EXHIBIT 1.1
2,100,000 Shares
Anthracite Capital, Inc.
Common Stock
Underwriting Agreement
dated June 24, 2004
JMP SECURITIES LLC
TABLE OF CONTENTS
SECTION PAGE
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Section 1. Representations and Warranties.................................................................2
(a) Subsidiaries of the Company...........................................................2
(b) Incorporation and Good Standing of the Company and its
Subsidiaries and the Manager..........................................................2
(c) Foreign Qualification and Good Standing of the Company and its Subsidiaries...........2
(d) Compliance of the Company and its Subsidiaries........................................3
(e) Non-Contravention of Instruments......................................................3
(f) No Further Authorizations Required; the Underwriting Agreement........................3
(g) The Management Agreement..............................................................3
(h) Capital Stock Matters.................................................................4
(i) No Further Authorizations or Approvals Required.......................................4
(j) All Necessary Permits, Etc............................................................4
(k) No Stop Orders........................................................................5
(l) Registration Statement; Prospectus....................................................5
(m) Incorporated Documents................................................................5
(n) Regulation S-T........................................................................5
(o) Description of Proceedings, Contracts, Etc............................................5
(p) No Actions or Proceedings.............................................................6
(q) Financial Statements..................................................................6
(r) Exchange Act Reports..................................................................6
(s) Independent Accounts..................................................................6
(t) No Material Adverse Change............................................................6
(u) Capitalization........................................................................7
(v) Capital Stock of the Subsidiaries.....................................................7
(w) Regulation M..........................................................................7
(x) Convertible Securities................................................................7
(y) No Stabilization or Manipulation......................................................7
(z) No Broker or Dealer...................................................................7
(aa) No Advice.............................................................................7
(bb) Disclosure of Statutes; Enforceability of Agreements..................................8
(cc) Related Party Transactions............................................................8
(dd) Title to Assets.......................................................................8
(ee) Intangibles...........................................................................8
(ff) Internal Controls.....................................................................8
(gg) Taxes.................................................................................9
(hh) Unlawful Payments.....................................................................9
(ii) Loans to Officers.....................................................................9
(jj) No Employees..........................................................................9
(kk) REIT Status...........................................................................9
(ll) New York Stock Exchange...............................................................9
(mm) Offering Materials....................................................................9
(nn) Investment Company Act...............................................................10
(oo) Finder's Fees........................................................................10
(pp) Environmental Laws...................................................................10
(qq) Compliance Costs.....................................................................10
(rr) Mortgages............................................................................10
(ss) Statistical Data.....................................................................10
(tt) Sarbanes-Oxley Act...................................................................10
(uu) Insurance............................................................................11
Section 2. Purchase, Sale and Delivery of the Offered Shares.............................................11
(a) The Firm Offered Shares..............................................................11
(b) The First Closing Date...............................................................11
(c) The Optional Offered Shares; the Second Closing Date.................................11
(d) Public Offering of the Offered Shares................................................12
(e) Payment for the Offered Shares.......................................................12
(f) Delivery of the Offered Shares.......................................................12
(g) Delivery of Prospectus to the Underwriters...........................................13
Section 3. Additional Covenants..........................................................................13
(a) Representative's Review of Proposed Amendments and Supplements.......................13
(b) Securities Act Compliance............................................................13
(c) Amendments and Supplements to the Prospectus and Other Securities Act Matters........14
(d) Copies of any Amendments and Supplements to the Prospectus...........................14
(e) Blue Sky Compliance..................................................................14
(f) Notice of Subsequent Events Affecting the Market Price of the Common
Stock or Offered Shares..............................................................14
(g) Use of Proceeds......................................................................15
(h) Transfer Agent.......................................................................15
(i) Earnings Statement...................................................................15
(j) Periodic Reporting Obligations.......................................................15
(k) Agreement Not to Offer or Sell Additional Securities.................................15
(l) Future Reports to the Representative.................................................15
(m) Exchange Act Compliance..............................................................16
(n) New York Stock Exchange..............................................................16
(o) Stock Price Manipulation.............................................................16
(p) REIT Status..........................................................................16
(q) Undertakings.........................................................................16
(r) Investment Company Act...............................................................16
(s) Internal Controls....................................................................16
(t) Conditions...........................................................................16
(u) Rule 462(b) Registration Statement...................................................17
Section 4. Conditions of the Obligations of the Underwriters.............................................17
(a) Accountants' Original Comfort Letter.................................................17
(b) Accountants' Bring-down Comfort Letter...............................................17
(c) Compliance with Registration Requirements; No Stop Order; No Objection
from the NASD........................................................................17
(d) No Material Adverse Change or Ratings Agency Change..................................18
(e) Opinion of Counsel to the Company....................................................18
(f) Opinion of Maryland Counsel to the Company...........................................18
(g) Opinion of Counsel for the Underwriters..............................................19
(h) Officers' Certificate................................................................19
(i) Effectiveness of the Registration Statement..........................................20
(j) Lock-up Agreement from Certain Securityholders of the Company........................20
(k) No Amendment or Supplement...........................................................20
(l) NASD Matters.........................................................................20
(m) New York Stock Exchange..............................................................20
(n) Manager's Representation Letter......................................................20
(o) Prospectus Flings....................................................................20
(p) Additional Documents.................................................................20
Section 5. Payment of Expenses...........................................................................21
Section 6. Reimbursement of the Underwriters' Expenses...................................................21
Section 7. Effectiveness of this Agreement...............................................................22
Section 8. Indemnification...............................................................................22
(a) Indemnification of the Underwriters..................................................22
(b) Indemnification of the Company, Its Directors and Officers...........................23
(c) Information Provided by the Underwriters.............................................24
(d) Notifications and Other Indemnification Procedures...................................24
(e) Settlements..........................................................................25
Section 9. Contribution..................................................................................25
Section 10. Default of One or More of the Several Underwriters............................................26
Section 11. Termination of This Agreement.................................................................27
Section 12. Representations and Indemnities to Survive Delivery...........................................27
Section 13. Notices.......................................................................................27
Section 14. Successors....................................................................................28
Section 15. Partial Unenforceability......................................................................28
Section 16. Governing Law Provisions......................................................................29
(a) Choice of Law............................................................................29
(b) Consent to Jurisdiction..................................................................29
Section 17. General Provisions............................................................................29
LIST OF SCHEDULES
SCHEDULE A LIST OF THE UNDERWRITERS
SCHEDULE B LIST OF THE SUBSIDIARIES
LIST OF EXHIBITS
EXHIBIT A FORM OF LEGAL OPINION OF COUNSEL FOR THE COMPANY
EXHIBIT B FORM OF LEGAL OPINION OF MARYLAND COUNSEL FOR THE COMPANY
EXHIBIT C FORM OF LOCK-UP AGREEMENT
EXHIBIT D MANAGER'S REPRESENTATION LETTER
Underwriting Agreement
June 24, 2004
JMP SECURITIES LLC
One Embarcadero Center, Suite 2100
San Francisco, California 94111
As Representative of the several Underwriters
Ladies and Gentlemen:
Introductory. Anthracite Capital, Inc., a Maryland corporation (the "Company"),
proposes to issue and sell to the several underwriters named in Schedule A (the
"List of the Underwriters") attached hereto (collectively, the "Underwriters")
an aggregate of 2,100,000 shares (the "Firm Offered Shares") of its common
stock, par value $0.001 per share (the "Common Stock") in accordance with the
terms and conditions set forth in this Underwriting Agreement (this
"Agreement"). In addition, the Company has granted to the Underwriters an
option to purchase up to an additional 315,000 shares (the "Optional Offered
Shares") of Common Stock, as provided in Section 2 (the "Purchase, Sale, and
Delivery of the Offered Shares") of this Agreement. The Firm Offered Shares
and, if and to the extent such option is exercised, the Optional Offered Shares
are collectively called the "Offered Shares." JMP Securities LLC ("JMP") has
agreed to act as representative of the several Underwriters (in such capacity,
the "Representative") in connection with the offering and sale of the Offered
Shares. The parties agree that JMP shall be the sole Underwriter in connection
with the Offering.
