EXECUTION COPY
ANNALY MORTGAGE MANAGEMENT, INC.
8,254,598 Shares of Common Stock
(par value $.01 per share)
SALES AGENCY AGREEMENT
July 8, 2002
UBS WARBURG LLC
299 Park Avenue
New York, New York 10171
Ladies and Gentlemen:
Annaly Mortgage Management, Inc., a Maryland corporation (the
"Company"), confirms its agreement with UBS Warburg LLC (the "Agent"), as
follows:
Section 1. Description of Securities. The Company proposes to issue and
sell from time to time through the Agent, as sales agent, up to 8,254,598 shares
(the "Shares") of the Company's common stock, par value $.01 per share (the
"Common Stock"), on the terms set forth in Section 3 of this Sales Agency
Agreement (this "Agreement").
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Securities Act"), with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-74618), as amended, including a prospectus, with respect to the Shares,
which incorporates by reference documents which the Company has filed or will
file in accordance with the provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (collectively, the
"Exchange Act"). Except where the context otherwise requires, the registration
statement, as it may have heretofore been amended, including all documents filed
as part thereof or incorporated by reference therein, and including any
information contained in a Prospectus (as defined below) filed with the
Commission pursuant to Rule 424(b) under the Securities Act and also including
any other registration statement filed with the Commission pursuant to Rule
462(b) and Rule 429 under the Securities Act, is herein called the "Registration
Statement," and the final form of prospectus, including all documents
incorporated therein by reference, included in the Registration Statement, as
amended or supplemented from time to time (including by any prospectus
supplement thereto), is herein called the "Prospectus." Any reference herein to
the Registration Statement, the Prospectus or any amendment or supplement
thereto shall be deemed to refer to and include the documents incorporated by
reference therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement or the Prospectus shall
be deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein. To
the extent that the amount of shares of Common Stock registered under the
Registration Statement is otherwise depleted and is at any time insufficient to
complete the sales of the Shares as contemplated by this Agreement, the Company
shall file a new registration statement with respect to any additional shares of
Common Stock necessary to complete such sales of the Shares and shall cause such
registration statement to become effective. After the effectiveness of any such
registration statement, all references to "Registration Statement"
included in this Agreement shall be deemed to include such new registration
statement and all references to "Prospectus" included in this Agreement shall be
deemed to include the final form of prospectus, including all documents
incorporated therein by reference, included in any such registration statement,
as amended or supplemented from time to time (including by any prospectus
supplement thereto). For purposes of this Agreement, all references to the
Registration Statement or the Prospectus or to any amendment or supplement
thereto shall be deemed to include any copy filed with the Commission pursuant
to its Electronic Data Gathering Analysis and Retrieval System ("EDGAR"), and
such copy shall be identical in content to any Prospectus delivered to the Agent
for use in connection with the offering of the Shares.
Section 2. Representations and Warranties of the Company. The Company
represents and warrants to the Agent that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement has been filed with the Commission
and has been declared effective under the Securities Act. The Company has not
received, and has no notice of, any order of the Commission preventing or
suspending the use or effectiveness of the Registration Statement, or
threatening or instituting proceedings for that purpose. Any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed. Copies of the
Registration Statement and the Prospectus, any such amendments or supplements
and all documents incorporated by reference therein that were filed with the
Commission on or prior to the date of this Agreement (including one fully
executed copy of the Registration Statement and of each amendment thereto) have
been delivered to the Agent and its counsel. The Company has not distributed any
offering material in connection with the offering or sale of the Shares other
than the Registration Statement, the Prospectus or any other materials, if any,
permitted by the Securities Act. As of the close of business on July 5, 2002,
securities in the amount of $162,000,000 were available for issuance pursuant to
the Registration Statement, which permits their sale in the manner contemplated
by this Agreement.
(b) Each part of the Registration Statement, when such part became or
becomes effective or was or is filed with the Commission, and the Prospectus and
any amendment or supplement thereto, on the date of filing thereof with the
Commission and at each Trade Date (as defined herein), conformed or will conform
in all material respects with the requirements of the Securities Act. Each part
of the Registration Statement, when such part became or becomes effective or was
or is filed with the Commission, did not or will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at each Trade Date, did not or will not include
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the foregoing shall not
apply to statements in, or omissions from, any such document in reliance upon,
and in conformity with, written information relating to the Agent that was
furnished in writing to the Company by the Agent, specifically for inclusion in
the Registration Statement, the Prospectus or any amendment or supplement
thereto.
(c) The documents incorporated by reference in the Registration
Statement, the Prospectus or any amendment or supplement thereto, when they
became or become effective under the Securities Act or were or are filed with
the Commission under the Securities Act or the
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Exchange Act, as the case may be, conformed or will conform in all material
respects with the requirements of the Securities Act and the Exchange Act, as
applicable.
(d) The consolidated financial statements of the Company, together with
the related schedules and notes thereto, set forth or included or incorporated
by reference in the Registration Statement and the Prospectus fairly present the
financial condition of the Company as of the dates indicated and the results of
operations, changes in financial position, stockholders' equity and cash flows
for the periods therein specified are in conformity with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise stated therein). The selected financial and statistical
data included or incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and, to the extent based
upon or derived from the financial statements, have been compiled on a basis
consistent with the financial statements presented therein. Any pro forma
financial statements of the Company, and the related notes thereto, included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the basis described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. No other financial statements are required to
be set forth or to be incorporated by reference in the Registration Statement or
the Prospectus under the Securities Act.
(e) Any prospectus delivered to the Agent for use in connection with
the offering of Shares pursuant to this Agreement will be identical to the
version of the Prospectus created to be transmitted to the Commission for filing
via EDGAR, except to the extent permitted by Regulation S-T.
(f) The Company has been duly formed and incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Maryland, is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of property or
assets or the conduct of its business requires such qualification, except where
the failure to so qualify would not have a material adverse effect on the
business, assets, properties, prospects, financial condition or results of
operation of the Company taken as a whole (a "Material Adverse Effect"), and has
full corporate power and authority necessary to own, hold, lease and/or operate
its assets and properties, to conduct the business in which it is engaged and as
described in the Prospectus and to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby, and the
Company is in compliance in all material respects with the laws, orders, rules,
regulations and directives issued or administered by such jurisdictions.
(g) The Company has no "significant subsidiaries" (as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the Securities Act) and
does not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity, except that it
owns a 33% ownership interest in Annaly International Mortgage Management, Inc.,
which in turn owns a 51% ownership interest in Annaly.com, Inc. Complete and
correct copies of the articles of incorporation and of the bylaws of the Company
and all amendments thereto have been delivered to the Agent and, except as set
forth in the exhibits to, or incorporated
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by reference into, the Registration Statement, no changes therein will be made
subsequent to the date hereof and the final Filing Date (as defined herein)
under this Agreement.
(h) The Company is not in breach of, or in default under (nor has any
event occurred which with notice, lapse of time, or both would result in any
breach of, or constitute a default under), (i) its charter or bylaws or (ii) any
obligation, agreement, covenant or condition contained in any contract, license,
repurchase agreement, indenture, mortgage, deed of trust, bank loan or credit
agreement, note, lease or other evidence of indebtedness, or any lease, contract
or other agreement or instrument to which the Company is a party or by which it
or any of its assets or properties may be bound or affected, the effect of which
breach or default under clause (ii) could have a Material Adverse Effect. The
execution, delivery and performance of this Agreement, the issuance and sale of
the Shares and the consummation of the transactions contemplated hereby will not
conflict with, or result in any breach of or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would result in
any breach of, or constitute a default under), (i) any provision of the charter
or bylaws of the Company, (ii) any provision of any contract, license,
repurchase agreement, indenture, mortgage, deed of trust, bank loan or credit
agreement, note, lease or other evidence of indebtedness, or any lease, contract
or other agreement or instrument to which the Company is a party or by which the
Company or any of its assets or properties may be bound or affected, the effect
of which could have a Material Adverse Effect, or (iii) under any federal,
state, local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company.
