EXECUTION COPY
ANNALY MORTGAGE MANAGEMENT, INC.
8,200,000 Shares
Common Stock
($0.01 Par Value)
UNDERWRITING AGREEMENT
April 1, 2003
UNDERWRITING AGREEMENT
April 1, 2003
UBS WARBURG LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
U.S. BANCORP PIPER JAFFRAY, INC.
as representatives of the several underwriters,
c/o UBS Warburg LLC
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
Annaly Mortgage Management, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule A annexed
hereto (the "Underwriters"), for whom UBS Warburg LLC ("UBS Warburg"), Merrill
Lynch, Pierce, Fenner & Smith Incorporated and U.S. Bancorp Piper Jaffray, Inc.
are acting as representatives, an aggregate of 8,200,000 shares (the "Firm
Shares") of common stock, $0.01 par value (the "Common Stock"), of the Company.
In addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 1,100,700 shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares." The Shares are described in the Prospectus which is
referred to below.
The Company has filed, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively,
the "Securities Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-74618), as
amended, including a base prospectus, with respect to the Shares, and 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"). The Company has prepared a prospectus supplement (the "Prospectus
Supplement") to the base prospectus included as part of such registration
statement setting forth the terms of the offering, sale and plan of distribution
of the Shares and additional information concerning the Company and its
business. The Company has furnished to UBS Warburg, for use by the Underwriters
and by dealers, copies of one or more preliminary prospectuses, containing the
base prospectus included as part of such registration statement, as supplemented
by a preliminary Prospectus Supplement, and including the documents incorporated
in such base prospectus by reference (each, a "Preliminary Prospectus"),
relating to the Shares. Except where the context otherwise requires, such
registration statement, as amended when it became effective, including all
documents filed as part thereof or incorporated by reference therein, and
including any information contained in a Prospectus (as defined below)
subsequently filed with the Commission pursuant to Rule 424(b) under the
Securities Act and also including any other registration statement filed
pursuant to Rule 462(b) under the Securities Act, collectively, are herein
called the "Registration Statement," and the base prospectus, including all
documents incorporated therein by reference, included in the Registration
Statement, as supplemented by the Prospectus Supplement, in the
form filed by the Company with the Commission pursuant to Rule 424(b) under the
Securities Act on or before the second Business Day (as defined below) following
the date of this Underwriting Agreement (the "Agreement") (or on such other day
as the parties may mutually agree), is herein called the "Prospectus." Any
reference herein to the Registration Statement, the Prospectus, any Preliminary
Prospectus or any amendment or supplement thereto shall be deemed to refer to
and include the documents incorporated by reference therein, and any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Prospectus or any Preliminary Prospectus shall be
deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein. For
purposes of this Agreement, all references to the Registration Statement, the
Prospectus, any Preliminary Prospectus or to any amendment or supplement thereto
shall be deemed to include any copy filed with the Commission pursuant to its
Electronic Data Gathering Analysis and Retrieval System ("EDGAR"), and such copy
shall be identical in content to any Prospectus or Preliminary Prospectus
delivered to the Underwriters for use in connection with the offering of the
Shares.
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the warranties and representations
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell the Firm Shares to the several Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
respective number of Firm Shares (subject to such adjustment as UBS Warburg may
determine to avoid fractional shares) set forth opposite the name of such
Underwriter in Schedule A annexed hereto at a purchase price of $16.292 per
Share. The Company is advised by UBS Warburg that the Underwriters intend (i) to
make a public offering of the Shares as soon as the Underwriters deem advisable
after this Agreement has been executed and delivered and (ii) initially to offer
the Firm Shares upon the terms set forth in the Prospectus. The Underwriters may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as they may determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company ratably
in accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as UBS Warburg shall determine to avoid fractional
shares), all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by UBS Warburg on behalf of the
several Underwriters at any time (but not more than once) on or before the
thirtieth day following the date hereof, by written notice to the Company. Such
notice shall set forth the aggregate number of Additional Shares as to which the
option is being exercised and the date and time when the Additional Shares are
to be delivered (such date and time being herein referred to as the "additional
time of purchase"); provided, however, that the additional time of purchase
shall not be (i) earlier than the time of purchase (as defined below) or (ii)
later than the tenth Business Day after the date on which the option shall have
been exercised. The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same proportion to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule A hereto bears to the
aggregate number of Firm Shares (subject, in each case, to such adjustment as
UBS Warburg may determine to eliminate fractional shares). As used herein
"Business Day" shall mean a day on which the New York Stock Exchange (the
"NYSE") is open for trading and commercial banks in the City of New York are
open for business.
2. Payment and Delivery. Payment of the purchase price for the Firm Shares
shall be made to the Company by federal funds wire transfer against delivery of
the certificates for the Firm Shares to
2
UBS Warburg through the facilities of the Depository Trust Company ("DTC") for
the respective accounts of the Underwriters. Such payment and delivery shall be
made at 10:00 A.M., New York City time, on April 7, 2003 (unless another time
shall be agreed to by UBS Warburg and the Company or unless postponed in
accordance with the provisions of Section 8 hereof). The time at which such
payment and delivery are actually made is herein sometimes called the "time of
purchase." Certificates for the Firm Shares shall be delivered to UBS Warburg,
through the facilities of DTC, in definitive form in such names and in such
denominations as UBS Warburg shall specify no later than the second Business Day
preceding the time of purchase. For the purpose of expediting the checking of
the certificates for the Firm Shares by UBS Warburg, the Company agrees to make
such certificates available to UBS Warburg for such purpose at least one full
Business Day preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall be made at
the additional time of purchase in the same manner and at the same office as the
payment for the Firm Shares. Certificates for the Additional Shares shall be
delivered to UBS Warburg, through the facilities of DTC, in definitive form in
such names and in such denominations as UBS Warburg shall specify no later than
the second Business Day preceding the additional time of purchase. For the
purpose of expediting the checking of the certificates for the Additional Shares
by UBS Warburg, the Company agrees to make such certificates available to UBS
Warburg for such purpose at least one full Business Day preceding the additional
time of purchase.
