indirectly, any capital stock
or other equity securities of any other corporation or any ownership interest in
any partnership, joint venture or other association;
(e) the Company is in compliance in all material respects with all
applicable laws, rules, regulations, orders, decrees and judgments, including
those relating to transactions with affiliates;
(f) the Company is not in breach of or in default under (nor has any event
occurred which with notice, lapse of time, or both would constitute a breach of,
or default under) its articles of incorporation or by-laws, or in the
performance or observance of any obligation, agreement, covenant or condition
contained in any license, indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument to which the Company is a party or by
which it or its properties is bound, except for such breaches or defaults which
would not have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company, and the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated hereby will not conflict with, or
result in any breach of, or constitute a default under (nor constitute any event
which with notice, lapse of time, or both would constitute a breach of, or
default under), (i) any provision of the articles of incorporation or bylaws of
the Company, or (ii) any provision of any license, indenture, mortgage, deed of
trust, loan or credit agreement or other agreement or instrument to which the
Company is a party or by which it or its properties may be bound or affected, or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company, except in the case of this
clause (ii) for such breaches or defaults which would not have a material
adverse effect on the assets, business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company; or result in
the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company;
(g) this Agreement has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting creditors' rights generally, and
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by general principles equity, and except to the extent that 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;
(h) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the transaction
contemplated hereby, and its sale and delivery of the Shares, other than (A)
such as have been obtained, or will have been obtained at the Closing Time or
the relevant Date of Delivery, as the case may be, under the Securities Act, (B)
such approvals as have been obtained in connection with the approval of the
quotation of the Shares on the American Stock Exchange and (C) any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters;
(i) the Company has all necessary licenses, authorizations, consents and
approvals and has made all necessary filings required under any federal, state
or local law, regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, required in order to conduct its
business as described in the Prospectus, except to the extent that any failure
to have any such licenses, authorizations, consents or approvals, to make any
such filings or to obtain any such authorizations, consents or approvals would
not, individually or in the aggregate, have a material adverse effect on the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company; 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, in default under, or has
received any notice regarding a possible violation, default or revocation of any
such license, authorization, consent or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment applicable to
the Company the effect of which could be material and adverse to the assets,
business, operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company; and no such license, authorization, consent or
approval contains a materially burdensome restriction that is not adequately
disclosed in the Registration Statement and the Prospectus;
(j) the Registration Statement has become effective and any Rule 462(b)
Registration Statement will become effective under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the Securities Act and
no proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and any request on
the part of the Commission for additional information has been complied with;
(k) the Preliminary Prospectus and the Registration Statement comply and
the Prospectus and any further amendments or supplements thereto will, when they
have become effective or are filed with the Commission, as the case may be,
comply in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
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required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in conformity
with the information concerning the Underwriters and furnished in writing by or
on behalf of the Underwriters through the Representatives to the Company
expressly for use in the Registration Statement or the Prospectus (that
information being limited to that described in the last sentence of the first
paragraph of Section 9(c) hereof);
(l) 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 created to be transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("XXXXX"), except to the extent permitted by Regulation S-T;
(m) all legal or governmental proceedings, contracts or documents of a
character required to be filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus have been so filed, summarized or
described as required, and such descriptions present fairly the information
required to be shown;
(n) there are no actions, suits, proceedings, inquiries or investigations
pending or, to the knowledge of the Company, threatened against the Company or
any of its officers and directors or to which the properties, assets or rights
of any such entity are subject, at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority, arbitral panel or agency which could result in a judgment, decree,
award or order having a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company;
(o) the financial statements, including the notes thereto, included in the
Registration Statement and the Prospectus present fairly the consolidated
financial position of the entities to which such financial statements relate
(the "Covered Entities") as of the dates indicated and the consolidated results
of operations and changes in financial position and cash flows of the Covered
