ANNALY MORTGAGE MANAGEMENT, INC.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
January 23, 2001
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
as Representative of the several Underwriters
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Annaly Mortgage Management, Inc., a Maryland corporation (the
"Company"), confirms its agreement with each of the Underwriters listed on
Schedule I hereto (collectively, the "Underwriters"), for whom Friedman,
Billings, ▇▇▇▇▇▇ & Co., Inc. is acting as representative (in such capacity, the
"Representative"), with respect to (i) the sale by the Company of an aggregate
of 9,000,000 shares (the "Initial Shares") of Common Stock, par value $0.01 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 described in Section 1(b) hereof to purchase all or
any part of 1,350,000 additional shares of Common Stock to cover overallotments
(the "Option Shares"), if any, from the Company 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. The
9,000,000 shares of Common Stock to be purchased by the Underwriters and all or
any part of the 1,350,000 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 make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
Commission"), a registration statement on Form S-3 (No. 333-86401) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and regulations
thereunder (the "Securities Act Regulations"). The Company has prepared and
filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required 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 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. The Company proposes to file
with the Commission pursuant to Rule 424 and/or Rule 497, as applicable under
the Securities Act, a supplement, dated the date specified on Schedule II
hereto, to the prospectus dated September 16, 1999, relating to the Shares and
the method of distribution thereof. The term "Base Prospectus" means the
prospectus included in the Registration Statement; the term "Preliminary
Prospectus" means any preliminary form of the Prospectus (as defined herein)
specifically relating to the Shares, in the form first filed with, or
transmitted for filing to, the Commission pursuant to Rule 424 of the Securities
Act Regulations; the term "Prospectus Supplement" means any prospectus
supplement specifically relating to the Shares, in the form first filed with, or
transmitted for filing to, the Commission pursuant to Rule 424 or Rule 497 under
the Securities Act; the term "Prospectus" means the Base Prospectus, including,
in each case, the Prospectus Supplement. 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:
(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 $8.93, the Company agrees to sell to the Underwriters 9,000,000 Initial
Shares, 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 that 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 Representative in its 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 the Underwriters, acting severally and not jointly, to purchase from the
Company in Schedule I hereto, all or any part of the Option Shares, 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
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and distribution of the Initial Shares upon notice by the Representative 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 shall be
determined by the Representative, but shall not be later than five 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. If the option is exercised as to all or any
portion of the Option Shares, the Company will sell that proportion of the total
number of Option Shares then being purchased which the number of Initial Shares
set forth in Schedule I opposite the name of the Company bears to the total
number of Initial Shares, and each of the Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of Option Shares then
being purchased which the number of Initial Shares set forth in Schedule I
opposite the name of such Underwriter bears to the total number of Initial
Shares, subject in each case to such adjustments among the Underwriters as the
Representative in its sole discretion shall make to eliminate any sales or
purchases of fractional shares.
2. Payment and Delivery
(a) Initial Shares. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representative, including, at the option of the
Representative, through the facilities of The Depository Trust Company ("DTC")
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified to the Representative by the Company
upon at least forty-eight hours' prior notice. The Company will cause the
certificates representing the Shares to be made available for checking and
packaging at least twenty-four hours prior to the Closing Time (as defined
below) with respect thereto at the office of ▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, or at the office of DTC or its
designated custodian, as the case may be (the "Designated Office"). The time and
date of such delivery and payment shall be 9:30 a.m., New York City time, on
January 29, 2001 or on such other time and date as the Company and the
Representative may agree upon in writing. The time at which such payment and
delivery are actually made is hereinafter sometimes called the "Closing Time"
and the date of delivery of both Initial Shares and Option Shares is hereinafter
sometimes called the "Date of Delivery."