3. Representations and Warranties of the Company. The Company represents
and warrants to each of the Underwriters that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement has been filed with the Commission
and have been declared effective under the Securities Act. The Company has not
received, and has no notice of, any order of the Commission preventing or
suspending the use of the Registration 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. The Prospectus Supplement has been or will be so prepared
and will be filed pursuant to Rule 424(b) of the Securities Act on or before the
second Business Day following the date of this Agreement or on such other day as
the parties may mutually agree. The Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the requirements of the
Securities Act. Copies of the Registration Statement, the Preliminary Prospectus
and the Prospectus, any such amendments or supplements and all documents
incorporated by reference therein that were filed with the Commission on or
prior to the date of this Agreement (including one fully executed copy of each
of the Registration Statement and of each amendment thereto for the
Underwriters) have been delivered to the Underwriters and their counsel. The
Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus, the Prospectus or any other materials, if any, permitted
by the Securities Act.
(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 the time of purchase and, if applicable, at the additional
time of purchase, conformed or will conform in all material respects with the
requirements of the Securities Act. Each part of the Registration 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 the
time of purchase and, if applicable, at the additional time of purchase, did not
or will not include an untrue statement of a material fact or omit to state a
material fact necessary to
3
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the foregoing shall not apply to
statements in, or omissions from, any such document in reliance upon, and in
conformity with, written information concerning the Underwriters that was
furnished in writing to the Company by UBS Warburg, on behalf of the several
Underwriters, specifically for use in the preparation thereof.
(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 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 are accurate in all
material respects and 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) The Preliminary Prospectus was, and the Prospectus delivered to the
Underwriters for use in connection with this offering will be, identical to the
versions of the Preliminary Prospectus and Prospectus, respectively, created to
be transmitted to the Commission for filing via 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. Complete and
correct copies of the
4
articles of incorporation and of the bylaws of the Company and all amendments
thereto have been delivered to UBS Warburg and, except as set forth in the
exhibits to, or incorporated by reference into, the Registration Statement, no
changes therein will be made subsequent to the date hereof and prior to the time
of purchase or, if applicable, the additional time of purchase.
(h) The Company is not in breach of, or in default under (nor has any event
occurred which with notice, lapse of time, or both would result in any breach
of, or constitute a default under), (i) its charter or bylaws or (ii) 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) As of December 31, 2002, as of the date of this Agreement and as of the
time of purchase, the Company had, has or will have an authorized, issued and
outstanding capitalization as set forth under the headings "Historical" and "As
adjusted for this offering," respectively, in the section of the Prospectus
Supplement entitled "Capitalization." All of the issued and outstanding shares
of capital stock, including the Common Stock of the Company, have been duly and
validly authorized and issued and are fully paid and non-assessable, have been
issued in compliance with all federal and state securities laws and were not
issued in violation of any preemptive right, resale right, right of first
refusal or similar right.
(j) This Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
in accordance with its terms, except to the extent that (i) enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general equitable principles and
(ii) the indemnification and contribution provisions of Section 9 hereof may be
limited by federal or state securities laws and public policy considerations in
respect thereof.
(k) The capital stock of the Company, including the Shares, conforms in all
material respects to the description thereof contained in the Registration
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.
5
(m) No approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the issuance and sale of the
Shares or the consummation by the Company of the transaction contemplated hereby
other than (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 are being offered by the Underwriters, or
(iii) such approvals as have been obtained in connection with the approval of
the listing of the Shares on 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 to the Underwriters 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 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
6
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, the aggregate market value of the Company's voting stock held by
nonaffiliates of the Company was 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 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") and in accordance with the Sales Agency Agreement,
dated July 8, 2002, between the Company and UBS Warburg) (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.
7
(z) The Company has not relied upon UBS Warburg or legal counsel for the
Underwriters 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 UBS
Warburg or to counsel for the Underwriters pursuant to or in connection with
this Agreement shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
(bb) 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 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.
8
(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 them under applicable federal and state
occupational safety and health and environmental laws and regulations to conduct
its business, and the Company is in compliance with all terms and conditions of
any such permit, license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals which could not, singly or in the aggregate, have a Material Adverse
Effect.
(hh) The Company has not incurred any liability for any finder's fees or
similar payments in connection with the transactions herein contemplated, except
as may otherwise exist with respect to the Underwriters pursuant to this
Agreement.
(ii) There are no existing or threatened labor disputes with the employees
of the Company which are likely to have individually or in the aggregate a
Material Adverse Effect.