The Company has prepared and filed, in accordance with the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-69848), which contains a form of a base prospectus to be used in connection
with the public offering and sale of the Offered Shares. Such registration
statement, including the financial statements, exhibits, and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act, including all documents and information incorporated or deemed
to be incorporated by reference therein and any information deemed to be a part
thereof at the time of effectiveness pursuant to Rule 430A or Rule 434 under
the Securities Act, is called the "Registration Statement." Any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act
is called the "Rule 462(b) Registration Statement," and from and after the date
and time of filing of the Rule 462(b) Registration Statement, the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
A final prospectus supplement relating to the Offered Shares, the terms of the
offering thereof and the other matters set forth therein has been prepared and
will be filed pursuant to Rule 424 under the Securities Act in the form first
used to confirm sales of the Offered Shares (the "Prospectus Supplement"). The
base prospectus included in the Registration Statement, as supplemented by the
Prospectus Supplement, is called the "Prospectus," in each case including the
documents and information filed by the Company with the Commission pursuant to
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act") that are incorporated
or deemed incorporated by reference therein. The term "preliminary prospectus"
as used in this Agreement shall mean each preliminary prospectus used in
connection with the marketing of the Shares including any prospectus (whether
or not in preliminary form) used in connection with the marketing of Offered
Shares, in each case as any of the foregoing may be amended or supplemented by
the Company. All references in this Agreement to the Registration Statement,
the Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus Supplement or the Prospectus, or any amendments or supplements to
any of the foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included," or "stated" in the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include
the filing of any document under the Exchange Act which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be.
The Company hereby confirms its agreements with the Underwriters as
follows:
Section 1. Representations and Warranties. The Company hereby
represents, warrants, and covenants to each Underwriter as follows:
(a) Subsidiaries of the Company. The Company does not own or
control, directly or indirectly, any corporation, association, or
other entity other than the subsidiaries named on Schedule B attached
hereto (each, a "Subsidiary" and, collectively, the "Subsidiaries").
(b) Incorporation and Good Standing of the Company and its
Subsidiaries and the Manager. Each of the Company and the Subsidiaries
has been duly incorporated or organized, as the case may be, and is
validly existing as a corporation or limited liability company, as the
case may be, with all requisite corporate or other power and authority
to own, lease and operate its respective properties and to conduct its
respective business as conducted and as proposed to be conducted as
described in the Registration Statement and Prospectus and, in the
case of the Company, to authorize, execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The Company is
in good standing under the laws of the State of Maryland or has taken
all action necessary in order to be in good standing under the laws of
the State of Maryland and, as of the First Closing Date (as defined
below) will be in good standing under the laws of the State of
Maryland. Each of the Subsidiaries is in good standing under the laws
of its respective jurisdiction of incorporation or organization.
(c) Foreign Qualification and Good Standing of the Company
and its Subsidiaries. The Company and the Subsidiaries are duly
qualified or registered to transact business in each jurisdiction in
which they conduct their respective businesses as conducted and as
proposed to be conducted as described in the Registration Statement
and the Prospectus and in which the failure, individually or in the
aggregate, to be so qualified or registered could reasonably be
expected to have a material adverse effect on the assets, operations,
business or condition (financial or otherwise) of the Company and the
Subsidiaries taken as a whole; and the Company and the Subsidiaries
are in good standing in each jurisdiction in which they own or lease
real property or maintain an office or in which the nature or conduct
of their respective businesses as now conducted or proposed to be
conducted as described in the Registration Statement and the
Prospectus requires such qualification, except where the failure to be
in good standing could be reasonably expected to not have a material
adverse effect on the assets, operations, business or condition
(financial or otherwise) of the Company and the Subsidiaries taken as
a whole.
(d) Compliance of the Company and its Subsidiaries. The
Company and the Subsidiaries are in compliance in all material
respects with all applicable laws, rules, regulations, orders, decrees
and judgments.
(e) Non-Contravention of Instruments. Neither the Company nor
any of the Subsidiaries is in breach of, or in default under (nor has
any event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under), (i) its respective charter
or bylaws or (ii) in the performance or observance of any obligation,
agreement, covenant or condition contained in any license, indenture,
mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or their respective properties is bound,
except for such breaches or defaults in the case of this clause (ii)
that could not reasonably be expected to have a material adverse
effect on the assets, operations, business or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole. The
issuance, sale and delivery by the Company of the Offered Shares, the
execution, delivery and performance of this Agreement by the Company,
and consummation of the transactions contemplated hereby will not
conflict with, or result in any breach of, or constitute a default
under (nor constitute any event which with notice, lapse of time, or
both would constitute a breach of, or default under), (x) any
provision of the charter or bylaws of the Company or any of the
Subsidiaries, (y) any provision of any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or
instrument to which the Company or any of the Subsidiaries is a party
or by which any of them or their respective properties may be bound or
affected or (z) any federal, state, local or foreign law, regulation
or rule or any decree, judgment or order applicable to the Company or
any of the Subsidiaries, except in the case of clause (y) for such
breaches or defaults which could not reasonably be expected not to
have a material adverse effect on the assets, operations, business or
condition (financial or otherwise) of the Company and the Subsidiaries
taken as a whole or result in the creation or imposition of any
material lien, charge, claim or encumbrance upon any property or asset
of the Company or any Subsidiaries.
(f) No Further Authorizations Required; the Underwriting
Agreement. The Company has full legal right, power and authority to
enter into and perform this Agreement and to consummate the
transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by the Company and is a legal,
valid and binding agreement of the Company enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity, and except to the
extent that the indemnification and contribution provisions of Section
8 ("Indemnification") hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof.
(g) The Management Agreement. The Company has full legal
right, power and authority to perform that certain Management
Agreement dated as of March 13, 2004 (the "Management Agreement"), by
and between the Company and BlackRock Management Inc. (the "Manager")
and to consummate the transactions contemplated therein. The
Management Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the
Company, enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general
principles of equity.
(h) Capital Stock Matters. The issuance and sale of the
Offered Shares to the several Underwriters hereunder have been duly
authorized by the Company. When issued and delivered against payment
therefor as provided in this Agreement, the Offered Shares will be
validly issued, fully paid and non-assessable and the issuance of the
Offered Shares will not be subject to any preemptive or similar
rights. Except as contemplated herein, no person or entity holds a
right to require or participate in the registration under the
Securities Act of the Offered Shares pursuant to the Registration
Statement. No person or entity has a right of participation or first
refusal with respect to the sale of the Offered Shares by the Company.