(b) Option Shares. Any Option Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representative, including, at the option of the
Representative, through the facilities of DTC for the account of such
Underwriter, against payment by or on behalf of such
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Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified to the Representative by the Company
upon at least forty-eight hours' prior notice. The Company will cause the
certificates representing the Shares to be made available for checking and
packaging at least twenty-four hours prior to the Date of Delivery with respect
thereto at the Designated Office. The time and date of such delivery and payment
shall be 9:30 a.m., New York City time, on the date specified by the
Representative in the notice given by the Representative to the Company of the
Underwriters' election to purchase such Option Shares or on such other time and
date as the Company and the Representative may agree upon in writing.
3. Representations and Warranties of the Company:
The Company represents and warrants to the Underwriters that:
(a) the Company has an authorized, issued and outstanding capitalization as
set forth in the Prospectus; the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid and
non-assessable; the Company has no subsidiaries and does not own, directly or
indirectly, any shares of stock or other equity securities of any corporations
or any equity interest in any firm, partnership, joint venture, association or
other entity, except that it owns 24.99% of Annaly International Money
Management, Inc., which in turn owns 51% of ▇▇▇▇▇▇.▇▇▇, Inc.; 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 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 and 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;
(c) the Company is duly qualified or licensed and is in good standing in
each jurisdiction in which it conducts its businesses or in which it owns or
leases real property or otherwise maintains an office and in which the failure,
individually or in the aggregate, 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), present or
prospective, of the Company (any such effect or change, where the context so
requires, is hereinafter called a "Material Adverse Effect" or "Material Adverse
Change");
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(d) the Company is in compliance with all applicable laws, rules,
regulations, orders, decrees and judgments, including those relating to
transactions with affiliates, except where the failure to be in compliance would
not have a Material Adverse Effect;
(e) the Company is not in breach of or in default under (nor has any event
occurred which with notice, lapse of time, or both would constitute a breach of,
or default under), its organizational documents, or in the performance or
observance of any obligation, agreement, covenant or condition contained in any
license, indenture, mortgage, deed of trust, lease, loan or credit agreement or
other agreement or instrument to which the Company is a party or by which its
properties are bound, except for such breaches or defaults which could not have
a Material Adverse Effect;
(f) 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 organizational documents 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 any of them 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, or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company, except in the case of this clause (ii) for
such breaches, defaults, liens, charges, claims or encumbrances which could not
have a Material Adverse Effect;
(g) this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and by general equitable principles, 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 transactions
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 and
the Securities Exchange Act of 1934 (the "Exchange Act"), (B) such approvals as
have been obtained in connection with the approval of the quotation of the
Shares on the New York 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;
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(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
businesses 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 could
not, individually or in the aggregate, 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, 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 result in
a Material Adverse Change; 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 Company meets the requirements for use of Form S-3 under the
Securities Act; each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement or the use of any Preliminary Prospectus or the
Prospectus 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 the Company has complied to the
Commission's satisfaction with any request on the part of the Commission for
additional information;
(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
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
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Representative 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) each document incorporated by reference or deemed to be incorporated by
reference in the Registration Statement and in the Prospectus, when they became
effective or was filed with the Commission, as the case may be, conformed in all
material respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and the Securities Act Regulations and the regulations
promulgated under the Exchange Act (the "Exchange Act Regulations"), and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and any further documents so filed and incorporated by reference
in the Registration Statement and the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the
Securities Act Regulations and the Exchange Act Regulations and will not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(m) 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 ("▇▇▇▇▇"), except to the extent permitted by Regulation S-T;
(n) there are no actions, suits, proceedings, inquiries or investigations
pending or, to the knowledge of the Company, threatened against the Company, 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 reasonably expected to have a Material Adverse Effect;
(o) the financial statements, including the notes thereto, included in (or
incorporated by reference into) the Registration Statement and the Prospectus
present fairly the consolidated financial position of the entities to which such
financial statements relate 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 as applied
in the United States and on a consistent basis during the periods involved and
in accordance with Regulation S-X promulgated by the Commission; the financial
statement schedules, if any, included in the Registration Statement fairly
present the information shown therein and have been compiled on a