(jj) Neither the Company nor, to the knowledge of the Company, any employee
or agent of the Company, has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation or of
a character required to be disclosed in the Prospectus. No relationship, direct
or indirect, exists between or among the Company, on the 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) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers, stockholders or directors
of the Company, on the other hand, which is required by the rules of the NASD to
be described in the Registration Statement and the Prospectus which is not so
described. Except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company to or for the benefit of any of the officers or directors of the
Company or any of the members of the families of any of them.
9
(nn) The Company is in compliance with all presently applicable provisions
of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and is actively
taking steps to ensure that it will be in compliance with other applicable
provisions of the Sarbanes-Oxley Act upon the effectiveness of such provisions.
4. Certain Covenants of the Company. The Company hereby covenants and
agrees with each of the Underwriters that:
(a) The Company will furnish such information as may be required and
otherwise will cooperate in qualifying the Shares for offering and sale under
the securities or blue sky laws of such jurisdictions (both domestic and
foreign) as UBS Warburg 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 jurisdiction (except
service of process with respect to the offering and sale of the Shares). The
Company will promptly advise UBS Warburg of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(b) The Company will prepare the Prospectus in a form approved by the
Underwriters and file such Prospectus with the Commission pursuant to Rule
424(b) under the Securities Act not later than 10:00 A.M. (New York City time),
on or before the second Business Day following the date of this Agreement or on
such other day as the parties may mutually agree and to furnish promptly (and
with respect to the initial delivery of such Prospectus, not later than 10:00
A.M. (New York City time) on or before the second Business Day following the
date of this Agreement or on such other day as the parties may mutually agree)
to the Underwriters copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendments or supplements
thereto after the effective date of the Registration Statement) in such
quantities and at such locations as the Underwriters may reasonably request for
the purposes contemplated by the Securities Act, which the Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the version created to be transmitted to the Commission for filing
via EDGAR, except to the extent permitted by Regulation S-T.
(c) The Company will advise UBS Warburg immediately, confirming such advice
in writing, of (i) the receipt of any comments from the Commission relating to
any filing of the Company under the Securities Act or the Exchange Act, (ii) any
request by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information with respect thereto,
(iii) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, (iv) the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, (v) the initiation, threatening or contemplation of any
proceedings for any of such purposes and, if the Commission or any other
governmental agency or authority should issue any such order, the Company will
make every reasonable effort to obtain the lifting or removal of such order as
soon as possible. The Company will advise UBS Warburg promptly of any proposal
to amend or supplement the Registration Statement or the Prospectus including by
filing any documents that would be incorporated therein by reference and to file
no such amendment or supplement to which UBS Warburg shall object to in writing.
(d) The Company will advise UBS Warburg promptly and, if requested by UBS
Warburg, will confirm such advice in writing when any post-effective amendment
to the Registration Statement becomes effective under the Securities Act.
10
(e) The Company will furnish to UBS Warburg and, upon request, to each of
the other Underwriters for a period of five years from the date of this
Agreement (i) copies of any reports or other communications which the Company
shall send to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports filed with
the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form as may be
designated by the Commission, (iii) copies of documents or reports filed with
any national securities exchange on which any class of securities of the Company
is listed, and (iv) such other information as UBS Warburg may reasonably request
regarding the Company, in each case as soon as such communications, documents or
information become available.
(f) The Company will advise the Underwriters promptly of the happening of
any event known to the Company within the time during which a Prospectus
relating to the Shares is required to be delivered under the Securities Act
which would require the making of any change in the Prospectus then being used,
or in the information incorporated by reference therein, so that the Prospectus
would not include an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend or supplement the
Prospectus to comply with any law. If within the time during which a Prospectus
relating to the Shares is required to be delivered under the Securities Act any
event shall occur or condition shall exist which, in the reasonable opinion of
the Company, UBS Warburg or their respective counsel, would require the making
of any change in the Prospectus then being used, or in the information
incorporated by reference therein, so that the Prospectus would not include an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend or supplement the Prospectus to comply with any
law, the Company will promptly prepare and furnish to the Underwriters copies of
the proposed amendment or supplement before filing any such amendment or
supplement with the Commission and thereafter promptly furnish, at the Company's
own expense, to the Underwriters and to dealers copies in such quantities and at
such locations as UBS Warburg may from time to time reasonably request of an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
circumstances when it is so delivered, be misleading or so that the Prospectus
will comply with the law.
(g) The Company will make generally available to its stockholders as soon
as practicable, and in the manner contemplated by Rule 158 of the Securities Act
but in any event not later than 15 months after the end of the Company's current
fiscal quarter, an earnings statement (which need not be audited) covering a
12-month period beginning after the date upon which the Prospectus Supplement is
filed pursuant to Rule 424(b) under the Securities Act that shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder and
will advise the Underwriters in writing when such statement has been made
available.
(h) The Company will furnish to UBS Warburg a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto and documents incorporated by
reference therein) and such number of conformed copies of the foregoing (other
than exhibits) as UBS Warburg may reasonably request.
(i) The Company will apply the net proceeds from the sale of the Shares in
the manner set forth under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will furnish to UBS Warburg, not less than two Business
Days before a filing with the Commission during the period referred to in
paragraph (f) above, a copy of any document
11
proposed to be filed pursuant to Section 13, 14 or 15(d) of the Exchange Act and
during such period will file all such documents in a manner and within the time
periods required by the Exchange Act.