Except as set forth in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person or
entity granting such person or entity the right to require the Company
to file a registration statement under the Securities Act with respect
to any securities of the Company or to require the Company to include
such securities with the Offered Shares registered pursuant to the
Registration Statement. The form of certificates evidencing the
Offered Shares complies with all applicable legal requirements and, in
all material respects, with all applicable requirements of the charter
and bylaws of the Company and the requirements of the New York Stock
Exchange.
(i) No Further Authorizations or Approvals Required. No
approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with (i) the
execution, delivery and performance by the Company of this Agreement,
the consummation of the transaction contemplated hereby or (ii) the
sale and delivery of the Offered Shares, other than (w) such as have
been obtained, or will have been obtained on the First Closing Date or
the Second Closing Date (as defined below), as the case may be, under
the Securities Act or the Exchange Act, (x) such approvals as have
been obtained in connection with the approval of the listing of the
Offered Shares on the New York Stock Exchange, (y) any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Offered Shares are being offered by the
Underwriters and (z) any approvals required by the National
Association of Securities Dealers, Inc. (the "NASD").
(j) All Necessary Permits, Etc. Each of the Company and the
Subsidiaries has all necessary licenses, authorizations, consents and
approvals and has made all necessary filings required under any
federal, state or local law, regulation or rule, and has obtained all
necessary authorizations, consents and approvals from other persons
required in order to conduct their respective businesses as described
in the Registration Statement and Prospectus, except to the extent
that any failure to have any such licenses, authorizations, consents
or approvals, to make any such filings or to obtain any such
authorizations, consents or approvals could reasonably be expected to
not have, individually or in the aggregate, a material adverse effect
on the assets, operations, business or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole.
Neither the Company nor any of the Subsidiaries is in violation of, in
default under, or has received any notice regarding a possible
violation, default or revocation of any such license, authorization,
consent or approval or any federal, state, local or foreign law,
regulation or rule or any decree, order or judgment applicable to the
Company or any of the Subsidiaries, the effect of which could
reasonably be expected to be material and adverse to the assets,
operations, business or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole; and no such license,
authorization, consent or approval contains a materially burdensome
restriction that is not adequately disclosed in the Registration
Statement and the Prospectus.
(k) No Stop Orders. Each of the Registration Statement and
any Rule 462(b) Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has
been issued under the Securities Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of
the Company, are threatened by the Commission, and the Company has
complied with any request on the part of the Commission for additional
information.
(l) Registration Statement; Prospectus. The Company and the
transactions contemplated by this Agreement meet the requirements and
conditions for using a registration statement on Form S-3 under the
Securities Act, set forth in the General Instructions to Form S-3; the
Registration Statement complies, and the Prospectus and any further
amendments or supplements thereto will comply, when they have become
effective or are filed with the Commission, as the case may be, in all
material respects with the requirements of the Securities Act and, in
each case, present, or will present, fairly the information required
to be shown. The Registration Statement did not, and any amendment
thereto will not, in each case as of the applicable effective date,
contain any 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 the Prospectus or any amendment
or supplement thereto will not, as of the applicable filing date and
at the First Closing Date and on the Second Closing Date, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no warranty
or representation with respect to any statement contained in the
Registration Statement or the Prospectus in reliance upon and in
conformity with the information concerning the Underwriters and
furnished in writing by the Underwriters to the Company expressly for
use in the Registration Statement or the Prospectus.
(m) Incorporated Documents. Each document incorporated by
reference in the Prospectus, when it was filed with the Commission
conformed in all material respects to the requirements of the Exchange
Act and none of such documents contained, as of the date filed, an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents are filed with the Commission will
conform in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and will not include, as of
the date filed, an untrue statement of a material fact or omit to
state a material fact required to be stated therein necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(n) Regulation S-T. The Prospectus in paper format delivered
to the Underwriters for use in connection with this offering will be
identical in all material respects to the version of the Prospectus
created to be transmitted to the Commission for filing via EDGAR,
except to the extent permitted by Regulation S-T.
(o) Description of Proceedings, Contracts, Etc. All legal or
governmental proceedings, contracts or documents that are material and
of a character required to be filed as exhibits to the Registration
Statement or to be summarized or described in the Prospectus have been
so filed, summarized or described as required.
(p) No Actions or Proceedings. There are no actions, suits,
proceedings, inquiries or investigations pending or, to the Company's
knowledge, threatened against the Company or any of the Subsidiaries
or any of their respective officers and directors or to which the
properties, assets or rights of any such entity is subject, at law or
in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority,
arbitral panel or agency which could reasonably be expected to result
in a judgment, decree, award or order having a material adverse effect
on the assets, operations, business or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole, or
which could adversely affect the consummation of the transactions
contemplated by this Agreement in any material respect.
(q) Financial Statements. The financial statements, including
the notes thereto, included in the Registration Statement and the
Prospectus present fairly the financial position of the entity or
entities presented therein as of the dates indicated and the results
of operations and changes in financial position and cash flows of the
entity or entities presented therein for the periods specified; such
financial statements have been prepared in conformity with generally
accepted accounting principles as applied in the United States and on
a consistent basis during the periods involved and in accordance with
Regulation S-X promulgated by the Commission; the financial statement
schedules included or incorporated by reference in the Registration
Statement and the Prospectus fairly present the information required
to be shown therein; no other financial statements or schedules are
required by Form S-3 or otherwise to be included in the Registration
Statement or Prospectus; the Company's ratios of earnings to fixed
charges and preferred stock dividends set forth in the Prospectus
under the caption "Prospectus - Ratio of Earnings to Fixed Charges"
have been calculated in compliance with Item 503(d) of Regulation S-K
under the Securities Act.
(r) Exchange Act Reports. The Company has filed in a timely
manner all reports required to be filed pursuant to Sections 13, 14
and 15(d) of the Exchange Act during the preceding twelve calendar
months and if during such period the Company has relied on Rule
12b-25(b) under the Exchange Act ("Rule 12b-25(b)") with respect to a
report or a portion of a report, that report or portion of a report
has actually been filed within the time period prescribed by Rule
l2b-25(b).
(s) Independent Accounts. Deloitte & Touche LLP, whose
reports on the audited financial statements of the Company and the
Subsidiaries are included as part of the Registration Statement and
Prospectus or are incorporated by reference therein and delivered its
reports with respect thereto, are and were during the periods covered
by their reports independent public accountants as required by the
Securities Act.
(t) No Material Adverse Change. Subsequent to the respective
dates as of which information is given in the Registration Statement
and the Prospectus, and except as may be otherwise described in the
Registration Statement or Prospectus, there has not been (i) any
material adverse change in the assets, operations, business or
condition (financial or otherwise), present or prospective, of the
Company and the Subsidiaries taken as a whole, whether or not arising
in the ordinary course of business, (ii) any transaction, which is
material to the Company and the Subsidiaries taken as a whole, entered
into by the Company or any of the Subsidiaries or (iii) any
obligation, contingent or otherwise, directly or indirectly incurred
by the Company or any of the Subsidiaries, which is material to the
Company and the Subsidiaries taken as a whole.
(u) Capitalization. The authorized shares of Common Stock of
the Company, including the Offered Shares, conform in all material
respects to the description thereof contained in the Registration
Statement and the Prospectus. The Company has an authorized, issued
and outstanding capitalization as set forth in the Prospectus under
the heading "historical" under the caption "Capitalization".