Entities for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved and in accordance with Regulation
S-X promulgated by the Commission; the financial statement schedules included in
the Registration Statement and the amounts in the Prospectus under the captions
"Prospectus Summary - Summary Financial Data" and "Selected Financial Data"
fairly present the information shown therein and have been compiled on a basis
consistent with the financial statements included in the Registration Statement
and the Prospectus; the unaudited pro forma financial information (including the
related notes) included in the Prospectus or any Preliminary Prospectus complies
as to form in all material respects to the applicable accounting requirements of
the Securities Act and the Securities Act Regulations, and management of the
Company believes that the assumptions
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underlying the pro forma adjustments are reasonable; such pro forma adjustments
have been properly applied to the historical amounts in the compilation of the
information and such information fairly presents with respect to the Company,
the financial position, results of operations and other information purported to
be shown therein at the respective dates and for the respective periods
specified;
(p) Each of PricewaterhouseCoopers LLP and McGladrey & Xxxxxx LLP, whose
reports on the consolidated financial statements of the Company are filed with
the Commission as part of the Registration Statement and Prospectus, are and
were during the periods covered by their reports independent public accountants
as required by the Securities Act and the Securities Act Regulations;
(q) subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as may be otherwise
stated in the Registration Statement or Prospectus, there has not been (A) any
material adverse change in the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise), present or
prospective, of the Company, whether or not arising in the ordinary course of
business, (B) any transaction, which is material to the Company, contemplated or
entered into by the Company, (C) any obligation, contingent or otherwise,
directly or indirectly incurred by the Company, which is material to the Company
or (D) any dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock;
(r) the Shares conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus;
(s) there are no persons with registration or other similar rights to have
any equity securities, including securities which are convertible into or
exchangeable for equity securities, registered pursuant to the Registration
Statement or otherwise registered by the Company under the Securities Act, (i)
except for those registration or similar rights which have been waived with
respect to the offering contemplated by this Agreement, all of which
registration or similar rights described in this clause are fairly summarized in
the Prospectus;
(t) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and nonassessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the articles of incorporation or
by-laws of the Company, under any agreement to which the Company is a party or
otherwise;
(u) the Company has not taken, and will not take, directly or indirectly,
any action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares;
(v) 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
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the rules
and regulations thereunder, or (ii) directly, or
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indirectly through one or more intermediaries, controls or has any other
association with (within the meaning of Article I of the By-laws of the National
Association of Securities Dealers, Inc. (the "NASD")) any member firm of the
NASD;
(w) the Company has not relied upon the Representatives or legal counsel
for the Representatives for any legal, tax or accounting advice in connection
with the offering and sale of the Shares;
(x) any certificate signed by any officer of the Company delivered to the
Representatives 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;
(y) 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 articles of incorporation and by-laws of the
Company and the requirements of the American Stock Exchange;
(z) the Company has good title to all personal property owned by it, free
and clear of all liens, security interests, pledges, charges, encumbrances,
mortgages and defects, except such as are disclosed in the Prospectus or such as
do not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company; and 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;
(aa) the descriptions in the Registration Statement and the Prospectus of
the contracts, leases and other legal documents therein described present fairly
the information required to be shown, and there are no contracts, leases, or
other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required;
(bb) the Company owns or possesses adequate licenses 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 does not know of any such infringement of or conflict with) asserted
rights of others with respect to any Intangibles which could materially and
adversely affect the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company;
(cc) 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
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principles 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;
(dd) the Company has filed on a timely basis all necessary federal, state,
local and foreign income and franchise tax returns required to be filed through
the date hereof and has paid all taxes shown as due thereon; and no tax
deficiency has been asserted against the Company, nor does the Company know of
any tax deficiency which is likely to be asserted against it which if determined
adversely to it could materially adversely affect its business, prospects,
properties, assets, results of operations or condition (financial or otherwise);
all tax liabilities are adequately provided for on the books of the Company;
(ee) the Company maintains insurance (issued by insurers of recognized
financial responsibility) of the types and in the amounts generally deemed
adequate for its business and consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect;