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basis consistent with the financial statements included in the Registration
Statement and the Prospectus; no other financial statements or supporting
schedules are required to be included in the Registration Statement; the
unaudited pro forma financial information (including the related notes) included
in the Prospectus and 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 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 and its subsidiaries, the financial position, results of
operations and other information purported to be shown therein at the respective
dates and for the respective periods specified; no other pro forma financial
information is required to be included in the Registration Statement;
(p) the Company has filed in a timely manner all reports required to be
filed pursuant to sections 13, 14, 15(d) of the Exchange Act during the
preceding twelve calendar months and if during such period the Company has
relied on Rule 12b-25(b) under the Exchange Act ("Rule 12b-25(b)") with respect
to a report or a portion of a report, that report or portion of a report has
actually been filed within the time period prescribed by Rule 12b-25(b);
(q) Deloitte & Touche, LLP, whose reports on the consolidated financial
statements of the Company and its subsidiaries are filed with the Commission as
part of the Registration Statement and Prospectus or are incorporated by
reference therein and any other accounting firm that has certified financial
statements and delivered its reports with respect thereto, are and were during
the periods covered by their reports independent public accountants as required
by the Securities Act and the Securities Act Regulations;
(r) 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 or any development that could reasonably be expected to
result in a Material Adverse Change, whether or not arising in the ordinary
course of business, (B) any transaction, that 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 taken as a whole or (D) any dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock;
(s) the Company has not (i) failed to pay any dividend or sinking fund
installment on preferred stock or (ii) 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 or its Subsidiaries; the Company has not filed a report
pursuant to Section 13(a) or 15(d) of the
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Exchange Act, since the filing of its last Annual Report on Form 10-K,
indicating that it has (i) failed to pay any dividend or sinking fund
installment on preferred stock or (ii) 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;
(t) 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 or resale of the Shares or (ii)
since the filing of the Registration Statement (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;
(u) the Shares conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus;
(v) 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
Statement or otherwise registered by the Company under the Securities Act;
(w) 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 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; 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 organizational documents of the Company or under any
agreement to which the Company or any Subsidiary is a party or otherwise;
(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 the Exchange Act Regulations, 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 By-laws of the National Association of
Securities Dealers, Inc. (the "NASD")) any member firm of the NASD;
(z) the Company has not relied upon the Representative or legal counsel for
the Representative for any legal, tax or accounting advice in connection with
the offering and sale of the Shares;
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(aa) any certificate signed by any officer of the Company or any Subsidiary
delivered to the Representative 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;
(bb) the Company owns no real property; the Company has good and marketable
title to all 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 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 (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus); 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;
(cc) the descriptions in the Registration Statement 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 Statement
or the Prospectus or to be filed as exhibits to the Registration Statement which
are not described or filed as required, all agreements between the Company or
any of the Subsidiaries and third parties expressly referenced in the Prospectus
are legal, valid and binding obligations of the Company or one or more of the
Subsidiaries, 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;
(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
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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; and 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;
(gg) the Company is not in violation, or has 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
their respective businesses, 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 result in a
Material Adverse Change;
(hh) 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;
(ii) 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 the Subsidiaries or affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba;
(jj) the Company has not incurred any liability for any finder's fees or
similar payments in connection with the transactions herein contemplated;
(kk) the Company is not and, after giving effect to the offering and sale
of the Shares, the Company 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");
(ll) there are no existing or, to the knowledge of the Company, threatened
labor disputes with the employees of the Company which are likely to have
individually or in the aggregate a Material Adverse Effect;
(mm) the Company has filed all necessary foreign, federal, state and local
tax returns that are required to be filed on or before the date hereof and has
paid all taxes and
-11-
any other assessment, fine or penalty levied against it required to be paid by
it on or before the date hereof; and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the Company
that could have a Material Adverse Effect; and
(nn) the Company is organized and operates in a manner so as to qualify as
a "real estate investment trust" ("REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"), and has elected to, and
will use its best efforts to and intends to remain qualified to, be taxed as a
REIT under the Code and pursuant to any applicable state tax laws; the Company
does not know of any event which would cause or is likely to cause the Company
to fail to qualify as a REIT.