Immediately after the First Closing Date, the Company will have an
authorized, issued and outstanding capitalization as set forth in the
Prospectus under the heading "as adjusted" under the caption
"Capitalization" (subject to the Underwriters' option described in
Section 2(c) hereof) and no shares of any other class of Common Stock
or preferred stock will be issued and outstanding. All of the issued
and outstanding shares of Common Stock of the Company have been duly
authorized and are validly issued, fully paid and non-assessable, and
have been offered, sold and issued by the Company in compliance with
all applicable laws (including, without limitation, federal and state
securities laws). None of the issued shares of Common Stock of the
Company have been issued in violation of any preemptive or similar
rights granted by the Company.
(v) Capital Stock of the Subsidiaries. All of the issued and
outstanding membership interests of each Subsidiary have been duly
authorized and are validly issued, fully paid and non-assessable, and
ninety-five percent (95%) thereof are owned of record and beneficially
by the Company, and have been offered, sold and issued by the
Subsidiaries in compliance with all applicable laws (including, but
not limited to, federal and state securities laws). None of the issued
shares of capital stock of the Subsidiaries have been issued in
violation of any preemptive or similar rights.
(w) Regulation M. The Common Stock is an "actively-traded
security" excepted from the requirements of Rule 101 of Regulation M
under the Exchange Act by subsection (c)(1) of such rule.
(x) Convertible Securities. Except as disclosed in the
Prospectus, there are no outstanding (i) securities or obligations of
the Company or any of its Subsidiaries convertible into or
exchangeable for any capital stock of the Company or any such
Subsidiary, (ii) warrants, rights or options to subscribe for or
purchase from the Company or any such Subsidiary any such capital
stock or any such convertible or exchangeable securities or
obligations or (iii) obligations of the Company or any such Subsidiary
to issue any shares of capital stock, any such convertible or
exchangeable securities or obligation, or any such warrants, rights or
options.
(y) No Stabilization or Manipulation. Each of the Company,
the Subsidiaries, and each of their respective officers, directors and
controlling persons has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Offered Shares.
(z) No Broker or Dealer. The Company (i) is not required to
register as a "broker" or "dealer" in accordance with the provisions
of the Exchange Act and (ii) directly, or indirectly through one or
more intermediaries, does not control any member firm of the NASD.
(aa) No Advice. The Company has not relied upon the
Underwriters or legal counsel for the Underwriters for any legal, tax
or accounting advice in connection with the offering and sale of the
Offered Shares.
(bb) Disclosure of Statutes; Enforceability of Agreements.
There are no statutes or regulations applicable to the Company or any
of the Subsidiaries or certificates, permits or other authorizations
from governmental regulatory officials or bodies required to be
obtained or maintained by the Company or any of the Subsidiaries of a
character required to be disclosed in the Registration Statement or
the Prospectus which have not been so disclosed and properly described
therein. All agreements between the Company or any of the Subsidiaries
and third parties expressly referenced in the Prospectus are legal,
valid and binding obligations of the Company or one or more of the
Subsidiaries, enforceable in accordance with their respective terms,
except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and by general principles of equity.
(cc) Related Party Transactions. No relationship, direct or
indirect, exists between or among the Company or any of the
Subsidiaries, on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company, the Subsidiaries
or the Manager, 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.
(dd) Title to Assets. With such exceptions as could not
reasonably be expected to have a material adverse effect on the
assets, operations, business or condition (financial or otherwise) of
the Company and the Subsidiaries taken as a whole, the Company and the
Subsidiaries have good and marketable title in fee simple to all real
property, if any, and good title to all personal property owned by
them, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Prospectus or such as do not materially and
adversely affect the value of such property and do not interfere with
the use made or proposed to be made of such property by the Company
and the Subsidiaries; and any real property and buildings held under
lease by the Company or any Subsidiary 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
or such Subsidiary.
(ee) Intangibles. The Company and each Subsidiary 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, and other
intangible property rights (collectively, "Intangibles") necessary to
entitle the Company and each Subsidiary to conduct its business as
described in the Prospectus, and neither the Company, nor any
Subsidiary, has received written notice of infringement of or conflict
with (and the Company does not know of any such infringement of or
conflict with) asserted rights of others with respect to any
Intangibles which could materially and adversely affect the business,
prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company or any Subsidiary.
(ff) Internal Controls. The Company and each of its
Subsidiaries maintain 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.
(gg) Taxes. Each of the Company and the Subsidiaries have
filed on a timely basis all material federal, state, local and foreign
income and franchise tax returns required to be filed through the date
hereof and have paid all taxes shown as due thereon; and no tax
deficiency has been asserted against any such entity, nor does any
such entity know of any tax deficiency which is likely to be asserted
against any such entity which if, determined adversely to any such
entity, could materially adversely affect the business, prospects,
properties, assets, results of operations or condition (financial or
otherwise) of any such entity, respectively; all tax liabilities are
adequately provided for on the respective books of such entities.
(hh) Unlawful Payments. Neither the Company nor any of the
Subsidiaries nor, to the best of the Company's knowledge, any officer
or director purporting to act on behalf of the Company or any of the
Subsidiaries has at any time (i) made any contributions to any
candidate for political office, or failed to disclose fully any such
contributions, in violation of law, (ii) made any payment to any
state, federal or foreign governmental officer or official, or other
person charged with similar public or quasi-public duties, other than
payments required or allowed by applicable law, (iii) made any payment
outside the ordinary course of business to any investment officer or
loan broker or person charged with similar duties of any entity to
which the Company or any of the Subsidiaries sells or from which the
Company or any of the Subsidiaries buys loans or servicing
arrangements for the purpose of influencing such agent, officer,
broker or person to buy loans or servicing arrangements from or sell
loans to the Company or any of the Subsidiaries or (iv) engaged in any
transactions, maintained any bank account or used any corporate funds
except for transactions, bank accounts and funds which have been and
are reflected in the normally maintained books and records of the
Company and the Subsidiaries.
(ii) Loans to Officers. Except as otherwise disclosed in the
Prospectus, there are no material outstanding loans or advances or
material guarantees of indebtedness by the Company or any of the
Subsidiaries to or for the benefit of any of the officers or directors
of the Company or any of the Subsidiaries or any of the members of the
families of any of them.
(jj) No Employees. Neither the Company nor any of the
Subsidiaries have any employees.
(kk) REIT Status. The Company has been, and upon the sale of
the Offered Shares will continue to be, organized and operated in
conformity with the requirements for qualification and taxation as a
"real estate investment trust" ("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,
2004. 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.
(ll) New York Stock Exchange. The Offered Shares have been
approved for listing, upon official notice of issuance, on the New
York Stock Exchange.
(mm) Offering Materials. In connection with this offering,
the Company has not offered and will not offer shares of its Common
Stock or any other securities convertible into or exchangeable or
exercisable for shares of Common Stock in a manner in violation of the
Securities Act; the Company has not distributed and will not
distribute any offering material in connection with the offer and sale
of the Offered Shares, other than the Prospectus and Registration
Statement.
(nn) Investment Company Act. Neither the Company nor any of
the Subsidiaries is, or solely as a result of transactions
contemplated hereby and the application of the proceeds from the sale
of the Offered Shares, will become, an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(oo) Finder's Fees. The Company has not incurred any
liability for any finder's fees or similar payments in connection with
the transactions herein contemplated.
(pp) Environmental Laws. The Company and the Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the
Company and the Subsidiaries taken as a whole.