(i) The Company has the authorized capitalization described in the
Prospectus. All of the issued and outstanding shares of capital stock, including
the Common Stock of the Company, have been duly and validly authorized and
issued and are fully paid and non-assessable, have been issued in compliance
with all federal and state securities laws and were not issued in violation of
any preemptive right, resale right, right of first refusal or similar right.
(j) This Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except to the extent that (i)
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
equitable principles and (ii) the indemnification and contribution provisions of
Section 6 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof.
(k) The capital stock of the Company, including the Shares, conforms in
all material respects to the description thereof contained in the Registration
Statement and the Prospectus and such description conforms to the rights set
forth in the instruments defining the same. The certificates for the Shares are
in due and proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders.
(l) The Shares have been duly and validly authorized by the Company for
issuance and sale pursuant to this Agreement and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued and
fully paid and non-assessable, free and clear of any pledge, lien, encumbrance,
security interest or other claim, and will be registered pursuant to Section 12
of the Exchange Act.
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(m) No approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the issuance and sale of the
Shares or the consummation by the Company of the transactions contemplated
hereby other than (i) registration of the Shares under the Securities Act, (ii)
any necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares will be sold by the Agent, or (iii) such
approvals as have been obtained in connection with the approval of the listing
of the Shares on the New York Stock Exchange (the "NYSE").
(n) No person, as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act (each, a "Person"), has the right,
contractual or otherwise, to cause the Company to issue to it any shares of
capital stock or other securities of the Company upon the issue and sale of the
Shares through the Agent, as sales agent, hereunder, nor does any Person have
preemptive rights, co-sale rights, rights of first refusal or other rights to
purchase or subscribe for any of the Shares or any securities or obligations
convertible into or exchangeable for, or any contracts or commitments to issue
or sell any of, the Shares or any options, rights or convertible securities or
obligations, other than those that have been expressly waived prior to the date
hereof.
(o) Deloitte & Touche LLP (the "Accountants"), whose report on the
consolidated financial statements of the Company is filed with the Commission as
part of the Registration Statement and the Prospectus, are and, during the
periods covered by their reports, were independent public accountants as
required by the Securities Act.
(p) The Company has all necessary licenses, authorizations, consents
and approvals and has made all necessary filings required under any federal,
state, local or foreign law, regulation or rule, and has obtained all necessary
permits, authorizations, consents and approvals from other Persons, in order to
conduct its business as described in the Prospectus, except as such as could not
have a Material Adverse Effect. The Company is not required by any applicable
law to obtain accreditation or certification from any governmental agency or
authority in order to provide the products and services which it currently
provides or which it proposes to provide as set forth in the Prospectus. The
Company is not in violation of, or in default under, any such license, permit,
authorization, consent or approval or any federal, state, local or foreign law,
regulation or rule or any decree, order or judgment applicable to the Company,
the effect of which could have a Material Adverse Effect.
(q) The descriptions in the Registration 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 and
third parties expressly referenced in the Prospectus are legal, valid and
binding obligations of the Company enforceable in accordance with their
respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and by general equitable principles.
(r) There are no actions, suits, claims, investigations, inquiries or
proceedings pending or, to the best of the Company's knowledge, threatened to
which the Company or any of
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its officers or directors is a party or of which any of its properties or other
assets is subject at law or in equity, or before or by any federal, state, local
or foreign governmental or regulatory commission, board, body, authority or
agency which could result in a judgment, decree or order having a Material
Adverse Effect.
(s) During the period of at least the last 24 calendar months prior to
the date of this Agreement, the Company has timely filed with the Commission all
documents and other material required to be filed pursuant to Sections 13, 14
and 15(d) under the Exchange Act. During the period of at least the last 36
calendar months preceding the filing of the Registration Statement, the Company
has filed all reports required to be filed pursuant to Sections 13, 14 and 15(d)
under the Exchange Act. As of the date of this Agreement and on each Filing
Date, the aggregate market value of the Company's voting stock held by
nonaffiliates of the Company was or will be equal to or greater than $150
million.
(t) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been (i) any
material adverse change, or any development which, in the Company's reasonable
judgment, is likely to cause a material adverse change, in the business,
properties or assets described or referred to in the Registration Statement or
the Prospectus, or the results of operations, condition (financial or
otherwise), net worth, business or operations of the Company taken as a whole,
(ii) any transaction which is material to the Company, except transactions in
the ordinary course of business, (iii) any obligation, direct or contingent,
which is material to the Company taken as a whole, incurred by the Company,
except obligations incurred in the ordinary course of business, (iv) any change
in the capital stock or outstanding indebtedness of the Company, or (v) except
for regular quarterly dividends on the Common Stock in amounts per share that
are consistent with past practice, any dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock. The
Company has no material contingent obligation which is not disclosed in the
Registration Statement or the Prospectus.
(u) There are no Persons with registration or other similar rights to
have any equity or debt securities, including securities which are convertible
into or exchangeable for equity securities, registered pursuant to the
Registration Statement or otherwise registered by the Company under the
Securities Act.
(v) The Company (i) does not have any issued or outstanding preferred
stock or (ii) has not defaulted on any installment on indebtedness for borrowed
money or on any rental on one or more long-term leases, which defaults would
have a Material Adverse Effect on the financial position of the Company. The
Company has not filed a report pursuant to Section 13(a) or 15(d) of the
Exchange Act since the filing of its last Annual Report on Form 10-K, indicating
that it (i) has failed to pay any dividend or sinking fund installment on
preferred stock or (ii) has defaulted on any installment on indebtedness for
borrowed money or on any rental on one or more long-term leases, which defaults
would have a Material Adverse Effect on the financial position of the Company.
(w) Each of the Company and its officers, directors and controlling
Persons has not, directly or indirectly, (i) taken any action designed to cause
or to result in, or that has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of the Common
Stock to facilitate the sale of the Shares or (ii) except for the public
offerings completed in the first quarter of
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2001, the public offering completed in the second quarter of 2001, the public
offering completed in the third quarter of 2001 and the public offering
completed in the first quarter of 2002, since the filing of the Registration
Statement (except pursuant to the Company's dividend reinvestment and share
purchase plan (the "DRSPP") or as may otherwise be contemplated by this
Agreement) (A) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Shares or (B) paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other securities of the
Company.
(x) The Shares have been approved for listing on the NYSE, subject to
official notice of issuance.
(y) Neither the Company nor any of its affiliates (i) is required to register as
a "broker" or "dealer" in accordance with the provisions of the Exchange Act or
(ii) directly or indirectly through one or more intermediaries, controls or has
any other association with (within the meaning of Article I of the Bylaws of the
National Association of Securities Dealers ("NASD")) any member firm of the
NASD.
(z) The Company has not relied upon the Agent or legal counsel for the
Agent for any legal, tax or accounting advice in connection with the offering
and sale of the Shares.
(aa) Any certificate signed by any officer of the Company delivered to
the Agent or to counsel for the Agent pursuant to or in connection with this
Agreement shall be deemed a representation and warranty by the Company to the
Agent as to the matters covered thereby.