4. Certain Covenants:
The Company hereby agrees with each Underwriter:
(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 jurisdictions (both domestic and foreign) as the
Representative may designate and to maintain such qualifications in effect as
long as requested by the Representative for the distribution of the Shares,
provided that in connection therewith 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) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representative promptly and, if requested by the
Representative, will confirm such advice in writing, when such post-effective
amendment has become effective;
(c) to prepare the Prospectus in a form approved by the Underwriters and
file such Prospectus (or a term sheet as permitted by Rule 434) with the
Commission pursuant to Rule 424(b) under the Securities Act not later than 10:00
a.m. (New York City time), on the day following the execution and delivery of
this 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 the day following the
execution and delivery 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 Registration
Statement) in such quantities and at such locations 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
-12-
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;
(d) to advise the Representative promptly and (if requested by the
Representative) to confirm such advice in writing, when any post-effective
amendment to the Registration Statement becomes effective under the Securities
Act Regulations;
(e) to advise the Representative 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, (iii) the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, (iv) the
initiation or threatening or contemplation 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
Representative promptly of any proposal to amend or supplement the Registration
Statement or Prospectus and to file no such amendment or supplement to which the
Representative shall reasonably object in writing;
(f) to furnish to the Underwriters 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 and the Subsidiaries;
(g) 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 or in the reasonable opinion of the Representative or
counsel for the Underwriters, 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, 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 the Representative may from time to time reasonably request of
an appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the
-13-
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law;
(h) to file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Company or the Representative, be required by the Securities Act
or requested by the Commission;
(i) prior to filing with the Commission any amendment to the Registration
Statement or supplement to the Prospectus or any Prospectus pursuant to Rule 424
of the Rules and Regulations, to furnish a copy thereof to the Representative
and counsel for the Underwriters and obtain the consent of the Representative to
the filing;
(j) to furnish promptly to each Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representative may reasonably request;
(k) 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 and during such period to file all such
documents in the manner and within the time periods required by the Exchange Act
and the Exchange Act Regulations;
(l) to apply the net proceeds of the sale of the Shares in accordance with
its statements under the caption "Use of Proceeds" in the Prospectus;
(m) to make generally available to its security holders and to deliver to
the Representative 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;
(n) to use its best efforts to maintain the quotation of the Shares on the
New York Stock Exchange 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 traded and quotations for which are reported by the New
York Stock Exchange;
(o) to engage and maintain, at its expense, a registrar and transfer agent
for the Shares;
-14-
(p) to refrain during a period of 60 days from the date of the Prospectus,
without the prior written consent of the Representative, from, directly or
indirectly, (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,
(or entering into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of), 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, (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, (C) any shares of Common Stock to be sold to FBR
Asset Investment Corporation, (D) Shares of Common Stock pursuant to the DRSPP,
or (E) 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;
(q) to 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;
(r) use its best efforts to cause each officer and director of the Company
to furnish to the Representative, prior to the first Delivery Date, a letter or
letters, substantially in the form of Exhibit B hereto, pursuant to which each
such person shall agree not to, directly or indirectly, (1) offer for sale,
sell, pledge or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case for a period of 90 days from the date of the Prospectus,
without the prior written consent to Representative on behalf of the
Underwriters;
-15-
(s) that the provisions of the letter agreement dated January 10, 2001, as
amended as of the date hereof between the Company and the Representative shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(t) 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;
(u) the Company will comply with all of the provisions of any undertakings
in the Registration Statement;
(v) the Company, during the period when the Prospectus is required to be
delivered under the 1933 Act, will file all documents required to be filed with
the Commission pursuant to the 1934 Act within the time periods required by the
1934 Act and the 1934 Act Regulations;
(w) the Company will continue to use its best efforts to continue to meet
the requirements to qualify as a REIT under the Code; and
(x) the Company has retained Deloitte & Touche LLP as its qualified
accountants and qualified tax experts to assist the Company in developing
appropriate accounting systems and testing procedures and to conduct quarterly
compliance reviews designed to determine compliance with the REIT provisions of
the Code and the Company's exempt status under the 1940 Act.