(qq) Compliance Costs. There are no costs or liabilities
associated with Environmental Laws (including, without limitation, any
capital or operating expenditures required for clean up, closure of
properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties) which would, singly or
in the aggregate, have a material adverse effect on the Company and
the Subsidiaries taken as a whole.
(rr) Mortgages. Each of the mortgages, deeds of trust or
other security agreements executed and/or delivered by or to the
Company or the Subsidiaries, as applicable, as the same may be
amended, restated, replaced, supplemented or otherwise modified from
time to time, (i) is accurate, correct and complete and enforceable in
accordance with its terms, subject to principles of equity and
bankruptcy, insolvency, moratorium and other laws generally applicable
to creditors' rights and the enforcement of debtors' obligations and
(ii) duly and properly executed by the Company or the Subsidiaries.
The Company is not aware of any facts that would impair the validity
or value of any of such mortgages, deeds of trust or other security
agreements and such mortgages, deeds of trust or other security
agreements are not the subject of any breach, default or event, that
with the passage of time or the giving of notice or both, would result
in such a breach or default.
(ss) Statistical Data. Any statistical and market-related
data included in the Registration Statement and the Prospectus are
based on or derived from sources that the Company believes to be
reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources to the extent
required.
(tt) Sarbanes-Oxley Act. 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.
(uu) Insurance. Each of the Company and the Subsidiaries are
insured by recognized, financially sound, and reputable institutions
with policies in such amounts and with such deductibles and covering
such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism, earthquakes,
general liability, and Directors and Officers liability. The Company
and each of the Subsidiaries believe in good faith that they will be
able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would, singly or in the
aggregate, have a material adverse effect on the Company and the
Subsidiaries taken as a whole. Neither of the Company nor any
Subsidiary has been denied any insurance coverage which it has sought
or for which it has applied.
Any certificate signed by an officer of the Company and
delivered to the Representative or to counsel for the Underwriters
shall be deemed to be a representation and warranty by the Company to
each Underwriter as to the matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Offered Shares.
(a) The Firm Offered Shares. On the basis of the
representations, warranties, and agreements herein contained, and upon
the terms but subject to the conditions herein set forth, the Company
agrees to issue and sell to the several Underwriters the Firm Offered
Shares upon the terms herein set forth and the Underwriters agree,
severally and not jointly, to purchase from the Company the respective
number of Firm Offered Shares set forth opposite their names on
Schedule A (the "List of the Underwriters") attached hereto. The
purchase price per Firm Offered Share to be paid by the several
Underwriters to the Company shall be $11.04 per share.
(b) The First Closing Date. Delivery of certificates for the
Firm Offered Shares to be purchased by the Underwriters and payment
therefor shall be made at the offices of JMP Securities LLC, One
Embarcadero Center, Suite 2100, San Francisco, California 94111 (or
such other place as may be agreed to by the Company and the
Representative) at 10:00 a.m. New York time, on June 30, 2004, or such
other time and date not later than 12:30 a.m. New York time, on July
12, 2004 as the Representative shall designate by notice to the
Company (the time and date of such closing are called the "First
Closing Date"); provided, however, that if the Company has not made
available to the Representative copies of the Prospectus within the
time provided in Section 2(g) (the "Payment for the Offered Shares")
and Section 3(d) (the "Copies of Any Amendments and Supplements to the
Prospectus") hereof, the Representative may, in its sole discretion,
postpone the First Closing Date until no later that two (2) full
business days following delivery of copies of the Prospectus to the
Representative.
(c) The Optional Offered Shares; the Second Closing Date. In
addition, on the basis of the representations, warranties, and
agreements herein contained, and upon the terms but subject to the
conditions herein set forth, the Company hereby grants an option to
the several Underwriters to purchase, severally and not jointly, up to
an aggregate of 315,000 Optional Offered Shares from the Company at
the purchase price per share to be paid by the Underwriters for the
Firm Offered Shares. The option granted hereunder is for use by the
Underwriters solely in covering any over-allotments in connection with
the sale and distribution of the Firm Offered Shares. The option
granted hereunder may be exercised at any time (but not more than
once) upon written notice by the Representative to the Company, which
notice may be given at any time within thirty (30) days from the date
of this Agreement. Such notice shall set forth (i) the aggregate
number of Optional Offered Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Offered Shares are to be registered and
(iii) the time, date, and place at which such certificates will be
delivered (which time and date may be simultaneous with, but not
earlier than, the First Closing Date, and in such case the term "First
Closing Date" shall refer to the time and date of delivery of
certificates for the Firm Offered Shares and the Optional Offered
Shares). Such time and date of delivery of the Optional Offered
Shares, if subsequent to the First Closing Date, is called the "Second
Closing Date" and shall be determined by the Representative and shall
not be earlier than three (3) nor later than five (5) full business
days after delivery of such notice of exercise. If any Optional
Offered Shares are to be purchased, each Underwriter agrees, severally
and not jointly, to purchase the number of Optional Offered Shares
(subject to such adjustments to eliminate fractional shares as the
Representative may determine) that bears the same proportion to the
total number of Optional Offered Shares to be purchased as the number
of Firm Offered Shares set forth on Schedule A (the "List of the
Underwriters") attached hereto opposite the name of such Underwriter
bears to the total number of Firm Offered Shares. The Representative
may cancel the option at any time prior to its expiration by giving
written notice of such cancellation to the Company.
(d) Public Offering of the Offered Shares. The Representative
hereby advises the Company that the Underwriters intend to offer for
sale to the public, as described in the Prospectus, their respective
portions of the Offered Shares as soon after this Agreement has been
executed and the Registration Statement has been declared effective as
the Representative, in its sole judgment, has determined is advisable
and practicable.
(e) Payment for the Offered Shares. Payment for the Offered
Shares shall be made at the First Closing Date (and, if applicable, at
the Second Closing Date) by wire transfer of immediately available
funds to the order of the Company.
It is understood that the Representative has been
authorized, for its own account and the accounts of the several
Underwriters, to accept delivery of and receipt for, and make payment
of the purchase price for, the Firm Offered Shares and any Optional
Offered Shares that the Underwriters have agreed to purchase. JMP,
individually and not as the Representative of the Underwriters, may
(but shall not be obligated to) make payment for any Offered Shares
to be purchased by any Underwriter whose funds shall not have been
received by the Representative by the First Closing Date or the
Second Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter
from any of its obligations under this Agreement.
(f) Delivery of the Offered Shares. The Company shall
deliver, or cause to be delivered, a credit representing the Firm
Offered Shares to an account or accounts at The Depository Trust
Company ("DTC") as designated by the Representative for the accounts
of the Representative and the several Underwriters at the First
Closing Date, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price
therefor. The Company shall also deliver, or cause to be delivered, a
credit representing the Optional Offered Shares that the
Representative and the Underwriters have agreed to purchase to an
account or accounts at DTC as designated by the Representative for the
accounts of the Representative and the several Underwriters, at the
Second Closing Date, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase
price therefor. Notwithstanding the foregoing, to the extent the
Representative so elects at least three (3) full business days prior
to the First Closing Date or the Second Closing Date, as the case may
be, the Company shall deliver, or cause to be delivered, to the
Representative for the accounts of the several Underwriters,
certificates for the Firm Offered Shares and the Optional Offered
Shares the Underwriters have agreed to purchase from them at the First
Closing Date or the Second Closing Date, as the case may be. In such
case, the certificates for the Offered Shares shall be in definitive
form and registered in such names and denominations as the
Representative shall have requested at least two (2) full business
days prior to the First Closing Date (or the Second Closing Date, as
the case may be) and shall be made available for inspection on the
business day preceding the First Closing Date (or the Second Closing
Date, as the case may be) at a location in San Francisco as the
Representative may designate.