(bb) As of the date of this Agreement, the investment portfolio of the
Company (i) consists entirely of mortgage-backed securities guaranteed, as to
payments of principal and interest, by either the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association or the Government
National Mortgage Association and (ii) all of such mortgage-backed securities
are REIT (as defined below) eligible assets. As of the date of this Agreement,
the Company has no plan or intention to materially alter (i) its capital
investment policy or (ii) except in accordance with its capital investment
policy, the percentage of its investment portfolio that is invested in
mortgage-backed securities which are guaranteed, as to payments of principal and
interest, by either the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association or the Government National Mortgage Association.
The Company has good and marketable title to all of the properties and assets
owned by it, in each case free and clear of any security interests, liens,
encumbrances, equities, claims and other defects (except for any security
interest, lien, encumbrance or claim that may otherwise exist under any
applicable repurchase agreement), except such as do not have a Material Adverse
Effect and do not interfere with the use made or proposed to be made of such
property or asset by the Company, and except as described in or contemplated by
the Prospectus. The Company owns no real property. Any real property and
buildings held under lease by the Company are held under valid, existing and
enforceable leases, with such exceptions as are disclosed in the Prospectus or
are not material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company.
(cc) The Company has filed all federal, state and foreign income and
franchise tax returns required to be filed on or prior to the date hereof and
has paid taxes shown as due thereon (or that are otherwise due and payable),
other than taxes which are being contested in good faith and for which adequate
reserves have been established in accordance with generally accepted accounting
principles. The Company has no knowledge, after due inquiry, of any tax
deficiency
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which has been asserted or threatened against the Company. To the knowledge of
the Company, there are no tax returns of the Company that are currently being
audited by federal, state or local taxing authorities or agencies which would
have a Material Adverse Effect.
(dd) The Company owns or possesses adequate license or other rights to
use all patents, trademarks, service marks, trade names, copyrights, software
and design licenses, trade secrets, manufacturing processes, other intangible
property rights and know-how (collectively, "Intangibles") necessary to entitle
the Company to conduct its business as described in the Prospectus, and the
Company has not received notice of infringement of or conflict with (and the
Company knows of no such infringement of or conflict with) asserted rights of
others with respect to any Intangibles which could have a Material Adverse
Effect.
(ee) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ff) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged. The Company has no reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.
(gg) The Company is not in violation, and has not received notice of
any violation with respect to, any applicable environmental, safety or similar
law applicable to the business of the Company. The Company has received all
permits, licenses or other approvals required of it under applicable federal and
state occupational safety and health and environmental laws and regulations to
conduct its business, and the Company is in compliance with all terms and
conditions of any such permit, license or approval, except any such violation of
law or regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals which could not, singly or in the aggregate, have a
Material Adverse Effect.
(hh) The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated,
except as may otherwise exist with respect to the Agent pursuant to this
Agreement.
(ii) There are no existing or threatened labor disputes with the
employees of the Company which are likely to have, individually or in the
aggregate, a Material Adverse Effect.
(jj) Neither the Company nor, to the knowledge of the Company, any
employee or agent of the Company, has made any payment of funds of the Company
or received or retained any funds in violation of any law, rule or regulation or
of a character required to be disclosed in the Prospectus. No relationship,
direct or indirect, exists between or among the Company, on the
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one hand, and the directors, officers and stockholders of the Company, on the
other hand, which is required by the Securities Act to be described in the
Registration Statement and the Prospectus that is not so described.
(kk) 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, 1997. The proposed method of operation
of the Company as described in the Prospectus will enable the Company to
continue to meet the requirements for qualification and taxation as a REIT under
the Code, and no actions have been taken (or not taken which are required to be
taken) which would cause such qualification to be lost. The Company intends to
continue to operate in a manner which would permit it to qualify as a REIT under
the Code. The Company has no intention of changing its operations or engaging in
activities which would cause it to fail to qualify, or make economically
undesirable its continued qualification, as a REIT.
(ll) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(mm) In connection with the equity shelf program established by this
Agreement, the Company has not offered and will not offer shares of Common Stock
or any other securities convertible into or exchangeable for shares of Common
Stock in a manner in violation of the Securities Act.
(nn) The Common Stock is an "actively-traded security" excepted from
the requirements of Rule 101 of Regulation M under the Exchange Act by
subsection (c)(1) of such rule.
(oo) The Company has not entered into any other sales agency agreements
or other similar arrangements with any agent or other representative in respect
of the Shares and the equity shelf program established by this Agreement.
Section 3. Sale and Delivery of Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell
through the Agent, as sales agent, and the Agent agrees to use its reasonable
efforts to sell as sales agent for the Company, the Shares.
The Shares are to be sold on a daily basis or otherwise as shall be
agreed to by the Company and the Agent on any day that is a trading day for the
NYSE (other than a day on which the NYSE is scheduled to close prior to its
regular weekday closing time). The Company will designate the maximum amount of
Shares to be sold by the Agent daily as reasonably agreed to by the Agent and in
any event not in excess of the amount available for issuance under the currently
effective Registration Statement. Subject to the terms and conditions hereof,
the Agent shall use its reasonable efforts to sell all of the Shares so
designated by the Company.
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Notwithstanding the foregoing, the Company may instruct the Agent by
telephone (confirmed promptly by telecopy) not to sell Shares if such sales
cannot be effected at or above the price designated by the Company in any such
instruction. Furthermore, the Company shall not authorize the issuance and sale
of, and the Agent shall not be obligated to use its reasonable efforts to sell,
any Shares at a price lower than the minimum price therefor designated from time
to time by the Company's board of directors and notified to the Agent in
writing. In addition, the Company or the Agent may, upon notice to the other
party hereto by telephone (confirmed promptly by telecopy), suspend the offering
of the Shares; provided, however, that such suspension or termination shall not
affect or impair the parties' respective obligations with respect to the Shares
sold hereunder prior to the giving of such notice. Under no circumstances shall
the number of Shares sold pursuant to this Agreement exceed the number set forth
in Section 1 or the number of shares of Common Stock available for issuance
under the currently effective Registration Statement.
If either party has reason to believe that the exemptive provisions set
forth in Rule 101(c)(1) of Regulation M under the Exchange Act are not satisfied
with respect to the Company or the Shares, it shall promptly notify the other
party and sales of Shares under this Agreement shall be suspended until that or
other exemptive provisions have been satisfied in the judgment of each party.
The Agent shall calculate on a weekly basis the average daily trading volume (as
defined by Rule 100 of Regulation M under the Exchange Act) of the Common Stock.
The Agent hereby covenants and agrees not to make any sales of Shares
on behalf of the Company other than by means of ordinary brokers' transactions
between members of the NYSE that qualify for delivery of a Prospectus to the
NYSE in accordance with Rule 153 under the Securities Act.
The gross sales price of any Shares sold under this Agreement shall be
the market price for shares of the Company's Common Stock sold by the Agent
under this Agreement on the NYSE at the time of such sale. The compensation
payable to the Agent for sales of Shares shall be equal to 3.00% of the gross
sales price of the Shares sold pursuant to this Agreement. The remaining
proceeds, after further deduction for any transaction fees imposed by any
governmental, regulatory or self-regulatory organization in respect of such
sales, shall constitute the net proceeds to the Company for such Shares (the
"Net Proceeds").
The Agent shall provide written confirmation to the Company following
the close of trading on the NYSE each day in which Shares are sold under this
Agreement setting forth the amount of Shares sold on such day, the Net Proceeds
to the Company and the compensation payable by the Company to the Agent with
respect to such sales.