(k) The Company will not sell, offer, contract to sell, pledge, register,
grant any option to purchase or otherwise dispose of, directly or indirectly,
any shares of capital stock, or any securities convertible into, or exercisable,
exchangeable or redeemable for shares of capital stock, except for the
registration of the Shares and the sales to the Underwriters pursuant to this
Agreement and except for issuances of Common Stock upon the exercise of
outstanding options, for a period of 90 days after the date hereof, without the
prior written consent of UBS Warburg. The foregoing sentence shall not apply to
(i) the Shares to be sold hereunder, (ii) any shares of Common Stock issued by
the Company upon the exercise of an option outstanding on the date hereof and
referred to in the Prospectus, (iii) shares of Common Stock issued pursuant to
the DRSPP, (iv) the grant of awards pursuant to the Company's Long-Term Stock
Incentive Plan or issuances pursuant to the exercise of employee stock options
or other awards or (v) the filing of any registration statement with the
Commission following the expiration of a period of 31 days after the date
hereof.
(l) The Company will use its best efforts to cause each officer and
director of the Company to furnish to UBS Warburg, prior to the time of
purchase, a letter or letters, substantially in the form of Exhibit C hereto,
pursuant to which each such person shall agree, subject to certain exceptions
set forth therein, not to sell, offer, contract to sell, pledge, grant any
option to purchase or otherwise dispose of, directly or indirectly, any shares
of capital stock, or any securities convertible into, or exercisable,
exchangeable or redeemable for shares of capital stock of the Company for a
period of 90 days after the date hereof, without the prior written consent of
UBS Warburg.
(m) 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 NYSE of companies that have securities that are
listed on the NYSE.
(n) The Company will maintain and keep accurate books and records
reflecting their assets and maintain internal accounting controls which provide
reasonable assurance that (i) transactions are executed in accordance with
management's authorization, (ii) transactions are recorded as necessary to
permit the preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company, (iii) access to the
assets of the Company is permitted only in accordance with management's
authorization and (iv) the recorded accounts of the assets of the Company are
compared with existing assets at reasonable intervals.
(o) The Company will engage and maintain, at its expense, a registrar and
transfer agent for the Shares.
(p) The Company will pay all expenses, fees and taxes (other than any
transfer taxes and fees and disbursements of counsel for the Underwriters,
except as set forth under Section 5 hereof or (iii) or (iv) below) in connection
with (i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (ii) the
issuance, sale and delivery of the Shares by the Company, (iii) the word
processing and/or printing of this Agreement, any Agreement among the
Underwriters, any dealer agreements, and the reproduction and/or printing and
furnishing of copies of each thereof to the Underwriters and to dealers
(including costs of mailing and shipment), (iv) the qualification of the Shares
for offering and sale under state laws and the determination of their
eligibility for investment under state law as aforesaid (including the legal
fees and filing fees and other disbursements of counsel to the Underwriters) and
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters
12
and to dealers, (v) any listing of the Shares on the NYSE and any registration
thereof under the Exchange Act, (vi) the filing, if any, for review of the
public offering of the Shares by the NASD, and (vii) the performance of the
Company's other obligations hereunder.
(q) The Company will not (i) take, directly or indirectly, prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay any Person (other than as
contemplated by the provisions hereof) any compensation for soliciting purchases
of the Shares, or (iii) pay or agree to pay to any Person any compensation for
soliciting any order to purchase any other securities of the Company.
(r) 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.
(s) The Company will comply with all of the provisions of any undertakings
in the Registration Statement.
(t) 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.
(u) The Company will not be or become, at any time prior to the expiration
of three years after the date of the Agreement, an "investment company," as such
term is defined in the Investment Company Act.
(v) 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.
(w) The Company will comply with all requirements imposed upon it by the
Securities Act and the Exchange Act as from time to time in force, so far as
necessary to permit the continuance of sales of, or dealings in, the Shares as
contemplated by the provisions hereof and the Prospectus.
(x) The Company will maintain such controls and other procedures,
including, without limitation, those required by Sections 302 and 906 of the
Sarbanes-Oxley Act, and the applicable regulations thereunder that are designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms, including, without limitation, controls and procedures designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated
13
and communicated to the Company's management, including its chief executive
officer and chief financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure and to
ensure that material information relating to the Company is made known to them
by others within those entities, particularly during the period in which such
periodic reports are being prepared.
(y) The Company will comply with all effective applicable provisions of the
Sarbanes-Oxley Act.
5. Reimbursement of Underwriters' Expenses. If the Shares are not delivered
for any reason other than the termination of this Agreement pursuant to the
default by one or more of the Underwriters in its or their respective
obligations hereunder, the Company shall, in addition to paying the amounts
described in Section 4(o) hereof, reimburse the Underwriters for all of their
out-of-pocket expenses, including the fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties on the part of the Company on the date hereof and at the time of
purchase (and the several obligations of the Underwriters at the additional time
of purchase are subject to the accuracy of the representations and warranties on
the part of the Company on the date hereof, at the time of purchase (unless
previously waived) and at the additional time of purchase, as the case may be),
the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Company shall furnish to UBS Warburg at the time of purchase and at
the additional time of purchase, as the case may be, an opinion of McKee Nelson
LLP, counsel for the Company, addressed to the Underwriters, and dated the time
of purchase or the additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in form satisfactory to
Clifford Chance US LLP, counsel for the Underwriters, substantially in the form
of Exhibit A attached hereto.