(ff) the Company has not violated, or received notice of any violation with
respect to, any applicable environmental, safety or similar law applicable to
the business of the Company, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees, nor any applicable
federal or state wages and hours law, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder, nor any state law precluding the denial of credit due to the
neighborhood in which a property is situated, the violation of any of which
could have a material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company;
(gg) the Company nor any officer or director purporting to act on behalf of
the Company has not at any time; (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contributions, in
violation of law, (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law,
(iii) made any payment outside the ordinary course of business to any investment
officer or loan broker or person charged with similar duties of any entity to
which the Company sells or from which the Company buys loans or servicing
arrangements for the purpose of influencing such agent, officer, broker or
person to buy loans or servicing arrangements from or sell loans to the Company,
or (iv) engaged in any transactions, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained books and records of the Company;
(hh) except as otherwise disclosed in the Prospectus, there are no material
outstanding loans or advances or material guarantees of indebtedness by the
Company to or for the benefit of any of the officers or directors of the Company
or any of the members of the families of any of them;
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(ii) 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;
(jj) all securities issued by the Company, or any trusts established by the
Company, have been issued and sold in compliance with (i) all applicable federal
and state securities laws, (ii) the laws of the applicable jurisdiction of
incorporation of the issuing entity and, (iii) to the extent applicable to the
issuing entity, the requirements of the American Stock Exchange;
(kk) in connection with this offering, the Company has not offered and will
not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common stock in a manner in violation of the
Securities Act. The Company has not distributed and will not distribute any
Prospectus or other offering material in connection with the offer and sale of
the Shares;
(ll) the Company has complied and will comply with all the provisions of
Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida). Neither the
Company nor any of its affiliates does business with the government of Cuba or
with any person or affiliate located in Cuba;
(mm) the Company has not incurred any liability for any finder's fees or
similar payments in connection with the transactions herein contemplated, other
than pursuant to this Agreement;
(nn) the Company is not in breach of, or default under (nor has any event
occurred which with notice, lapse of time, or both would constitute a breach of,
or default under), the management agreement dated March 17, 1998 (the
"Management Agreement") between the Company and Anworth Mortgage Advisory
Corporation (the "Manager");
(oo) the Company, since its date of inception, has been, and upon the sale
of the Shares will continue to be, organized and operated in conformity with the
requirements for qualification and taxation as a "real estate investment trust"
(a "REIT") under Sections 856 through 860 of the Internal Revenue Code of 1986,
as amended (the "Code"), for all taxable years commencing with its taxable year
ended December 31, 1998. The proposed method of operation of the Company as
described in the Prospectus will enable the Company to continue to meet the
requirements for qualification and taxation as a REIT under the Code, and no
actions have been taken (or not taken which are required to be taken) which
would cause such qualification to be lost. The Company intends to continue to
operate in a manner which would permit it to qualify as a REIT under the Code.
The Company has no intention of changing its operations or engaging in
activities which would cause it to fail to qualify, or make economically
undesirable its continued qualification, as a REIT; and
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(pp) 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
and "investment company", as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act").
4. Certain Covenants: The Company hereby agrees with each Underwriter:
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(a) to 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 states as the Representatives may designate and to
maintain such qualifications in effect as 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);
(b) to prepare the Prospectus in a form approved by the Underwriters and
file such Prospectus with the Commission pursuant to Rule 424(b) not later than
10:00 a.m. (New York City time), on the second business day following the
execution and delivery of this Agreement and to furnish promptly (and with
respect to the initial delivery of such Prospectus, not later than 10:00 a.m.
(New York City time) on the second business day following the execution and
delivery of this Agreement) to the Underwriters as many copies of the Prospectus
(or of the Prospectus as amended or supplemented if the Company shall have made
any amendments or supplements thereto after the effective date of the
Registration Statement) as the Underwriters may reasonably request for the
purposes contemplated by the Securities Act Regulations, 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 XXXXX, except to the extent permitted by Regulation S-T;
(c) to advise the Representatives promptly and (if requested by the
Representatives) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(d) to advise the Representatives immediately, confirming such advice in
writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representatives promptly of any
11
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which the Representatives shall
reasonably object in writing;
(e) to furnish to the Underwriters at the request of any of the
Representatives, for a period of five years from the date of this Agreement (i)
as soon as available, copies of all annual, quarterly and current reports or