Settlement for sales of Shares will occur on the third business day
following the date on which such sales are made, unless another date shall be
agreed to by the Company and the Agent (each such day, a "Settlement Date"). On
each Settlement Date, the Shares sold through the Agent for settlement on such
date shall be delivered by the Company to the Agent against payment of the Net
Proceeds from the sale of such Shares. Settlement for all Shares shall be
effected by free delivery of Shares to the Agent's account at The Depository
Trust Company in return for payments by the Agent of the Net Proceeds from the
sale of such Shares in same day funds delivered to an account designated by the
Company. If the Company shall default on its obligation to deliver Shares on any
Settlement Date, the Company shall (i) hold the Agent harmless against any loss,
claim or damage arising from or as a result of such default by the
10
Company and (ii) pay the Agent any commission to which it would otherwise be
entitled absent such default. If the Agent breaches this Agreement by failing to
deliver the applicable Net Proceeds on any Settlement Date for Shares delivered
by the Company, the Agent will pay the Company interest based on the effective
overnight federal funds rate.
On each date of execution of any sale order (a "Trade Date") and each
Filing Date, the Company shall be deemed to have affirmed each representation,
warranty, covenant and other agreement contained in this Agreement. The Company
covenants and agrees with the Agent that on or prior to the second business day
after any date on which the Company shall file an annual report on Form 10-K or
quarterly report on Form 10-Q in respect of any quarter in which sales of Shares
were made by the Agent under this Agreement (each such date, a "Filing Date"),
the Company will (i) affirm in writing each representation, warranty, covenant
and other agreement contained in this Agreement, (ii) file a prospectus
supplement to the Prospectus included as part of the Registration Statement with
the Commission under the applicable paragraph of Rule 424(b) of the Securities
Act, which prospectus supplement will set forth, with regard to such quarter,
the number of Shares sold through the Agent under this Agreement, the Net
Proceeds received by the Company and the compensation paid by the Company to the
Agent with respect to sales of Shares pursuant to this Agreement and (iii)
deliver such number of copies of each such prospectus supplement to the NYSE as
are required by such exchange. Any obligation of the Agent to use its reasonable
efforts to sell the Shares on behalf of the Company shall be subject to the
continuing accuracy of the representations and warranties of the Company, and
the performance by the Company of its obligations, set forth in this Agreement
and to the continuing satisfaction of the additional conditions specified in
Sections 4 and 5 of this Agreement.
Section 4. Covenants of the Company. The Company hereby covenants and
agrees with the Agent that:
(a) During the period in which a Prospectus relating to the Shares is
required to be delivered under the Securities Act, the Company will notify the
Agent promptly of the time when any subsequent amendment to the Registration
Statement has become effective or any subsequent supplement to the Prospectus
has been filed. The Company will prepare and file with the Commission, promptly
upon the Agent's request, any amendments or supplements to the Registration
Statement or the Prospectus that, in the Agent's reasonable opinion, may be
necessary or advisable in connection with the offering of the Shares by the
Agent. The Company will not file any amendment or supplement to the Registration
Statement or the Prospectus, during the period in which a Prospectus relating to
the Shares is required to be delivered under the Securities Act, unless a copy
thereof has been submitted to the Agent a reasonable period of time before
filing with the Commission and the Agent has not reasonably objected thereto.
The Company will file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as
the delivery of a Prospectus is required in connection with the offering or sale
of the Shares and to advise the Agent of any such filing. During the period in
which a Prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company will furnish to the Agent at the time of filing
thereof, a copy of any document that upon filing is deemed to be incorporated by
reference in the Registration Statement or the Prospectus. During the period in
which a Prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company will cause each amendment or supplement to the
Prospectus to be filed with the Commission as required pursuant to the
applicable paragraph of Rule 424(b) of the Securities Act or, in the case of any
document to be incorporated therein by
11
reference, to be filed with the Commission as required pursuant to the Exchange
Act, within the prescribed time period.
(b) The Company will promptly advise the Agent of any request by the
Commission for any amendment or supplement to the Registration Statement or the
Prospectus or for additional information with respect thereto or of notice of
institution of proceedings for or the entry of a stop order suspending the
effectiveness of the Registration Statement by the Commission and, if the
Commission should enter a stop order suspending the effectiveness of the
Registration Statement, to use its best efforts to obtain the lifting or removal
of such order as soon as possible. The Company will promptly advise the Agent of
any proposal to amend or supplement the Registration Statement or Prospectus,
including by filing any documents that would be incorporated therein by
reference, and to file no such amendment or supplement to which the Agent shall
object in writing.
(c) The Company will make available to the Agent, as soon as
practicable after the Registration Statement becomes effective and thereafter
from time to time furnish to the Agent copies of the Prospectus (or 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 Agent may reasonably
request for the purposes contemplated by the Securities Act, which Prospectus
and any amendments or supplements thereto furnished to the Agent will be
materially identical to the version created to be transmitted to the Commission
for filing via EDGAR, except to the extent permitted by Regulation S-T. For so
long as this Agreement is in effect, the Company will prepare and file promptly
such amendments or supplements to the Registration Statement and the Prospectus
as may be necessary to comply with the requirements of Section 10(a)(3) of the
Securities Act.
(d) The Company will promptly notify the Agent to suspend the offering
of Shares upon the happening of any event known to the Company within the time
during which a Prospectus relating to the Shares is required to be delivered
under the Securities Act which, in the reasonable judgment of the Company, would
require the making of any change in the Prospectus then being used, or in the
information incorporated by reference therein, so that the Prospectus would not
include an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and,
during such time period, to prepare and furnish, at the Company's expense, to
the Agent promptly such amendments or supplements to such Prospectus as may be
necessary to reflect any such change and to furnish the Agent with a copy of
such proposed amendment or supplement before filing any such amendment or
supplement with the Commission and thereafter promptly to furnish, at the
Company's expense, to the Agent, copies in such quantities and at such locations
as the Agent 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 (i) will reflect such change, (ii)
will not, in the light of the circumstances when it is so delivered, be
misleading and (iii) will comply with applicable securities laws.
(e) The Company will furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such jurisdictions as the Agent may designate and
to maintain such qualifications in effect so long as required for the
distribution of the Shares; provided that the Company shall not be required to
qualify as a foreign corporation or to consent to the service of process under
the laws of any such
12
jurisdiction (except service of process with respect to the offering and sale of
the Shares). The Company will promptly advise the Agent of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose.
(f) The Company will furnish to the Agent for a period of three years
from the date of final Filing Date (i) copies of any reports or other
communications which the Company shall send directly to its stockholders or
shall from time to time publish or publicly disseminate, (ii) copies of all
annual, quarterly and current reports filed with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar form as may be designated by the Commission,
(iii) copies of any financial statements or reports filed with any national
securities exchange on which any class of securities of the Company is listed,
and (iv) such other information as the Agent may reasonably request regarding
the Company, in each case as soon as such reports, communications, documents or
information becomes available.
(g) The Company will make generally available to its stockholders as
soon as practicable, and in the manner contemplated by Rule 158 of the
Securities Act but in any event not later than 15 months after the end of the
Company's current fiscal quarter, an earnings statement (which need not be
audited) covering a 12-month period beginning after the date upon which the
Prospectus Supplement is filed pursuant to Rule 424(b) under the Securities Act
that shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder and will advise the Agent in writing when such statement has
been made available.