(b) UBS Warburg shall have received from the Accountants, letters dated,
respectively, the date of this Agreement and the time of purchase and the
additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by UBS Warburg relating to the financial statements,
including any pro forma financial statements of the Company and such other
matters customarily covered by comfort letters issued in connection with a
registered public offering.
In the event that the letters referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (i) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless UBS Warburg
deem such explanation unnecessary, and (ii) such changes, decreases or increases
do not, in the sole judgment of UBS Warburg, make it impractical or inadvisable
to proceed with the purchase and delivery of the Shares as contemplated by the
Registration Statement and the Prospectus.
(c) UBS Warburg shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the favorable opinion of
Clifford Chance US LLP, counsel for the Underwriters, dated the time of purchase
or the additional time of purchase, as the case may be, substantially in the
form of Exhibit B hereto.
14
(d) No amendment or supplement to the Registration Statement or the
Prospectus, including documents deemed to be incorporated by reference therein,
shall be filed to which the Underwriters object in writing.
(e) Prior to the time of purchase or the additional time of purchase, as
the case may be, (i) no stop order with respect to the effectiveness of any one
of the Registration Statement shall have been issued under the Securities Act or
proceedings initiated under Section 8(d) or 8(e) of the Securities Act; (ii) the
Registration 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.
(f) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the time of purchase or the additional time
of purchase, as the case may be, shall have been made within the applicable time
period prescribed for such filing by Rule 424.
(g) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, (i) no material
and unfavorable change, financial or otherwise (other than as referred to in the
Registration Statement and the Prospectus), in the business, condition, net
worth or prospects of the Company shall occur or become known and (ii) no
transaction which is material and unfavorable to the Company shall have been
entered into by the Company.
(h) The Company will, at the time of purchase or additional time of
purchase, as the case may be, deliver to UBS Warburg a certificate of two of its
executive officers to the effect that the representations and warranties of the
Company as set forth in this Agreement are true and correct as of each such
date, that the Company shall perform such of its obligations under this
Agreement as are to be performed at or before the time of purchase and at or
before the additional time of purchase, as the case may be, and that the
conditions set forth in paragraphs (e) and (g) of this Section 6 have been met.
(i) The Company shall have furnished to UBS Warburg such other documents
and certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the time of purchase and the
additional time of purchase, as the case may be, as UBS Warburg may reasonably
request.
(j) The Shares shall have been approved for listing on the NYSE, subject
only to notice of issuance at or prior to the time of purchase or the additional
time of purchase, as the case may be.
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) UBS Warburg shall have received lock-up agreements from the Company and
its officers and directors, in the form of Exhibit C attached hereto, and such
letter agreements shall be in full force and effect.
(m) Between the time of execution of this Agreement and the time of
purchase or additional time of purchase, as the case may be, there shall not
have occurred any downgrading, nor shall any notice or announcement have been
given or made of (i) any intended or potential downgrading or (ii) any review or
possible change that does not indicate an improvement, in the rating accorded
any securities of or
15
guaranteed by the Company by any "nationally recognized statistical rating
organization," as that term is defined in Rule 436(g)(2) under the Securities
Act.
7. Termination. The obligations of the several Underwriters hereunder shall
be subject to termination in the absolute discretion of UBS Warburg, at any time
prior to the time of purchase or, if applicable, the additional time of
purchase, (i) if any of the conditions specified in Section 6 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, (ii) if
any material adverse and unfavorable change occurs (financial or otherwise), or
any development involving a material adverse and unfavorable change occurs
(financial or otherwise) (in each case, other than as disclosed in, or
incorporated by reference into, the Registration Statement and the Prospectus
(exclusive of any supplement thereto)), in the operations, business, net worth,
condition or prospects of the Company, or a material change in management of the
Company occurs, whether or not arising in the ordinary course of business, which
would, in the sole judgment of UBS Warburg, make it impracticable to market the
Shares, (iii) if the United States shall have declared war in accordance with
its constitutional processes or there has occurred an outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic, political or other conditions the effect of which on the financial
markets of the United States is such as to make it, in the sole judgment of UBS
Warburg, impracticable or inadvisable to market the Shares or enforce contracts
for the sale of the Shares, (iv) if trading in any securities of the Company has
been suspended by the Commission or by the NYSE, or if trading generally on the
NYSE has been suspended (including an automatic halt in trading pursuant to
market-decline triggers other than those in which solely program trading is
temporarily halted), or limitations on or minimum prices for trading (other than
limitations on hours or numbers of days of trading) shall have been fixed, or
maximum ranges for prices for securities have been required, by such exchange or
the NASD or Nasdaq or by order of the Commission or any other governmental
authority, (v) if a banking moratorium shall have been declared by New York or
United States authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States,
(vi) if there shall have occurred any downgrading, or any notice or announcement
shall have been given or made of (a) any intended or potential downgrading or
(b) any review or possible change that does not indicate an improvement, in the
rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization," as that term is defined
in Rule 436(g)(2) under the Securities Act, (vii) if any federal or state
statute, regulation, rule or order of any court or other governmental authority
has been enacted, published, decreed or otherwise promulgated which, in the
reasonable opinion of UBS Warburg, materially adversely affects or will
materially adversely affect the business or operations of the Company, or (viii)
if any action has been taken by any federal, state or local government or agency
in respect of its monetary or fiscal affairs which, in the reasonable opinion of
UBS Warburg, has a material adverse effect on the securities markets in the
United States.