(g) Delivery of Prospectus to the Underwriters. Not later
than 12:00 p.m. on the second business day following the date that the
Offered Shares are first released by the Underwriters for sale to the
public, the Company shall deliver or cause to be delivered, copies of
the Prospectus in such quantities and at such places as the
Representative shall request.
Section 3. Additional Covenants. The Company further covenants and
agrees with each Underwriter as follows:
(a) Representative's Review of Proposed Amendments and
Supplements. During such period beginning on the date hereof and
ending on the later of the First Closing Date or such date, as in the
opinion of counsel for the Underwriters, the Prospectus is no longer
required by law to be delivered in connection with sales by an
Underwriter or dealer (the "Prospectus Delivery Period"), prior to
amending or supplementing the Registration Statement (including any
registration statement filed under Rule 462(b) under the Securities
Act) or the Prospectus (including any amendment or supplement through
incorporation by reference of any report filed under the Exchange
Act), the Company shall furnish to the Representative for review a
copy of each such proposed amendment or supplement, and the Company
shall not file any such proposed amendment or supplement to which the
Representative reasonably objects.
(b) Securities Act Compliance. After the date of this
Agreement, the Company shall promptly advise the Representative in
writing of (i) the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (ii) the
time and date of any filing of any post-effective amendment to the
Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus, (iii) the time and date that
any post-effective amendment to the Registration Statement becomes
effective and (iv) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or
of any proceedings to remove, suspend, or terminate from listing or
quotation the Common Stock from any securities exchange upon which it
is listed for trading or included or designated for quotation, or of
the threat or initiation of any proceedings for any of such purposes.
If the Commission shall enter any such stop order at any time, the
Company will use its best efforts to obtain the lifting of such order
as soon as reasonably possible. Additionally, the Company agrees that
it shall comply with the provisions of Rules 424(b), 430A, and 434, as
applicable, under the Securities Act and will use its best efforts to
confirm that any filings made by the Company under such Rule 424(b)
were received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If, during the Prospectus Delivery Period, any
event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if in the opinion of
the Representative or counsel for the Underwriters, it is otherwise
necessary to amend or supplement the Prospectus to comply with the
law, the Company agrees to promptly prepare (subject to Section 3(a)
(the "Representative's Review of Proposed Amendments and
Supplements")), file with the Commission and furnish at its own
expense to the Underwriters and to dealers, amendments or supplements
to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus, as amended or supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the
Prospectus. The Company agrees to furnish the Representative, without
charge, during the Prospectus Delivery Period, as many copies of the
Prospectus and any amendments and supplements thereto (including any
documents incorporated or deemed incorporated by reference therein) as
the Representative may reasonably request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representative and counsel for the Underwriters to qualify or register
the Offered Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws, Canadian
provincial securities laws, or the securities laws of those
jurisdictions designated by the Representative, and will make such
applications, file such documents, and furnish such information as may
be required for that purpose. The Company shall comply with such laws
and shall continue such qualifications, registrations, and exemptions
in effect so long as required to continue such qualifications for so
long a period as the Representative may request for the distribution
of the Offered Shares. The Company shall not be required to qualify as
a foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not
presently qualified or where it is not presently subject to taxation
as a foreign corporation. The Company will advise the Representative
promptly of the suspension of the qualification or registration of (or
any such exemption relating to) the Offered Shares for offering, sale,
or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose. In the event of the issuance of any
order suspending such qualification, registration, or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at
the earliest possible moment.
(f) Notice of Subsequent Events Affecting the Market Price of
the Common Stock or Offered Shares. If during any period of time in
which a Prospectus relating to the Offered Shares is required to be
delivered under the Securities Act, any publication, or event relating
to or affecting the Company shall occur, as a result of which, in the
opinion of the Representative it shall reasonably determine, the
market price of the Offered Shares or Common Stock has been or is
likely to be adversely affected (regardless of whether such rumor,
publication, or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from the
Representative advising the Company to the effect set forth above,
prepare, consult with the Representative concerning the substance of
and disseminate a press release, or other public statement, reasonably
satisfactory to the Representative, responding to or commenting on
such publication, or event.
(g) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Offered Shares sold by it in the manner described
under the caption "Use of Proceeds" in the Prospectus.
(h) Transfer Agent. The Company shall engage and maintain, at
its expense, a registrar and transfer agent for the Common Stock.
(i) Earnings Statement. As soon as practicable, the Company
will make generally available to its securityholders and to the
Representative an earnings statement (which need not be audited)
covering a period of at least twelve (12) months beginning after the
effective date of the Registration Statement that satisfies the
provisions of Section 11(a) of the Securities Act.
(j) Periodic Reporting Obligations. During the Prospectus
Delivery Period, the Company shall file, on a timely basis, with the
Commission and the New York Stock Exchange all reports and documents
required to be filed under the Exchange Act. Additionally, the Company
shall report the use of proceeds from the issuance of the Offered
Shares as may be required under Rule 463 under the Securities Act.
(k) Agreement Not to Offer or Sell Additional Securities.
During the period of ninety (90) days following the date of the
Prospectus (the "Lock-up Period"), the Company will not, without the
prior written consent of JMP (which consent may be withheld in its
sole discretion), directly or indirectly, sell, offer, contract, or
grant any option to sell, pledge, transfer, or establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, otherwise dispose of, transfer, or enter into any
transaction which is designed to, or could be expected to, result in
the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise by the Company or any
affiliate of the Company or any person in privity with the Company or
any affiliate of the Company), or otherwise dispose of any Securities
(as defined in Exhibit C (the "Form of Lock-up Agreement") attached
hereto) or any securities that relates to or derives any significant
part of its value from the Securities; provided, however, that the
Company may issue (i) options to purchase its Common Stock pursuant to
any stock option plan, stock bonus, or other stock plan or arrangement
approved by the Board of Directors of the Company and described in the
Prospectus, (ii) Common Stock upon the exercise of such options
described in clause (i), but only if the holders of such shares,
options, or shares issued upon exercise of such options, agree in
writing not to sell, offer, dispose of or otherwise transfer any such
shares or options during the Lock-up Period without the prior written
consent of JMP (which consent may be withheld in its sole discretion),
(iii) Common Stock issuable pursuant to any dividend reinvestment and
stock purchase plan approved by the Board of Directors of the Company
or (iv) beginning twenty (20) days after the First Closing Date,
Common Stock issuable under a structured equity arrangement approved
by the Board of Directors of the Company.
(l) Future Reports to the Representative. During the period
of two (2) years hereafter, the Company will furnish to the
Representative at JMP Securities LLC, One Embarcadero Center, Suite
2100, San Francisco, California 94111, Attention: Mr. Joseph A.
Jolson: (i) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity, and cash flows for the
year then ended and the opinion thereon of the Company's independent
public or certified public accountants, (ii) as soon as practicable
after the filing thereof, copies of each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on
Form 8-K, or other report filed by the Company with the Commission,
the NASD, or any securities exchange, and (iii) as soon as available,
copies of any report or communication of the Company mailed generally
to holders of its capital stock.