(h) Whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, the Company will pay all of its
costs, expenses, fees and taxes incident to the performance of its obligations
hereunder, including, but not limited to, such costs, expenses, fees and taxes
in connection with (i) the preparation and filing of the Registration Statement,
the Prospectus, each prospectus supplement filed by the Company in connection
with the offering and sale of Shares by the Agent under this Agreement and any
amendments or supplements thereto and the printing and furnishing of copies of
each thereof to the Agent (including costs of mailing and shipment), (ii) the
registration, issue, sale and delivery of the Shares, (iii) the producing, word
processing and/or printing of this Agreement, any power of attorney and any
closing documents (including compilations thereof) and the reproduction and/or
printing and furnishing of copies of each thereof to the Agent (including costs
of mailing and shipment), (iv) the qualification of the Shares for offering and
sale under state laws and the determination of their eligibility for investment
under state law as aforesaid (including the reasonable legal fees and filing
fees and other disbursements of counsel for the Agent) and the printing and
furnishing of copies of any blue sky surveys to the Agent, (v) the listing of
the Shares on the NYSE and any registration thereof under the Exchange Act, (vi)
any filing for review of the public offering of the Shares by the NASD, (vii)
the reasonable fees and disbursements of the Company's counsel and accountants,
and (viii) the performance of the Company's other obligations hereunder. The
Agent will pay its own out-of-pocket costs and expenses incurred in connection
with entering into this Agreement and the transactions contemplated by this
Agreement, including, without limitation, travel, reproduction, printing and
similar expenses as well as the fees and disbursements of its legal counsel.
(i) The Company will apply the net proceeds from the sale of the Shares
in the manner set forth in the Prospectus.
13
(j) The Company will not sell, offer or agree to sell, contract to
sell, pledge, register, grant any option to purchase or otherwise dispose of,
directly or indirectly, any shares of capital stock or securities convertible
into or exchangeable, exercisable or redeemable for capital stock or warrants or
other rights to purchase capital stock, except (i) for the registration of the
Shares and the sales of Shares through the Agent pursuant to this Agreement,
(ii) for sales of shares through the DRSPP, (iii) for options granted pursuant
to employee benefit plans and for shares of Common Stock issuable upon the
exercise of such outstanding options during the period from the date of this
Agreement through the final Filing Date for the sale of Shares hereunder and
(iv) the grant of awards pursuant to the Company's Long-Term Stock Incentive
Plan, without (a) giving the Agent at least three business days' prior written
notice specifying the nature of the proposed sale and the date of such proposed
sale and (b) the Agent suspending activity under this program for such period of
time as requested by the Company.
(k) At any time during the term of this Agreement, as supplemented from
time to time, the Company will advise the Agent immediately after it shall have
received notice or obtain knowledge thereof, of any information or fact that
would alter or affect any opinion, certificate, letter or other document
provided to the Agent pursuant to Section 5 of this Agreement.
(l) Upon commencement of the offering of Shares under this Agreement,
and each time that (i) the Registration Statement or the Prospectus shall be
amended or supplemented (other than a prospectus supplement to the Prospectus
included as part of the Registration Statement filed pursuant to Rule 424(b)
under the Securities Act that contains solely the information set forth in the
final paragraph of Section 3 of this Agreement or relating solely to the
offering of securities other than the Shares), (ii) there is filed with the
Commission any document incorporated by reference into the Prospectus (other
than a current report on Form 8-K, unless the Agent shall otherwise reasonably
request) or (iii) as otherwise may be required in Section 5(e) hereof, the
Company will furnish or cause to be furnished forthwith to the Agent a
certificate dated the date of effectiveness of such amendment or the date of
filing with the Commission of such supplement or other document, as the case may
be, in a form satisfactory to the Agent to the effect that the statements
contained in the certificate referred to in Section 5(e) of this Agreement which
were last furnished to the Agent are true and correct at the time of such
amendment, supplement or filing, as the case may be, as though made at and as of
such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in said Section 5(e), but modified as necessary to
relate to the Registration Statement and the Prospectus as amended and
supplemented, or to the document incorporated by reference into the Prospectus,
to the time of delivery of such certificate.
In addition, upon commencement of the offering of Shares under this Agreement,
the Company will furnish or cause to be furnished promptly to the Agent a
certificate of two of its executive officers in a form satisfactory to the Agent
stating the minimum price designated from time to time by the Company's board of
directors for the sale of Shares pursuant to this Agreement or, in connection
with any amendment, revision or modification of such minimum price, a new
certificate with respect thereto.
(m) Upon commencement of the offering of Shares under this Agreement,
and each time that (i) the Registration Statement or the Prospectus shall be
amended or supplemented (other than a prospectus supplement to the Prospectus
included as part of the Registration Statement filed pursuant to Rule 424(b)
under the Securities Act that contains solely the
14
information set forth in the final paragraph of Section 3 of this Agreement or
relating solely to the offering of securities other than the Shares) or (ii)
there is filed with the Commission any document incorporated by reference into
the Prospectus (other than a current report on Form 8-K, unless the Agent shall
otherwise reasonably request), the Company will furnish or cause to be furnished
forthwith to the Agent and to counsel to the Agent a written opinion of McKee
Nelson LLP, counsel to the Company ("Company Counsel"), or other counsel
satisfactory to the Agent, dated the date of effectiveness of such amendment or
the date of filing with the Commission of such supplement or other document, as
the case may be, in form and substance satisfactory to the Agent and its
counsel, of the same tenor as the opinions referred to in Section 5(c) of this
Agreement, but modified as necessary to relate to the Registration Statement and
the Prospectus as amended and supplemented, or to the document incorporated by
reference into the Prospectus, to the time of delivery of such opinion;
(n) Upon commencement of the offering of Shares under this Agreement,
and each time that (i) the Registration Statement or the Prospectus shall be
amended or supplemented to include additional amended financial information or
(ii) there is filed with the Commission any document incorporated by reference
into the Prospectus which contains additional amended financial information
(other than a current report on Form 8-K, unless the Agent shall otherwise
reasonably request), the Company will cause the Accountants, or other
independent accountants satisfactory to the Agent, to furnish within 5 business
days thereafter to the Agent a letter, dated the date of effectiveness of such
amendment or the date of filing of such supplement or other document with the
Commission, as the case may be, in form satisfactory to the Agent and its
counsel, of the same tenor as the letter referred to in Section 5(d) hereof, but
modified as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented, or to the document incorporated by
reference into the Prospectus, to the date of such letter.
(o) The Company consents to the Agent trading in the Company's Common
Stock for the Agent's own account and for the account of its clients at the same
time as sales of Shares occur pursuant to this Agreement.
(p) For three years from the date of this Agreement, the Company will
furnish to its stockholders within 120 days after the end of each fiscal year,
for so long as the Company shall not be required to file annual and periodic
reports with the Commission under the Exchange Act, audited financial statements
(including a balance sheet and statements of income, stockholders' equity and of
cash flow of the Company for such fiscal year), accompanied by a copy of the
certificate or report thereon of nationally recognized independent certified
public accountants.
(q) If to the knowledge of the Company, any condition set forth in
Section 5(a) or 5(f) hereof shall not have been satisfied on the applicable
Settlement Date, the Company will offer to any person who has agreed to purchase
Shares from the Company as the result of an offer to purchase solicited by the
Agent the right to refuse to purchase and pay for such Shares.
(r) The Company will disclose in its annual reports on Form 10-K and
quarterly reports on Form 10-Q, as applicable, the number of Shares sold through
the Agent under this Agreement, the Net Proceeds to the Company and the
compensation paid by the Company with respect to sales of Shares pursuant to
this Agreement during the relevant quarter.
15
(s) The Company will use its best efforts to cause the Shares to be
listed on the NYSE and to maintain such listing and to file with the NYSE all
documents and notices required by the New York Stock Exchange of companies that
have securities that are listed on the NYSE.
(t) The Company will engage and maintain, at its expense, a registrar
and transfer agent for the Shares.
(u) The Company will not (i) take, directly or indirectly, 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 any Person (other than as
contemplated by the provisions of this Agreement) 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 other than as contemplated by the provisions of this Agreement.
(v) 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.
(w) The Company will comply with all of the provisions of any
undertakings in the Registration Statement.
(x) The Company has been organized and operated in conformity with the
requirements for qualification and taxation of the Company as a REIT under the
Code, and the Company's proposed methods of operation will enable the Company to
continue to meet the requirements for qualification and taxation as a REIT under
the Code for subsequent taxable years.