other communications supplied to holders of shares of Common Stock, (ii) as soon
as practicable after the filing thereof, copies of all reports filed by the
Company with the Commission, the NASD or any securities exchange and (iii) such
other information as the Underwriters may reasonably request regarding the
Company;
(f) to 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 Regulations which, in the
judgment of the Company, would require the making of any change in the
Prospectus then being used so that the Prospectus would not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and, during such time,
to prepare and furnish, at the Company's expense, to the Underwriters promptly
such amendments or Supplements to such Prospectus as may be necessary to reflect
any such change and to furnish to the Underwriters a copy of such proposed
amendment or supplement before filing any such amendment or supplement with the
Commission;
(g) to furnish promptly to each Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representatives may reasonably request;
(h) to furnish to each Representative, not less than two business days
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (f) above, a copy of
any document proposed to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act;
(i) to apply the net proceeds of the sale of the Shares in accordance with
its statements under the caption "Use of Proceeds" in the Prospectus;
(j) to make generally available to its security holders as soon as
practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the Registration
Statement an earnings statement complying with the provisions of Section 11(a)
of the Securities Act (in form, at the option of the Company, complying with the
provisions of Rule 158 of the Securities Act Regulations,) covering a period of
12 months beginning after the effective date of the Registration Statement;
(k) to use its best efforts to effect and maintain the quotation of the
Shares on the American Stock Exchange and to file with the American Stock
Exchange all documents and notices required by the American Stock Exchange of
companies that have securities that are traded on the American Stock Exchange;
12
(l) to engage and maintain, at its expense, a registrar and transfer agent
for the Shares;
(m) to use its reasonable efforts to meet the requirements for
qualification as a real estate investment trust under Sections 856 through 860
of the Code;
(n) to conduct its affairs in such a manner so as to ensure that the
Company will not be an "investment company" or an entity "controlled" by an
investment company within the meaning of the Investment Company Act;
(o) to refrain during a period of 90 days from the date of the Prospectus,
without the prior written consent of Friedman, Billings, Xxxxxx & Co., Inc.
("FBR"), from (i) offering, pledging, selling, contracting to sell, selling any
option or contract to purchase, purchasing any option or contract to sell,
granting any option for the sale of, or otherwise disposing of or transferring,
directly or indirectly, any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or filing any registration
statement under the Securities Act with respect to any of the foregoing, or (ii)
entering 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 (i) or (ii) 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 Shares to be sold hereunder, or (B) 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, and (C) the grant of any option to purchase
shares of Common Stock of the Company under the Company's 1997 Stock Option Plan
and Awards Plan;
(p) to not itself, and to use its best efforts to cause its officers,
directors and affiliates not to, (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; and
(q) if at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in the reasonable opinion
of the Representatives the market price of the Common Stock has been or is
likely to be materially affected (regardless of whether such rumor, publication
or event necessitates a supplement to or amendment of the Prospectus) and after
written notice from the Representatives advising the Company to the effect set
forth above, to forthwith prepare, consult with the Representatives concerning
the substance of, and disseminate a press release or other public statement,
reasonably satisfactory to the Representatives, responding to or commenting on
such rumor, publication or event.
13
5. Payment of Expenses:
-------------------
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each 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 that the Company and the
Representatives have mutually agreed are appropriate 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 for 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) filing for
review of the public offering of the Shares by the NASD (including the legal
fees and filing fees and other disbursements of counsel for the Underwriters
relating thereto), (vi) the fees and expenses of any transfer agent or registrar
for the Shares and miscellaneous expenses referred to in the Registration
Statement, (vii) the fees and expenses incurred in connection with the inclusion
of the Shares in the American Stock Exchange, (viii) making road show
presentations with respect to the offering of the Shares, (ix) preparing and
distributing bound volumes of transaction documents for the Representatives and
their legal counsel, and (x) the performance of the Company's other obligations
hereunder. Upon the request of the Representatives, the Company will provide
funds in advance for filing fees.
(b) The Company agrees to reimburse the Representatives for their
reasonable out-of-pocket expenses in connection with the performance of its
activities under this Agreement, including, but not limited to, costs such as
printing, facsimile, courier service, direct computer expenses, accommodations
and travel, but excluding the fees and expenses of the Underwriters' outside
legal counsel and any other advisors, accountants, appraisers, etc. (other than
the fees and expenses of counsel with respect to state securities or blue sky
laws and obtaining the filing for review of the public offering of the Shares by
the NASD, all of which shall be reimbursed by the Company pursuant to the
provisions of subsection (a) above).