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 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 Representative have mutually agreed are
appropriate and the determination of
-16-
their eligibility for investment under state law as aforesaid (including the
legal fees and filing fees and other disbursements of counsel for the
Underwriters assuming that the Common Stock is approved for quotation on the New
York Stock Exchange and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers, (v) the
fees and expenses of any transfer agent or registrar for the Shares and
miscellaneous expenses referred to in the Registration Statement, (vi) the fees
and expenses incurred in connection with the inclusion of the Shares in the New
York Stock Exchange, (vii) making road show presentations with respect to the
offering of the Shares (other than travel expenses of the Underwriters or their
representatives), and (viii) the performance of the Company's other obligations
hereunder. Upon the request of the Representative, the Company will provide
funds in advance for filing fees.
(b) The Company agrees to reimburse the Representative for its 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, 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, all of which shall be reimbursed
by the Company pursuant to the provisions of subsection (a) above) and excluding
its expenses related to the travel expenses of the Underwriters and its
representatives during due diligence, drafting sessions and road shows. In
addition, the Company agrees to reimburse the Representative for expenses of the
Representative's outside counsel in connection with the performance of its
obligations under this Agreement in an amount equal to 65% of its total
disbursements to the Representative's outside counsel (based on a fee for the
Representative's legal counsel of $75,000, excluding fees and expenses related
to blue sky matters).
(c) If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, subject to sections 5(a) and 5(b) the Company will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (such as
printing, facsimile, courier service, direct computer expenses, accommodations,
travel and the fees and disbursements of Underwriters' counsel) and any other
advisors, accountants, appraisers, etc. reasonably incurred by such Underwriters
in connection with this Agreement or the transactions contemplated herein.
6. Conditions of the Underwriters' Obligations:
(a) The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on each Date of Delivery, as applicable, are subject to the
accuracy of the representations and warranties on the part of the Company
hereunder on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, the
-17-
performance by the Company of its obligations hereunder and to the satisfaction
of the following further conditions at the Closing Time or on each Date of
Delivery, as applicable:
(b) The Company shall furnish to the Underwriters at the Closing Time and
on each Date of Delivery an opinion of ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Company, addressed to the Underwriters and dated the Closing Time and each Date
of Delivery and in the form of Exhibit A.
(c) The Representative shall have received from Deloitte & Touche, LLP,
letters dated, respectively, as of the date of this Agreement, the Closing Time
and each Date of Delivery, as the case may be, addressed to the Representative,
in form and substance satisfactory to the Representative, relating to the
financial statements, including any pro forma financial statements, of the
Company and the Subsidiaries, and such other matters customarily covered by
comfort letters issued in connection with registered public offerings.
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 (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement.
(d) The Representative shall have received at the Closing Time and on each
Date of Delivery the favorable opinion of Hunton & ▇▇▇▇▇▇▇▇, dated the Closing
Time or such Date of Delivery, addressed to the Representative and in form and
substance satisfactory to the Representative.
(e) No amendment or supplement to the Registration Statement or Prospectus
shall have been filed to which the Underwriters shall have objected in writing.
(f) 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; (ii) all
requests for additional information on the part of the Commission shall have
been complied with to the Representative's reasonable satisfaction; and (iii)
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.
-18-
(g) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Time shall have been made
within the applicable time period prescribed for such filing by such Rule.
(h) Between the time of execution of this Agreement and the Closing Time or
the relevant Date of Delivery there shall not have been any Material Adverse
Change, and (ii) no transaction which is material and unfavorable to the Company
shall have been entered into by the Company or any of the Subsidiaries, in each
case, which in the Representative's sole judgment, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Registration Statement.
(i) The Shares shall have been approved for inclusion in the New York Stock
Exchange listing.
(j) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(k) The Representative shall have received lock-up agreements from the
officers and directors of the Company, in the form of Exhibit B attached hereto,
and such letter agreements shall be in full force and effect.