(m) Exchange Act Compliance. The Company will file all
documents required to be filed with the Commission pursuant to Section
13, 14, or 15 of the Exchange Act in the manner and within the time
periods required by the Exchange Act.
(n) New York Stock Exchange. The Company shall use its best
efforts to effect and maintain the listing of the Offered Shares on
the New York Stock Exchange and to file with the New York Stock
Exchange all documents and notices required by the New York Stock
Exchange of companies that have securities that are listed on the New
York Stock Exchange.
(o) Stock Price Manipulation. The Company shall not, and
shall use its best efforts to cause its officers, directors and
affiliates not to, prior to the earlier of the expiration or the
exercise by the Underwriters of the option granted to the Underwriters
by the Company in Section 2 of this Agreement, (i) take, directly or
indirectly prior to termination of this Agreement, any action designed
to stabilize or manipulate the price of any security of the Company,
or which could be reasonably likely to cause or result in, or which
could be reasonably likely to in the future 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 Offered
Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Offered Shares other than pursuant to
this Agreement or (iii) pay or agree to pay to any person any
compensation for soliciting any order to purchase any other securities
of the Company.
(p) REIT Status. The Company shall use its best efforts to
continue to qualify as a REIT under the Code for each of its taxable
years for so long as the Board of Directors of the Company deems it in
the best interests of the Company's stockholders to remain so
qualified.
(q) Undertakings. The Company shall comply with all of the
provisions of any undertakings in the Registration Statement.
(r) Investment Company Act. The Company shall conduct its
affairs in such a manner so as to ensure that neither the Company nor
any of its subsidiaries will be an "investment company" or an entity
subject to regulation as an investment company within the meaning of
the Investment Company Act.
(s) Internal Controls. The Company shall maintain 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 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.
(t) Conditions. The Company shall use its best efforts to
satisfy, or cause to be satisfied, the conditions set forth in Section
6 hereof on or in respect of the First Closing Date and the Second
Closing Date hereunder.
(u) Rule 462(b) Registration Statement. The Company shall, if
necessary or appropriate, file a registration statement pursuant to
Rule 462(b) under the Act.
JMP, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
Section 4. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Offered
Shares as provided herein on the First Closing Date and, with respect to the
Optional Offered Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company set
forth in Section 1 (the "Representations and Warranties") hereof as of the date
hereof and as of the First Closing Date as though then made and, with respect
to the Optional Offered Shares, as of the Second Closing Date as though then
made, to the timely performance by the Company of its obligations hereunder,
and to each of the following additional conditions:
(a) Accountants' Original Comfort Letter. On the date hereof,
the Representative shall have received from Deloitte & Touche LLP,
independent public or certified public accountants for the Company, a
letter dated the date hereof addressed to the Underwriters, in form
and substance satisfactory to the Representative (the "Original
Letter").
(b) Accountants' Bring-down Comfort Letter. Representative
shall have received on the First Closing Date and on the Second
Closing Date, as the case may be, a letter from Deloitte & Touche LLP
addressed to the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, in form and substance
satisfactory to the Representatives.
(c) Compliance with Registration Requirements; No Stop Order;
No Objection from the NASD. For the period from and after
effectiveness of this Agreement and prior to the First Closing Date
and, with respect to the Optional Offered Shares, prior to the Second
Closing Date:
(i) the Company shall have filed the Prospectus with
the Commission (including the information required by Rule
430A under the Securities Act) in the manner and within the
time period required by Rule 424(b) under the Securities Act;
or the Company shall have filed a post-effective amendment to
the Registration Statement containing the information
required by such Rule 430A, and such post-effective amendment
shall have become effective; or, if the Company elected to
rely upon Rule 434 under the Securities Act and obtained the
Representative's consent thereto, the Company shall have
filed a Term Sheet with the Commission in the manner and
within the time period required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of
the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment to the
Registration Statement, shall be in effect and no proceedings
for such purpose shall have been instituted or are pending,
contemplated, or threatened by the Commission;
(iii) any request of the Commission for additional
information (to be included in the Registration Statement or
the Prospectus or any incorporated document or otherwise)
shall have been complied with to the satisfaction of counsel
to the Underwriters; and
(iv) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(d) No Material Adverse Change or Ratings Agency Change. For
the period from and after the date of this Agreement and prior to the
First Closing Date and, with respect to the Optional Offered Shares,
prior to the Second Closing Date:
(i) in the judgment of the Representative, there
shall not have occurred any material adverse change, or any
development that could reasonably be expected to result in a
material adverse change, in the condition, financial or
otherwise, earnings, operations, business, or prospects,
whether or not arising from transaction in the ordinary
course of business, of the Company and the Subsidiaries taken
as a whole, from that set forth in the Registration Statement
or Prospectus, which, in the sole judgment of the
Representative, is material and adverse and that makes it, in
the sole judgment of the Representative, impracticable or
inadvisable to proceed with the public offering of the
Offered Shares as contemplated by the Prospectus; and
(ii) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any securities of the Company or any
of its subsidiaries by any "nationally recognized statistical
rating organization" as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act.
(e) Opinion of Counsel to the Company. On each of the First
Closing Date and the Second Closing Date, the Representative shall
have received the favorable opinion of Skadden, Arps, Slate, Meagher &
Flom LLP, counsel for the Company, dated as of such Closing Date, the
form of which is attached hereto as Exhibit A (the "Form of Legal
Opinion of Counsel for the Company"). The Representative shall have
received such additional number of conformed copies of such counsel's
legal opinion as the Representative may request for each of the
several Underwriters.
Counsel rendering the opinion contained in Exhibit A
attached hereto may rely as to questions of law not involving the laws
of the United States or the State of New York or Delaware and upon
opinions of local counsel, and as to questions of fact upon
representations or certificates of officers of the Company and of
government officials, in which case their opinion is to state that
they are so relying and that they have no knowledge of any material
misstatement or inaccuracy in any such opinion, representation, or
certificate. Copies of any opinion, representation, or certificate so
relied upon shall be delivered to the Representative, and to
Underwriters' counsel.
(f) Opinion of Maryland Counsel to the Company. On each of
the First Closing Date and the Second Closing Date, the Representative
shall have received the favorable opinion of Miles & Stockbridge,
P.C., Maryland counsel for the Company, dated as of such Closing Date,
the form of which is attached hereto as Exhibit B (the "Form of Legal
Opinion of Counsel for the Company"). The Representative shall have
received such additional number of conformed copies of such counsel's
legal opinion as the Representative may request for each of the
several Underwriters.
(g) Opinion of Counsel for the Underwriters. On each of the
First Closing Date and the Second Closing Date, the Representative
shall have received the opinion of O'Melveny & Myers LLP, counsel for
the Underwriters, dated as of such Closing Date, in form and substance
satisfactory to the Representative, and the Representative shall have
received such additional number of conformed copies of such counsel's
legal opinion as the Representatives may request for each of the
several Underwriters. The Company shall have furnished to such counsel
such documents as such may have requested for the purpose of enabling
them to pass upon such matters.