6. Conditions of the Underwriters' Obligations: The obligations of the
-------------------------------------------
Underwriters hereunder to purchase Shares at the Closing Time or on the Date of
Delivery, as applicable, are subject to the accuracy of the representations and
warranties on the part of the Company in all material respects on the date
hereof and at the Closing Time and on each Date of Delivery, as applicable, the
performance by the Company of its obligations hereunder in all material respects
and to the satisfaction of the following further conditions at the Closing Time
or on the Date of Delivery, as applicable:
(a) The Representatives shall have received, dated as of the Closing Time
and on each Date of Delivery, an opinion of Xxxxx Xxxxxxx Xxxx Xxxxxx & Xxxxxxx
LLP, as counsel for
14
the Company, addressed to the Underwriters and covering the matters described in
Exhibit A hereto.
(b) The Representatives shall have received signed copies of opinions
addressed to the Company (i) from Xxxxx Xxxxxxx Xxxx Xxxxxx & Xxxxxxx LLP
substantially in the form of Exhibit 8.1 to the Registration Statement and (ii)
from Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP substantially in the form of Exhibit 5.1
to the Registration Statement.
(c) The Representatives shall have received from PricewaterhouseCoopers
LLP, letters dated, respectively, as of the date of this Agreement, the Closing
Time and each Date of Delivery, as the case may be, addressed to the
Representatives, in form and substance reasonably satisfactory to the
Representatives, 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 registered public offerings.
(d) No amendment or supplement to the Registration Statement or Prospectus
shall have been filed to which the Underwriters shall have objected in writing.
(e) Prior to the Closing Time and each Date of Delivery (i) no stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued, and no proceedings for such purpose shall have been initiated or
threatened, by the Commission, and no suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes, has occurred; and (ii)
the Registration Statement and the Prospectus shall not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(f) Between the time of execution of this Agreement and the Closing Time or
the relevant Date of Delivery (i) no material and unfavorable change in the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company shall occur or become known (whether or
not arising in the ordinary course of business), and (ii) no transaction which
is material and unfavorable to the Company shall have been entered into by the
Company.
(g) The Shares shall have been approved for inclusion in the American Stock
Exchange.
(h) If the issuance and sale of the Initial Shares and/or Option Shares to
the Underwriters will result in the Underwriters individually or in the
aggregate exceeding the Aggregate Stock Ownership Limit (as defined in the
Amended Articles of Incorporation of the Company as of the date hereof) with
respect to the Company's capital stock, then, on or prior to the Closing Time,
the Underwriters shall have received from the Company's Board of Directors a
waiver or exemption from the Aggregate Stock Ownership Limit with respect to the
issuance and sale of such Shares, in form and substance reasonably satisfactory
to the Underwriters.
15
(i) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements between
the date of this Agreement and the Closing Time or the Date of Delivery, as
applicable.
(j) The Representatives shall have received lock-up agreements from each 5%
or greater stockholder of the Company, and officer and director of the Company,
in the form of Exhibit C attached hereto, and such letter agreements shall be in
full force and effect.
(k) The Company will, at the Closing Time and on each Date of Delivery,
deliver to the Underwriters a certificate of its Chairman of the Board and Chief
Executive Officer, its President and Chief Operating Officer, and its Vice
President and Chief Financial Officer, to the effect that, to each of such
officer's knowledge, the representations and warranties of the Company set forth
in this Agreement are true and correct in all material respects and the
conditions set forth in paragraphs (e), (f) and (g) have been satisfied, in each
case as of such date.
(l) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus, the representations,
warranties and statement of the Company contained herein, and the performance by
the Company of its covenants contained herein and therein, and the fulfillment
of any conditions contained herein or therein, as of the Closing Time or any
Date of Delivery as the Underwriters may reasonably request.
(m) The Company shall have performed its obligations under this Agreement
as are to be performed by the terms hereof and thereof at or before the Closing
Time or the relevant Date of Delivery.