If UBS Warburg elects to terminate this Agreement as provided in this
Section 7, the Company and each other Underwriter shall be notified promptly by
telephone, which shall be promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(o), 5 and 9 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters' Commitments. If any Underwriter shall default
in its obligation under this Agreement to take up and pay for the Shares to be
purchased by it under this Agreement
16
(otherwise than for reasons sufficient to justify the termination of this
Agreement under the provisions of Section 7 hereof), UBS Warburg shall have the
right, within 36 hours after such default, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Shares which such Underwriter shall have agreed
but failed to take up and pay for (the "Defaulted Shares"). Absent the
completion of such arrangements within such 36 hour period, (i) if the total
number of Defaulted Shares does not exceed 10% of the total number of Shares to
be purchased at the time of purchase or the additional time of purchase, as the
case may be, each non-defaulting Underwriter shall take up and pay for (in
addition to the number of Shares which it is otherwise obligated to purchase on
such date pursuant to this Agreement) the number of Shares agreed to be
purchased by all such defaulting Underwriters in such amount or amounts as UBS
Warburg may designate with the consent of each Underwriter so designated or, in
the event no such designation is made, such Shares shall be taken up and paid
for by all non-defaulting Underwriters pro rata in proportion to the aggregate
number of Firm Shares set opposite the names of such non-defaulting Underwriters
in Schedule A; and (ii) if the total number of Defaulted Shares exceeds 10% of
such total number of Shares to be purchased at the time of purchase or the
additional time of purchase, as the case may be, and if neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
five Business Day period from the date of default for the purchase of such
Defaulted Shares, UBS Warburg may terminate this Agreement by notice to the
Company, without liability of any party to any other party except that the
provisions of Sections 4(o), 5 and 9 shall at all times be effective and shall
survive such termination. Nothing in this paragraph, and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect of
any default of such Underwriter under this Agreement.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that they
will not sell any Shares hereunder unless all of the Shares are purchased by the
Underwriters (or by substituted Underwriters selected by UBS Warburg with the
approval of the Company or selected by the Company with UBS Warburg's approval).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter or Underwriters in accordance with the foregoing provisions, the
Company or UBS Warburg shall have the right to postpone the time of purchase or
the additional time of purchase, as the case may be, for a period not exceeding
five Business Days from the date of substitution in order that any necessary
changes in the Registration Statement and the Prospectus and other documents may
be effected.
The term Underwriter as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 8 with like effect as if such
substituted Underwriter had originally been named in Schedule A.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any Person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing Persons from and against any loss, damage, expense, liability or claim
(including, but not limited to, the reasonable cost of investigation) which,
jointly or severally, any such Underwriter or any such Person may incur under
the Securities Act, the Exchange Act, federal or state statutory law or
regulation, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented by the
Company), or in any documents filed under the Exchange Act and deemed to be
17
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission, (ii) upon any omission or alleged omission to state in any such
document a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading or (iii) any act or failure to act or any alleged act or
failure to act by the Underwriters in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, damage, expense, liability, claim or action
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable under this clause (iii) to the
extent it is finally judicially determined by a court of competent jurisdiction
that such loss, damage, expense, liability, claim or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by the
Underwriters through their gross negligence or willful misconduct), except
insofar as any such loss, damage, expense, liability or claim arises out of or
is based upon any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in writing by or
on behalf of any Underwriter through UBS Warburg to the Company expressly for
use with reference to such Underwriter in the Prospectus or arises out of or is
based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in the Prospectus or
necessary to make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding") is brought
against an Underwriter or any such Person in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such Underwriter
or such Person shall promptly notify the Company in writing of the institution
of such Proceeding and the Company shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission
to so notify the Company shall not relieve the Company from any liability which
the Company may have to any Underwriter or any such Person or otherwise. Such
Underwriter or such controlling Person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or of such Person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Company (in which case the Company shall not have
the right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Company and paid as incurred (it being understood, however, that the
Company shall not be liable for the expenses of more than one separate counsel
(in addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). The Company shall not be liable for any
settlement of any such Proceeding effected without its written consent (which
shall not be unreasonably withheld) but if settled with the written consent of
the Company, the Company agrees to indemnify and hold harmless any Underwriter
and any such Person from and against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 Business Days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party
shall have given the indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall,
18
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, any Person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
director of the Company and each officer of the Company who signed the
Registration 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 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 such Underwriter through UBS Warburg to
the Company expressly for use with reference to such Underwriter 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 information required to be
stated therein or necessary to make the statement therein, in the light of the
circumstances under which they were made, not misleading.
If any Proceeding is brought against the Company or any such Person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such Person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter, from any liability
which such Underwriter may have to the Company or any such Person or otherwise.
The Company or such Person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such Person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct
the defense of such Proceeding on behalf of the indemnified party or parties,
but such Underwriter may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne by
such Underwriter and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). No Underwriter shall be liable for
any settlement of any such Proceeding effected without the written consent of
such Underwriter but if settled with the written consent of such Underwriter,
such Underwriter agrees to indemnify and hold harmless the Company and any such
Person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for
19
fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 Business Days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least 30 days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened Proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this Section 9 is unavailable to
an indemnified party under subsections (a) and (b) of this Section 9 in respect
of any losses, 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 Underwriters on the other hand from the offering
of the Shares or (ii) if, but only if, the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and of the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be in the
same respective proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the total underwriting discounts and commissions received by
the Underwriters, bear to the aggregate public offering price of the shares. The
relative fault of the Company on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating, preparing to defend or defending any claim or
Proceeding.