(l) 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, Chief
Executive Officer, President, Chief Operating Officer or Vice President and
Chief Accounting Officer or Chief Financial Officer, to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of this Date of
Delivery, as the case may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to this Date of Delivery;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference therein
("Incorporated Document") has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the
Securities Act; and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, there has not
been (a) any Material Adverse Change, (b) any transaction that is
material to the Company, except transactions entered into in the
ordinary course of business, (c) any obligation, direct or contingent,
that is material to the Company, incurred by the Company, except
obligations incurred in the ordinary course of business, (d) any change
in the capital stock or
-19-
outstanding indebtedness of the Company that is material to the
Company, (e) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company, or (f) any loss or damage
(whether or not insured) to the property of the Company which has been
sustained or will have been sustained which has a Material Adverse
Effect.
(m) 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 statements of the Company contained herein, and the performance
by the Company of its covenants contained herein, and the fulfillment of any
conditions contained herein, as of the Closing Time or any Date of Delivery as
the Underwriters may reasonably request.
7. Termination:
The obligations of the several Underwriters hereunder shall be subject to
termination in the absolute discretion of the Representative, 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, or material change in 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 Representative, 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 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 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 Nasdaq or by
order of the Commission or any other governmental authority, (v) a banking
moratorium shall have been declared by New York or United States authorities, or
(vi) if there has been any downgrading in the rating of any of the Company's
debt securities or preferred stock by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Securities Act), or (vii) any federal or state statute, regulation, rule or
order of any court or other governmental authority has been enacted, published,
decreed or otherwise promulgated which in the reasonable opinion of the
Representative materially adversely affects or will materially adversely affect
the business or operations of the Company, or (viii) 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
-20-
Representative has a material adverse effect on the securities markets in the
United States.
If the Representative 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 Representative 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 Representative may terminate this
Agreement by notice to the Company, without liability of any party to any other
party except that the provisions of Section 5 and Section 9 shall at all times
be effective and shall survive such termination.
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 Representative with the approval of the
Company or selected by the Company with the approval of the Representative).
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
-21-
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.
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 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),
the 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), (B) any omission or alleged omission
to state a material fact required to be stated in any 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, or (C)
any untrue statement or alleged untrue statement of any material fact contained
in any audio or visual materials used in connection with the marketing of the
Shares, including, without limitation, slides, videos, films and tape
recordings; 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
Representative to the Company expressly for use in such Registration Statement
or Prospectus.
(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 in
writing of the institution of such action, and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses, provided, however, that any failure or delay to so notify the Company
will not relieve the Company of any obligation hereunder, 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 expense of such Underwriter or such controlling person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action, or the Company shall not have
employed
-22-
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 (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 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 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 (A) any 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 Representative to the
Company expressly for use in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the Company) or
the Prospectus, or (B) any omission or alleged omission to state a material fact
in connection with such information required to be stated either in such
Registration Statement, Prospectus or necessary to make such information, in the
light of the circumstances under which made, not misleading. The statements set
forth in the eighth, ninth and tenth paragraphs 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 Representative to the Company for purposes
of Section 3(k) 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
Representative in writing of the institution of such action and the
Representative, 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 Representative in connection with the defense of
such action or the Representative shall not have employed counsel to have
-23-
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 Underwriters (in which
case the Representative 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 Representative.
(d) If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless 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 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
-24-
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.
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, ▇▇▇▇▇▇ & Co.,
Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate
Department; if to the Company, shall be sufficient in all respects if delivered
to the Company at the offices of the Company at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
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
-25-
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.
-26-
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,
ANNALY MORTGAGE MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By: : /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Title: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Managing Director
For itself and as Representative of the other
Underwriters named on Schedule I hereto.
-27-
Schedule I
Number of Initial
Underwriter Shares to be Purchased
------------------------------------------------------------------------------
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. 6,300,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated 2,700,000
Total............................................. 9,000,000
=========
A-1
Schedule II
Date of Prospectus Supplement
January 23, 2001
A-2