(y) The Company will not be or become, at any time prior to the
expiration of three years after the final Filing Date under this Agreement, an
"investment company," as such term is defined in the Investment Company Act.
(z) The Company has retained the Accountants as its qualified
accountants and qualified tax experts (i) to test procedures and conduct annual
compliance reviews designed to determine compliance with the REIT provisions of
the Code and the Company's exempt status under the Investment Company Act and
(ii) to otherwise assist the Company in monitoring appropriate accounting
systems and procedures designed to determine compliance with the REIT provisions
of the Code and the Company's exempt status under the Investment Company Act.
Section 5. Conditions of Agent's Obligations. The obligations of the
Agent hereunder are subject to (i) the accuracy of the representations and
warranties on the part of the Company on the date hereof, any applicable date
referred to in Section 4(l) and as of each Settlement Date, (ii) the performance
by the Company of its obligations hereunder and (iii) the following additional
conditions precedent:
16
(a) (i) No stop order with respect to the effectiveness of any one of
the Registration Statement shall have been issued under the Securities Act or
proceedings initiated under Section 8(d) or 8(e) of the Securities Act and no
order directed at any document incorporated by reference therein and no order
preventing or suspending the use of the Prospectus has been issued by the
Commission, and no suspension of the qualification of the Shares for offering or
sale in any jurisdiction, or to the knowledge of the Company or the Agent of the
initiation or threatening of any proceedings for any of such purposes, has
occurred; (ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) the
Prospectus and all amendments or supplements thereto, or modifications thereof,
if any, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
(b) No material and unfavorable change, financial or otherwise (other
than as referred to in the Registration Statement and Prospectus), in the
business, condition, net worth or prospects of the Company shall occur or become
known and no transaction which is material and unfavorable to the Company shall
have been entered into by the Company.
(c) The Company shall furnish or cause to be furnished to the Agent, on
every date specified in Section 4(m) hereof, an opinion of Company Counsel,
addressed to the Agent, and dated as of such date, and in form satisfactory to
the Agent and its counsel, substantially in the form of Exhibit A attached
hereto.
(d) At the dates specified in Section 4(n) hereof, the Agent shall have
received from the Accountants letters dated the date of delivery thereof and
addressed to the Agent in form and substance satisfactory to the Agent and its
counsel.
(e) The Company will deliver to the Agent a certificate, prior to the
next business day following each Filing Date (each, a "Certificate Date"), of
two of its executive officers to the effect that (i) the representations and
warranties of the Company as set forth in this Agreement are true and correct as
of the Certificate Date, (ii) the Company has performed or shall perform such of
its obligations under this Agreement as are to be performed at or before each
such Certificate Date, and (iii) the conditions set forth in paragraphs (a) and
(b) of this Section 5 have been met.
In addition, on each Certificate Date, the certificate shall also state
that the Shares sold during the period to which the certificate relates have
been duly and validly authorized by the Company and that all corporate action
required to be taken for the authorization, issuance and sale of the Shares on
that date has been validly and sufficiently taken.
(f) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Settlement Date shall have been made
within the applicable time period prescribed for such filing by Rule 424.
(g) The Shares shall have been approved for listing on the NYSE,
subject only to notice of issuance at or prior to the Settlement Date.
17
(h) The Company shall have furnished to the Agent such other documents
and certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the Settlement Date as the Agent
may reasonably request.
(i) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the terms and arrangements under this Agreement.
(j) No amendment or supplement to the Registration Statement or
Prospectus, including documents deemed to be incorporated by reference therein,
shall be filed to which the Agent objects in writing.
(k) Between the time of execution of this Agreement and the time of
sale of Shares through the Agent, as the case may be, there shall not have
occurred any downgrading, nor shall any notice or announcement have been given
or made of (i) any intended or potential downgrading or (ii) any review or
possible change that does not indicate an improvement, in the rating accorded
any securities of or guaranteed by the Company by any "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
under the Securities Act.
Section 6. Indemnification and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless the
Agent, its partners, directors and officers, and any Person who controls the
Agent within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the foregoing Persons
from and against any loss, damage, expense, liability or claim (including, but
not limited to, the reasonable cost of investigation) which, jointly and
severally, the Agent or any such Person may incur under the Securities Act, the
Exchange Act, federal or state statutory law or regulation, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim arises out
of or is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the Company) or
in a Prospectus, or in any documents filed under the Exchange Act and deemed to
be incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission, (ii) any omission or alleged omission to state in any such
document a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading or (iii) any act or failure to act or any alleged act or
failure to act by the Agent in connection with, or relating in any manner to,
the Shares or the sale of Shares contemplated hereby, and which is included as
part of or referred to in any loss, damage, expense, liability, claim or action
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable under this clause (iii) to the
extent it is finally judicially determined by a court of competent jurisdiction
that such loss, damage, expense, liability, claim or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by the
Agent through its gross negligence or willful misconduct), except insofar as any
such loss, damage, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
and in conformity with information furnished in writing by or on behalf of the
Agent to the Company expressly for use with reference to the Agent in such
Registration Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material
18
fact in connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such information
not misleading.
If any action, suit or proceeding (together, a "Proceeding") is brought
against the Agent or any such Person in respect of which indemnity may be sought
against the Company pursuant to the foregoing paragraph, the Agent or such
Person shall promptly notify the Company in writing of the institution of such
Proceeding and the Company shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission
to so notify the Company shall not relieve the Company from any liability which
the Company may have to the Agent or any such Person or otherwise. The Agent or
such 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 the
Agent or such Person unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such
Proceeding or the Company shall not have, within a reasonable period of time in
light of the circumstances, employed counsel to have charge of the defense of
such Proceeding or such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from, additional to or in conflict with those available to the Company (in which
case the Company shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties), in any of which
events such fees and expenses shall be borne by the Company and paid as incurred
(it being understood, however, that the Company shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). The
Company shall not be liable for any settlement of any Proceeding effected
without its written consent but if settled with the written consent of the
Company, the Company agrees to indemnify and hold harmless the Agent and any
such person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested the Company to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the second sentence of this paragraph,
then the Company agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by the Company of the
aforesaid request, (ii) the Company shall not have reimbursed the indemnified
party in accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at least 30
days' prior notice of its intention to settle. The Company shall not, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
may be a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such Proceeding and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(b) The Agent agrees to indemnify, defend and hold harmless the
Company, any Person who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act and each director of the
Company and each officer of the Company who signed the Registration Statement
from and against any loss, damage, expense, liability or claim (including, but
not limited to, the reasonable cost of investigation) which, jointly or
severally, the Company or any such Person may incur under the Securities Act,
the Exchange Act, federal or state statutory law or regulation, the common law
or otherwise, insofar as such
19
loss, damage, expense, liability or claim arises out of or is based upon any (i)
untrue statement or alleged untrue statement of a material fact contained in,
and in conformity with information furnished in writing by or on behalf of the
Agent to the Company expressly for use with reference to the Agent in, the
Registration Statement (or in the Registration Statement as amended by or on
behalf of any post-effective amendment thereof by the Company) or in a
Prospectus, or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission or (ii) omission or alleged omission to state in any such
document a material fact in connection with such written information required to
be stated therein or necessary to make the statement therein, in the light of
the circumstances under which they were made, not misleading.