7. Termination: The obligations of the several Underwriters hereunder shall
-----------
be subject to termination in the absolute discretion of the Representatives, at
any time prior to the Closing Time or any Date of Delivery, (i) if any of the
conditions specified in Section 6 shall not have been fulfilled when and as
required by this Agreement to be fulfilled, or (ii) if there has been since the
respective dates as of which information is given in the Registration Statement,
any material adverse change, or any development involving a prospective material
adverse change, in or affecting the assets, business, operations, earnings,
prospects, properties, condition (financial or otherwise) or management of the
Company, whether or not arising in the ordinary course of business, or (iii) if
there has occurred outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic, political or other
conditions the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representatives, impracticable to
market the Shares or enforce contracts for the sale of the Shares, or (iv) if
trading in any securities of the Company has been suspended by the Commission or
by the American Stock Exchange, or if trading generally on the New York Stock
Exchange or on the Nasdaq Stock Market has been suspended (including automatic
halt in trading pursuant to market-decline triggers other than those in which
solely program trading is temporarily halted), or limitations on prices for
trading (other than limitations on hours or numbers of days of trading) have
been fixed, or maximum ranges for prices for securities have been required, by
such exchange or the NASD or the Nasdaq Stock Market or by order of the
Commission or any other governmental authority, or (v) any federal or state
statute, regulation, rule or order of any court or other governmental authority
has been enacted, published, decreed
16
or otherwise promulgated which in the reasonable opinion of the Representatives
materially adversely affects or will materially adversely affect the business or
operations of the Company, or (vi) any action has been taken by any federal,
state or local government or agency in respect of its monetary or fiscal affairs
which in the reasonable opinion of the Representatives has a material adverse
effect on the securities markets in the United States.
If the Representatives elects to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, 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 in all material respects 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 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
-------------------------------------
at the Closing Time or on a Date of Delivery in its obligation to take up and
pay for the Shares to be purchased by it under this Agreement on such date the
Representatives 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 on such date, 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 portion of the total number of Shares agreed to be purchased by the
defaulting Underwriter on such date in the proportion that its underwriting
obligations hereunder bears to the underwriting obligations of all
non-defaulting Underwriters; and (ii) if the total number of Defaulted Shares
exceeds 10% of such total, the Representatives may terminate this Agreement by
notice to the Company, without liability to any non-defaulting Underwriter.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
17
The term Underwriter as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 8 with the like effect as, if
such substituted Underwriter had originally been named in this Agreement.
9. Indemnity and Contribution by the Company and the Underwriters:
--------------------------------------------------------------
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) which, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises out
of or is based upon (A) any breach of any representation, warranty or covenant
of the Company contained herein, (B) any failure on the part of the Company to
comply with any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, or (C) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or 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 arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such Registration
Statement or Prospectus or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, except
insofar as any such loss, expense, liability, damage or claim arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in and in conformity with
information furnished in writing by the Underwriters through the Representatives
to the Company expressly for use in such Registration Statement or such
Prospectus, provided, however, that the indemnity agreement contained in this
subsection (a)(i) with respect to the Preliminary Prospectus or the Prospectus
shall not inure to the benefit of an Underwriter (or to the benefit of any
person controlling such Underwriter) with respect to any person asserting any
such loss, expense, liability, damage or claim which is the subject thereof if
the Prospectus or any supplement thereto prepared with the consent of the
Representatives and furnished to the Underwriters prior to the Closing Time
corrected any such alleged untrue statement or omission and if such Underwriter
failed to send or give a copy of the Prospectus or supplement thereto to such
person at or prior to the written confirmation of the sale of Shares to such
person, unless such failure resulted from noncompliance by the Company with
Section 4(b) above).
(b) If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to
subsection (a) above, such Underwriter shall promptly notify the Company, as
applicable, in writing of the institution of such action, and the Company, as
applicable, shall assume the defense of such action, including the employment of
counsel and payment of expenses, provided, however, that any failure or delay to
so notify the Company, as applicable, will not relieve the Company, as
applicable, of any obligation hereunder, except to the extent that its ability
to defend is actually impaired by such failure or delay. Such Underwriter or
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
18
expense of such Underwriter or such controlling person unless the employment of
such counsel shall have been authorized in writing by the Company, as
applicable, in connection with the defense of such action, or the Company, as
applicable, shall not have employed counsel to have charge of the defense of
such action within a reasonable time or such indemnified party or parties shall
have reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional to those
available to the Company, as applicable, (in which case the Company shall not
have the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Company, as applicable, and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate firm of attorneys for the Underwriters or controlling persons in any
one action or series of related actions in the same jurisdiction (other than
local counsel in any such jurisdiction) representing the indemnified parties who
are parties to such action). Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent.