(d) The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be liable or responsible
for, or be required to contribute, any amount pursuant to this Section 9 in
excess of the amount of the underwriting discounts and commissions applicable to
the Shares purchased by such Underwriter. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this Section 9
and the covenants, warranties and representations of the Company contained in
this Agreement shall remain in
20
full force and effect regardless of any investigation made by or on behalf of
any Underwriter, its directors and officers or any Person (including each
partner, officer or director of such Person) who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, or by or on behalf of the Company, its directors or officers or any Person
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. The Company and each
Underwriter agree promptly to notify each other upon the 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 the Prospectus.
10. Notices. Except as otherwise herein provided, all statements, requests,
notices and agreements shall be in writing or by telegram and, if to the
Underwriters, shall be sufficient in all respects if delivered or sent to UBS
Warburg LLC, 299 Park Avenue, New York, New York 10171-0026, Attention:
Syndicate Department, 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; and if to the Company, shall be sufficient
in all respects if delivered or sent to the Company at the offices of the
Company at 12 East 41st Street, Suite 700, New York, New York 10017, Attention:
Michael A.J. Farrell.
11. Governing Law; Construction. This Agreement and any claim, counterclaim
or dispute of any kind or nature whatsoever arising out of or in any way
relating to this Agreement (a "Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company
consents to the 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 UBS Warburg or
any indemnified party. Each of UBS Warburg and the Company (on its behalf and,
to the extent permitted by applicable law, on behalf of its stockholders and
affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company agrees that a final judgment
in any such action, proceeding or counterclaim brought in any such court shall
be conclusive and binding upon the Company and may be enforced in any other
courts in the jurisdiction of which the Company is or may be subject, by suit
upon such judgment.
13. Parties at Interest. The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company and to the extent
provided in Section 9 hereof the controlling Persons, directors and officers
referred to in such Section, and their respective successors, assigns, heirs,
pursuant representatives and executors and administrators. No other Person,
partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
14. Counterparts. This Agreement may be signed by the parties in one or
more counterparts which together shall constitute one and the same agreement
among the parties.
21
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
16. Miscellaneous. UBS Warburg LLC, an indirect, wholly owned subsidiary of
UBS AG, is not a bank and is separate from any affiliated bank, including any
U.S. branch or agency of UBS AG. Because UBS Warburg LLC is a separately
incorporated entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales and
purchases of securities. Securities sold, offered or recommended by UBS Warburg
LLC are not deposits, are not insured by the Federal Deposit Insurance
Corporation, are not guaranteed by a branch or agency, and are not otherwise an
obligation or responsibility of a branch or agency.
17. A lending affiliate of UBS Warburg LLC may have lending relationships
with issuers of securities underwritten or privately placed by UBS Warburg LLC.
To the extent required under the securities laws, prospectuses and other
disclosure documents for securities underwritten or privately placed by UBS
Warburg LLC will disclose the existence of any such lending relationships and
whether the proceeds of the issue will be used to repay debts owed to affiliates
of UBS Warburg LLC.
22
If the foregoing correctly sets forth the understanding among the Company
and the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement among the Company and the Underwriters, severally.
Very truly yours,
ANNALY MORTGAGE MANAGEMENT, INC.
By: /s/ Kathryn Fagan
--------------------------------------------
Name: Kathryn Fagan
Title: Chief Financial Officer and Treasurer
Accepted and agreed to as of the date first above written, on behalf of itself
and the other several Underwriters named in Schedule A
UBS WARBURG LLC
By: UBS WARBURG LLC
By: /s/ Halle J. Bennett
---------------------------
Name: Halle J. Bennett
Title: Executive Director
By: /s/ Joseph A. Jiampietro
---------------------------
Name: Joseph A. Jiampietro
Title: Executive Director
23
SCHEDULE A
Number of
Underwriter Firm Shares
- ----------- -----------
UBS Warburg LLC 4,070,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 1,850,000
U.S. Bancorp Piper Jaffray, Inc. 1,480,000
Advest, Inc. 80,000
A.G. Edwards & Sons, Inc. 80,000
Fahnestock & Co. Inc. 80,000
Flagstone Securities, LLC 80,000
Janney Montgomery Scott LLC 80,000
Legg Mason Wood Walker, Incorporated 80,000
Putnam Lovell Securities Inc. 80,000
RBC Dain Rauscher Inc. 80,000
SG Cowen Securities Corporation 80,000
Wachovia Securities, Inc. 80,000
-----------
Total: 8,200,000
===========
Sch-A
EXHIBIT A
OPINION OF MCKEE NELSON LLP
1. 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.
2. 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
Underwriting Agreement.
3. The Underwriting Agreement has been duly authorized, executed, and
delivered by the Company.
4. The Shares have been duly authorized by the Company for issuance and
sale to the Underwriters pursuant to the Underwriting Agreement and, when issued
and delivered by the Company pursuant to the Underwriting 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 by-laws of the Company, by reason of being a
holder.
5. The Company has an authorized capitalization as of December 31, 2002 as
set forth in the Prospectus Supplement under the caption "Capitalization." 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.
6. 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 by-laws of the Company, or, to our knowledge, 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.
7. 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 by-laws of the
Company and complies with all the applicable requirements of NYSE.
8. 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 by-laws, has been reviewed by
us and is correct in all material respects.