If any Proceeding is brought against the Company or any such Person in
respect of which indemnity may be sought against the Agent pursuant to the
foregoing paragraph, the Company or such Person shall promptly notify the Agent
in writing of the institution of such Proceeding and the Agent shall assume the
defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses;
provided, however, that the omission to so notify the Agent shall not relieve
the Agent from any liability which the Agent may have to the Company or any such
Person or otherwise. The Company or such Person shall have the right to employ
its own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of the Company or such Person unless the employment of
such counsel shall have been authorized in writing by the Agent in connection
with the defense of such Proceeding or the Agent shall not have employed counsel
to have charge of the defense of such Proceeding or such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to or in conflict with those
available to the Agent (in which case the Agent shall not have the right to
direct the defense of such Proceeding on behalf of the indemnified party or
parties, but the Agent may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of the Agent),
in any of which events such fees and expenses shall be borne by the Agent and
paid as incurred (it being understood, however, that the Agent shall not be
liable for the expenses of more than one separate counsel (in addition to any
local counsel) in any one Proceeding or series of related Proceedings in the
same jurisdiction representing the indemnified parties who are parties to such
Proceeding). The Agent shall not be liable for any settlement of any such
Proceeding effected without the written consent of the Agent, but if settled
with the written consent of the Agent, the Agent agrees to indemnify and hold
harmless the Company and any such Person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested the Agent to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the Agent agrees that it shall be liable for
any settlement of any Proceeding effected without its written consent if (i)
such settlement is entered into more than 60 business days after receipt by the
Agent of the aforesaid request, (ii) the Agent shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the Agent at least
30 days' prior notice of its intention to settle. The Agent shall not, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an
20
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under subsections (a) and/or (b) of this
Section 6 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then in order to provide just and equitable contribution in
such circumstance, each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses, liabilities or
claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Agent on the other hand from the
offering of the Shares or (ii) if, but only if, the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Agent on the other in connection with the statements or omissions which resulted
in such losses, damages, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Agent on the other shall be deemed to be in the same
respective proportion as the total net proceeds from the offering (net of
commissions but before deducting expenses) received by the Company and the total
compensation (before deducting expenses) received by the Agent from the sale of
Shares on behalf of the Company. The relative fault of the Company on the one
hand and of the Agent on the other shall be determined by reference to, among
other things, whether the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission relates to information supplied by
the Company or by the Agent and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, damages,
expenses, liabilities and claims referred to in this subsection shall be deemed
to include any legal or other fees or expenses reasonably incurred by such party
in connection with investigating, preparing to defend or defending any claim or
Proceeding.
(d) The Company and the Agent agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 6, the Agent shall not be liable
or responsible for, or be required to contribute, any amount pursuant to this
Section 6 in excess of the amount of the commissions applicable to the Shares
sold by the Agent. 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.
(e) The indemnity and contribution agreements contained in this Section
6 and the covenants, warranties, representations and agreements of the Company
contained in this Agreement or in any certificates delivered pursuant to this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the Agent, its directors and officers or any Person
(including each partner, officer or director of such Person) who controls the
Agent within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, or by or on behalf of the Company, its directors or officers
or any Person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the issuance and delivery of the Shares. The
Company and the Agent agree promptly to notify each other upon the
21
commencement of any Proceeding against it and, in the case of the Company,
against any of the Company's officers or directors in connection with the
issuance and sale of the Shares, or in connection with the Registration
Statement or Prospectus.
Section 7. Termination.
(a) The Company shall have the right, by giving written notice as
hereinafter specified, to terminate this Agreement in its sole discretion at any
time. Any such termination shall be without liability of any party to any other
party except that (i) if Shares have been sold through the Agent for the
Company, then Sections 4(g) and (p) shall remain in full force and effect
notwithstanding such termination, (ii) with respect to any pending sale through
the Agent for the Company, the obligations of the Company, including in respect
of compensation of the Agent, shall remain in full force and effect
notwithstanding such termination and (iii) the provisions of Section 4(h) and
Section 6 of this Agreement shall remain in full force and effect
notwithstanding such termination.
(b) The Agent shall have the right, by giving written notice as
hereinafter specified, to terminate this Agreement in its sole discretion at any
time. Any such termination shall be without liability of any party to any other
party except that the provisions of Section 4(h) and Section 6 of this Agreement
shall remain in full force and effect notwithstanding such termination.
(c) This Agreement shall remain in full force and effect unless
terminated pursuant to Section 7(a) or (b) above or otherwise by mutual
agreement of the parties; provided that any such termination by mutual agreement
shall in all cases be deemed to provide that Section 4(h) and Section 6 of this
Agreement shall remain in full force and effect.
(d) Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by the Agent or the Company, as the case may be. If such termination
shall occur prior to the Settlement Date for any sale of Shares, such sale shall
settle in accordance with the provisions of the second to last paragraph of
Section 3 hereof.
Section 8. Notices. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing and delivered
by hand, overnight courier, mail or facsimile and, if to the Agent, shall be
sufficient in all respects if delivered or sent to UBS Warburg LLC, 299 Park
Avenue, New York, NY 10171-0026, Attention: Syndicate Department, Fax No. (212)
821-6186, with a copy for information purposes to UBS Warburg LLC, 677
Washington Blvd., Stamford, CT 06901, Attention: Legal and Compliance
Department, Fax No. (203) 719-0680; if to the Company, it shall be sufficient in
all respects if delivered or sent to the Company at the offices of the Company
at 1211 Avenue of the Americas, Suite 2902, New York, New York 10036, Attention:
Michael A.J. Farrell, Fax No. (212) 696-9809. Each party to this Agreement may
change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose.
Section 9. Parties. The Agreement herein set forth has been and is made
solely for the benefit of the Agent and the Company and to the extent provided
in Section 6 hereof the controlling persons, directors and officers referred to
in such section, and their respective successors, assigns, heirs, personal
representatives and executors and administrators. No other
22
person, partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Agent) shall acquire or have any right under or by
virtue of this Agreement.
Section 10. Adjustments for Stock Splits. The parties acknowledge and
agree that all share related numbers contained in this Agreement shall be
adjusted to take into account any stock split effected with respect to the
Shares.
Section 11. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all other prior and contemporaneous agreements and
undertakings, both written and oral, among the parties hereto with regard to the
subject matter hereof.
Section 12. Counterparts. This Agreement may be signed by the parties
in one or more counterparts which together shall constitute one and the same
agreement among the parties.
Section 13. Governing Law. This Agreement and any claim, counterclaim
or dispute of any kind or nature whatsoever arising out of or in any way
relating to this Agreement ("Claim"), directly or indirectly, shall be governed
by, and construed in accordance with, the internal laws of the State of New York
applicable to contracts entered into and to be performed within such state
without regard to conflicts of law principles.
Section 14. Headings. The Section headings in this Agreement have been
inserted as a matter of convenience of reference and are not a part of this
Agreement.
Section 15. Submission to Jurisdiction. Except as set forth below, no
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and the
Company consents to the non exclusive jurisdiction of such courts and personal
service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any Claim arising out of
or in any way relating to this Agreement is brought by any third party against
the Agent or any indemnified party. Each of the Agent and the Company (in the
case of the Company on its behalf and, to the extent permitted by applicable
law, on behalf of its stockholders and affiliates) waives all right to trial by
jury in any action, proceeding or counterclaim (whether based upon contracts,
tort or otherwise) in any way arising out of or relating to this Agreement. The
Company agrees that a final, non-appealable judgment in any such action,
proceeding or counterclaim brought in any such court shall be conclusive and
binding upon the Company and may be enforced in any other courts in the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
Section 16. Successors and Assigns. This Agreement shall be binding
upon the Agent and the Company and their successors and assigns and any
successor or assign of any substantial portion of the Company's and any of the
Agent's respective businesses and/or assets.