(c) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, the Company's directors, the Company's
officers that signed the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which, jointly or severally,
the Company, or any such person may incur under the Securities Act, the Exchange
Act or otherwise, but only insofar as such loss, expense, liability, damage or
claim arises out of or is based upon arty untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by such Underwriter through the Representatives to the
Company expressly for use in the Registration Statement (or in the Registration
Statement as amended by any posteffective amendment thereof by the Company) or
in a 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 either in such Registration Statement or Prospectus or necessary to
make such information, in the light of the circumstances under which made, not
misleading. The statements set forth (i) in the last paragraph on the cover page
and (ii) under the caption "Underwriting" in the Preliminary Prospectus and the
Prospectus (to the extent such statements relate to the Underwriters) constitute
the only information furnished by or on behalf of any Underwriter through the
Representatives to the Company for purposes of Section 3(j) and this Section 9.
If any action 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 the
Representatives in writing of the institution of such action and the
Representatives, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. The Company
or such person shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of the Company
or such person unless the employment of such counsel shall have been authorized
in writing by the Representatives in connection with the defense of such action
or the Representatives shall not have employed counsel to have charge of the
defense of such action within a reasonable time or such indemnified party or
parties shall have reasonably concluded (based on the advice of counsel)
19
that there may be defenses available to it or them which are different from or
additional to those available to the Underwriters (in which case the
Representatives shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which events such fees
and expenses shall be borne by such Underwriter and paid as incurred (it being
understood, however, that the Underwriters shall not be liable for the expenses
of more than one separate firm of attorneys in any one action or series of
related actions in the same jurisdiction (other than local counsel in any such
jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representatives.
(d) If the indemnification provided for in this Section 9 is unavailable to
an indemnified party under subsections (a), (b) and (c) of this Section 9 in
respect of any losses, expenses, liabilities, damages or claims referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, expenses, liabilities, damages or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Underwriters 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 and of the Underwriters in connection with the statements
or omissions which resulted in such losses, expenses, liabilities, damages or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as, the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company, as applicable, bear to the underwriting discounts and
commissions received by the Underwriters. The relative fault of the Company and
of the Underwriters 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, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any claim or action.
(e) The Company and the 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 which does not take account of the
equitable considerations referred to in subsection (d)(i) and, if applicable
(ii), above. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of 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.
20
10. Survival: The indemnity and contribution agreements contained in
--------
Section 9 and the covenants, warranties and representations of the Company
contained in Sections 3, 4 and 5 of this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter, or any 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 and 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
sale and delivery of the Shares. The Company and each Underwriter agree promptly
to notify the others of the commencement of any litigation or proceeding against
it and, in the case of the Company, against any of the Company's officers and
directors, in connection with the sale and delivery of the Shares, or in
connection with the Registration Statement or Prospectus.
11. Notices: Except as otherwise herein provided, all statements, requests,
-------
notices and agreements shall be in writing or by telegram and, if to the
Underwriters, shall be sufficient in all respects if delivered to Friedman,
Billings, Xxxxxx & Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Syndicate Department; if to the Company, shall be sufficient in all
---------
respects if delivered to Anworth Mortgage Asset Corporation, 0000 Xxxxx Xxxxxx,
#000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000.
12. Governing Law; Headings: THIS AGREEMENT SHALL BE GOVERNED BY, AND
-----------------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this Agreement
have been inserted as a matter of convenience of reference and are not a part of
this Agreement.
13. Parties at Interest: The Agreement herein set forth has been and is
-------------------
made solely for the benefit of the Underwriters, the Company, and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, 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 and Facsimile Signatures: This Agreement may be signed by
-------------------------------------
the parties in counterparts which together shall constitute one and the same
agreement among the parties. A facsimile signature shall constitute an original
signature for all purposes.
[Signatures on following page]
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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 Agreement shall constitute a binding agreement among the
Company and the Underwriters.
Very truly yours,
ANWORTH MORTGAGE ASSET CORPORATION
By:____________________________________
Name: Xxxxx XxXxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
ADVEST, INC.
For themselves and as Representatives of the several Underwriters named in
Schedule I hereto
By: FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: _______________________________
Name: Xxxxx X. Xxxxxxxxx
Title: Managing Director
22
Schedule I
ANWORTH MORTGAGE ASSET CORPORATION
Number of Initial Maximum Option Shares
Underwriter Shares to be Purchased to be Purchased
-------------------------- ---------------------- ----------------------
Friedman, Billings, Xxxxxx
& Co., Inc.
Advest, Inc.
Total.................. 13,000,000 1,950,000
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