Ex. A-1
9. The Registration Statement and the Prospectus (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 we express no opinion and (B) except as expressed in our
opinion in paragraph (x) below, the documents incorporated therein), as of their
respective effective 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 of 1933 (the "1933 Act") and the rules and
regulations of the Securities and Exchange Commission (the "Commission") under
the 1933 Act (the "1933 Act Regulations").
10. The annual report on Form 10-K for the year ended December 31, 2002 and
the definitive proxy statement filed with the Commission on March 31, 2003,
incorporated by reference in the Registration Statement (other than the
financial statements and supporting schedules and other financial data included
therein, as to which we express no opinion), when they were filed with the
Commission (or, if later, upon filing of an amendment thereto) complied as to
form in all material respects with the requirements of the Securities Exchange
Act of 1934, as amended (the "1934 Act") and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations").
11. To our 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 to the Underwriters as contemplated by the Underwriting Agreement or the
public offering of the Shares as contemplated by the Prospectus.
12. The issuance and sale of the Shares to the Underwriters as contemplated
by the Underwriting 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, known to us, to which the Company is a party or is bound, except for
such 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 of
1940, or (E) or any judgment, decree, order, rule, or regulation, known to us,
of any court, other governmental authority, or arbitrator having jurisdiction
over the Company, except for such for such violations, conflicts, breaches,
defaults, liens, charges, or encumbrances that would not result in a Material
Adverse Effect.
13. The Company is not in violation of its charter or by-laws, and, to our
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 for such violations, conflicts, breaches, defaults, liens,
charges, or encumbrances that would not result in a Material Adverse Effect.
14. To our knowledge, there are no legal or governmental proceedings
pending or threatened which are required to be disclosed in the Registration
Statement or the Prospectus but are not so disclosed.
15. The Company is not, and the transactions contemplated by the
Underwriting Agreement will not cause the Company to become an "investment
company" or an entity "controlled" by an "investment company" under the 1940
Act.
Ex. A-2
16. 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.
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 Underwriters at which the contents of the
Registration Statement and the 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 the
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 the Prospectus).
Ex. A-3
EXHIBIT B
OPINION OF CLIFFORD CHANCE US LLP
1. The Underwriting Agreement has been duly authorized, executed and
delivered by the Underwriters.
2. The Shares have been duly authorized and, when issued and delivered to
and paid for by the Underwriters, will be duly and validly and issued and will
be fully paid and non-assessable.
3. The Shares conform to the description thereof contained in the
Registration Statement and the Prospectus.
4. The Registration Statement and the Prospectus (except as to the
financial statements and schedules and other financial and statistical data
contained or incorporated by reference therein, as to which we express no
opinion) comply as to form in all material respects with the requirements of the
Securities Act.
5. The Registration Statement have become effective under the Securities
Act and, to the best of our knowledge, no stop order proceedings with respect
thereto are pending or threatened under the Securities Act and any required
filings of the Prospectus and any supplement thereto pursuant to Rule 424 under
the Securities Act has been made in the manner and within the time period
required by such Rule 424.
In addition, we have reviewed the Registration Statement and the Prospectus and
participated in the preparation of the Prospectus Supplement and in conferences
with officers and other representatives of and counsel to the Company,
representatives of the independent public accountants for the Company and
representatives of the Underwriters at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and, we have
reviewed certain corporate records, documents and proceedings, and on the basis
of the foregoing, nothing has come to our attention that leads us to believe
that the Registration Statement, at the time such Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading or that the Prospectus, as of the date of the
Underwriting Agreement or the date hereof, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood that we express
no belief with respect to the financial statements, financial schedules and
other financial data included or incorporated by reference in the Registration
Statement or the Prospectus).
The limitations inherent in the independent verification of factual matters and
the character of determinations involved in the preparation of a disclosure
document are such, however, that we do not assume any responsibility for the
accuracy, completeness, or fairness of the statements contained in the
Registration Statement or the Prospectus or any amendments or supplements
thereto (including any of the documents incorporated by reference therein).
Ex. B-1
EXHIBIT C
April __, 2003
UBS WARBURG LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
U.S. BANCORP PIPER JAFFRAY, INC.
as representatives of the several underwriters,
c/o UBS Warburg LLC
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
In consideration of the agreement of UBS Warburg LLC ("UBS Warburg"),
Merrill Lynch, Pierce, Fenner & Smith Incorporated and U.S. Bancorp Piper
Jaffray, Inc. and certain other underwriters to underwrite a proposed public
offering (the "Offering") of Common Stock, par value $0.01 per share (the
"Common Stock"), of Annaly Mortgage Management, Inc., a Maryland corporation
(the "Company"), as contemplated by a registration statement on Form S-3 (File
No. 333-74618), as amended, including a prospectus (the "Registration
Statement"), the undersigned hereby agrees that the undersigned will not, for a
period of 90 days after the commencement of the Offering, without the prior
written consent of UBS Warburg, offer, sell, contract to sell, pledge, grant any
option to purchase or otherwise dispose of, directly or indirectly, any shares
of capital stock, or any securities convertible into, or exercisable,
exchangeable or redeemable for, shares of capital stock, except for the sale of
Common Stock to the Company for the purpose of exercising options issued by the
Company or the issuance of Common Stock upon the exercise of outstanding options
issued by the Company.
Very truly yours,
By
--------------------------------
Name:
Title:
Ex. C-1