Section 17. Miscellaneous. The Agent, an indirect, wholly owned
subsidiary of UBS AG, is not a bank and is separate from any affiliated bank,
including any U.S. branch or agency of UBS AG. Because the Agent is a separately
incorporated entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales and
purchases of securities. Securities sold, offered or recommended by the Agent
are not deposits,
23
are not insured by the Federal Deposit Insurance Corporation, are not guaranteed
by a branch or agency, and are not otherwise an obligation or responsibility of
a branch or agency.
A lending affiliate of the Agent may have lending relationships with
issuers of securities underwritten or privately placed by the Agent. To the
extent required under the securities laws, prospectuses and other disclosure
documents for securities underwritten or privately placed by the Agent will
disclose the existence of any such lending relationships and whether the
proceeds of the issue will be used to repay debts owed to affiliates of the
Agent.
24
If the foregoing correctly sets forth the understanding between the
Company and the Agent, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company and the Agent. Alternatively, the execution of this Agreement by the
Company and its acceptance by or on behalf of the Agent may be evidenced by an
exchange of telegraphic or other written communications.
Very truly yours,
ANNALY MORTGAGE MANAGEMENT, INC.
By:
-----------------------------------------
Name:
Title:
ACCEPTED as of the date
first above written
UBS WARBURG LLC
By:
-----------------------------------------
Name:
Title:
UBS WARBURG LLC
By:
-----------------------------------------
Name:
Title:
25
EXHIBIT A
(i) The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Maryland. The Company is duly
qualified or registered as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification or registration
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or register or be in
good standing would not have a Material Adverse Effect.
(ii) The Company has the corporate power and authority to own, lease
and operate its properties and conduct its business as described in the
Prospectus and to enter into and perform its obligations under or as
contemplated by the Sales Agency Agreement.
(iii) The Sales Agency Agreement has been duly authorized, executed,
and delivered by the Company.
(iv) The Shares have been duly authorized by the Company for sale
through the Agent pursuant to the Sales Agency Agreement and, when issued and
delivered by the Company pursuant to the Sales Agency Agreement against payment
of the consideration set forth therein, will be validly issued, fully paid and
non-assessable and no holder of the Shares is or will be subject to personal
liability, under the General Corporation Law of the State of Maryland (the
"MGCL") or the charter or bylaws of the Company, by reason of being a holder.
(v) The Company has the authorized capitalization described in the
Prospectus. All issued and outstanding shares of capital stock of the Company
are validly issued, fully paid, and non-assessable, and conform in all material
respects with the description thereof contained in the Prospectus. The Shares
when issued and outstanding will conform in all material respects with the
description thereof contained in the Prospectus.
(vi) The issuance of the Shares is not subject to preemptive or other
similar rights of any stockholder of the Company arising by operation of the
MGCL or under the charter or bylaws of the Company or, to the knowledge of such
counsel, any contractual preemptive rights, resale rights, rights of first
refusal or similar rights. Except as disclosed in the Registration Statement and
the Prospectus, there is no outstanding option, warrant or other right calling
for the issuance of, and, to the knowledge of such counsel, no commitment, plan
or arrangement to issue, any shares of capital stock of the Company or any
security convertible into, exercisable for, or exchangeable for shares of
capital stock of the Company. No holder of any security of the Company has the
right to have any security owned by such holder included for registration in the
Registration Statement.
(vii) The form of the certificate used to evidence the common stock of
the Company complies in all material respects with all applicable requirements
of the MGCL and with the applicable requirements of the charter and bylaws of
the Company and complies with all the applicable requirements of the NYSE.
26
(viii) The information in the Prospectus under the caption "Description
of Stock," to the extent that it constitutes a summary of legal matters under
the MGCL or of provisions of the Company's charter or bylaws, has been reviewed
by us and is correct in all material respects.
(ix) The Registration Statement and the Prospectus (including any
documents incorporated by reference into the Registration Statement and the
Prospectus), as of their respective effective dates or filing dates, as the case
may be, each complied, and as of the date hereof each comply, as to form in all
material respects to the applicable requirements of the Securities Act or
Exchange Act, as applicable (in each case other than (A) the financial
statements and supporting schedules and other financial or statistical data
included or incorporated by reference therein or omitted therefrom as to which
such counsel expresses no opinion and (B) except as expressed in such counsel's
opinion in paragraph (x) below, the documents incorporated therein).
(x) The Registration Statement has been declared effective under the
Securities Act; the Prospectus has been filed pursuant to Rule 424(b) of the
Securities Act in the manner and within the time period required by Rule 424(b);
and, to such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
(xi) To such counsel's knowledge, no consent, approval, authorization,
or other order of any federal regulatory body, federal administrative agency or
other federal governmental body of the United States of America or any state
regulatory body, state administrative agency or other state governmental body of
the State of Maryland is required under Applicable Laws for the issuance and
sale of the Shares through the Agent as contemplated by the Sales Agency
Agreement or the public offering of the Shares as contemplated by the
Prospectus.
(xii) The sale of the Shares through the Agent as contemplated by the
Sales Agency Agreement and consummation of the transactions contemplated thereby
do not and will not conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under (A) any indenture,
mortgage, deed of trust, lease, repurchase agreement or other agreement to which
the Company is a party or is bound, except for such violations, conflicts,
breaches, defaults, liens, charges, or encumbrances that would not result in a
Material Adverse Effect, (B) the charter or bylaws of the Company, (C)
Applicable Laws, (D) the Investment Company Act or (E) any judgment, decree,
order, rule, or regulation, known to such counsel, of any court, other
governmental authority, or arbitrator having jurisdiction over the Company,
except for such violations, conflicts, breaches, defaults, liens, charges, or
encumbrances that would not result in a Material Adverse Effect.
(xiii) The Company is not in violation of its charter or bylaws and, to
such counsel's knowledge, no default by the Company exists in the due
performance or observance of any material obligation, agreement, covenant, or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease, repurchase agreement, other agreement, or instrument that is described or
referred to in the Registration Statement or the Prospectus or filed or
incorporated by reference as an exhibit to the Registration Statement, except,
in each case above, for such violations, conflicts,
27
breaches, defaults, liens, charges, or encumbrances that would not result in a
Material Adverse Effect.
(xiv) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened which are required to be disclosed in the
Registration Statement or Prospectus but are not so disclosed.
(xv) The Company is not, and the transactions contemplated by the Sales
Agency Agreement will not cause the Company to become an "investment company" or
an entity "controlled" by an "investment company" under the Investment Company
Act.
(xvi) For all taxable years commencing with the taxable year ended
December 31, 1997, the Company has been, and upon the sale of 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
Section 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company's proposed method of operation 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 disclosure contained
in the Prospectus under the caption "Federal Income Tax Considerations," to the
extent such information constitutes a summary of the United States federal
income tax laws referred to therein, is accurate in all material respects and
fairly summarizes the federal income tax laws referred to therein.
(xvii) The Company's Common Stock is an "actively-traded security"
excepted from the requirements of Rule 101 of Regulation M under the Exchange
Act by subsection (c)(1) of such rule.
(xviii) The Shares have been duly authorized for listing by the NYSE,
subject to official notice of issuance.
We have participated in conferences with officers and other representatives of
the Company, representatives of the independent public accountants of the
Company and representatives of the Agent at which the contents of the
Registration Statement and Prospectus were discussed and, although we are not
passing upon and do not assume responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or Prospectus
(except as and to the extent stated in opinions number six and eight above), on
the basis of the foregoing nothing has come to our attention that causes us to
believe that the Registration Statement or any amendment thereto at the time
such Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus or any supplement thereto at the date of such Prospectus or
such supplement, and at all times up to and including the time of purchase or
additional time of purchase, as the case may be, 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 (it being understood
that we express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Registration
Statement or Prospectus).
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