(h) Officers' Certificate. On each of the First Closing Date
and the Second Closing Date, the Representative shall have received a
written certificate executed by the Chief Executive Officer of the
Company and the Chief Financial Officer of the Company, dated as of
such Closing Date, to the effect set forth in subsection (c)(ii)
("Compliance with Registration Requirements; No Stop Order; No
Objection from NASD") and subsection (d)(ii) ("No Material Adverse
Change or Ratings Agency Change") of this Section 5, and further to
the effect that:
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, there has not been (A) any material adverse
change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and
the Subsidiaries taken as a whole, (B) any transaction that
is material to the Company and the Subsidiaries taken as a
whole, except transactions entered into in the ordinary
course of business, (C) any obligation, direct or contingent,
that is material to the Company and the Subsidiaries taken as
a whole, incurred by the Company or the Subsidiaries, except
obligations incurred in the ordinary course of business, (D)
any change in the capital stock or outstanding indebtedness
that is material to the Company and the Subsidiaries taken as
a whole, (E) any dividend or distribution of any kind
declared, paid, or made on the capital stock of the Company
or any of the Subsidiaries or (F) any loss or damage (whether
or not insured) to the property of the Company or any of the
Subsidiaries which has been sustained or will have been
sustained which has a material adverse effect on the
condition (financial or otherwise), earnings, operations,
business, or business prospects of the Company and the
Subsidiaries taken as a whole;
(ii) When the Registration Statement became
effective and at all times subsequent thereto up to the
delivery of such certificate, (A) the Registration Statement
and the Prospectus, and any amendments or supplements thereto
and the incorporated documents, when such incorporated
documents became effective or were filed with the Commission,
contained all material information required to be included
therein by the Securities Act or the Exchange Act, as the
case may be, and in all material respects conformed to the
requirements of the Securities Act or the Exchange Act, as
the case may be; (B) the Registration Statement and any
amendments or supplements thereto, did not and does not
include any 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; (C)
the Prospectus and any amendments or supplements thereto, did
not and does not include any 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 light
of the circumstances under which they were made, not
misleading; and (D) since the effective date of the
Registration Statement, there has occurred no event required
to be set forth in an amended or supplemented Prospectus
which has not been so set forth;
(iii) the representations, warranties, and covenants
of the Company in this Agreement are true and correct with
the same force and effect as though expressly made on and as
of such Closing Date; and
(iv) the Company has complied with all the
agreements hereunder and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to
such Closing Date.
(i) Effectiveness of the Registration Statement. The Company
shall furnish at such Closing Date evidence reasonably satisfactory to
the Underwriters and their counsel that the Registration Statement
shall have become effective.
(j) Lock-up Agreement from Certain Securityholders of the
Company. On the date hereof, the Company shall have furnished to the
Representative an agreement in the form of Exhibit C (the "Form of
Lock-up Agreement") attached hereto from each officer and director of
the Company. Such agreement shall be in full force and effect on each
of the First Closing Date and the Second Closing Date.
(k) No Amendment or Supplement. No amendment or supplement to
the Registration Statement or Prospectus, including documents
incorporated by reference therein, shall have been filed to which the
Underwriters shall have reasonably objected.
(l) NASD Matters. On each of the First Closing Date and the
Second Closing Date, the NASD shall not have raised any objections
with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(m) New York Stock Exchange. On each of the First Closing
Date and the Second Closing Date, the Offered Shares shall have been
approved for listing on the New York Stock Exchange.
(n) Manager's Representation Letter. On each of the First
Closing Date and the Second Closing Date, the Manager shall have
furnished the Underwriters such documents and certificates as of the
date of this Agreement as the Underwriters may reasonably request,
including the certificate attached as Exhibit D attached hereto (the
"Manager's Representation Letter").
(o) Prospectus Flings. All filings with the Commission
required by Rule 424 under the Securities Act to have been filed by
the First Closing Date and the Second Closing Date, as applicable,
shall have been made within the applicable time period prescribed for
such filing by such rule.
(p) Additional Documents. On or before each of the First
Closing Date and the Second Closing Date, the Representative and
counsel for the Underwriters shall have received such information,
documents, and opinions as they may require for the purposes of
enabling them to pass upon the issuance and sale of the Offered Shares
as contemplated herein, or in order to evidence the accuracy of any of
the representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
If any condition specified in this Section 4 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Representative by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Offered Shares, at any time
prior to the Second Closing Date, which termination shall be without liability
on the part of any party to any other party, except that Section 5 (the
"Payment of Expenses"), Section 6 (the "Reimbursement of Underwriters'
Expenses"), Section 8 ("Indemnification"), Section 9 ("Contribution"), and
Section 12 (the "Representations and Indemnities to Survive Delivery") shall at
all times be effective and shall survive such termination.
Section 5. Payment of Expenses. The Company agrees to pay all costs,
fees, and expenses incurred in connection with the performance of its
obligations hereunder and in connection with the transactions contemplated
hereby, including, without limitation (i) all expenses incident to the issuance
and delivery of the Offered Shares (including all printing and engraving
costs), (ii) all fees and expenses of the registrar and transfer agent of the
Common Stock, (iii) all necessary issue, transfer, and other stamp taxes in
connection with the issuance and sale of the Offered Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel, independent
public or certified public accountants, and other advisors, (v) all costs and
expenses incurred in connection with the preparation, printing, filing,
shipping, and distribution of the Registration Statement (including financial
statements, exhibits, schedules, consents, and certificates of experts), each
preliminary prospectus and the Prospectus, and all amendments and supplements
thereto, and this Agreement, (vi) all filing fees, reasonable attorneys' fees,
and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Offered Shares for offer and sale under
the state securities or blue sky laws, and, if requested by the Representative,
preparing and printing a "Blue Sky Survey," or other memorandum, and any
supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to, and the
reasonable fees and expenses of counsel for the Underwriters in connection
with, the NASD's review and approval of the Underwriters' participation in the
offering and distribution of the Offered Shares, (viii) the fees and expenses
associated with listing the Offered Shares on the New York Stock Exchange, (ix)
all costs and expenses incident to the travel and accommodation of the
Company's employees on the "roadshow," and (x) all other fees, costs, and
expenses referred to in Part II of the Registration Statement. Except as
provided in this Section 5, Section 6 (the "Reimbursement of Underwriters'
Expenses"), Section 8 ("Indemnification"), and Section 9 ("Contribution")
hereof, the Underwriters shall pay their own expenses, including the fees and
disbursements of their counsel.
Section 6. Reimbursement of the Underwriters' Expenses.
If this Agreement is terminated by the Representative
pursuant to Section 4 (the "Conditions of the Obligations of the
Underwriters"), Section 7 (the "Effectiveness of this Agreement"), Section 10
(the "Default of One or More of the Several Underwriters") or Section 11 (the
"Termination of this Agreement"), or if the sale to the Underwriters of the
Offered Shares on the First Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Representative and the other Underwriters (or such Underwriters
as have terminated this Agreement with respect to themselves), severally, upon
demand for all reasonable out-of-pocket expenses that shall have been incurred
by the Representative and the Underwriters in connection with the proposed
purchase and the offering and sale of the Offered Shares, including, without
limitation, reasonable fees and disbursements of counsel, printing expenses,
travel and accommodation expenses, postage, facsimile, and telephone charges.
Section 7. Effectiveness of this Agreement.
This Agreement shall not become effective until the later of
(i) the execution of this Agreement by the parties hereto and (ii) notification
by the Commission to the Company and the Representative of the effectiveness of
the Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated
by any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (a) the Company to any
Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Representative and the Underwriters pursuant to Section 5 (the
"Payment of Expenses") and Section 6 (the "Reimbursement of the Underwriters")
hereof, (b) of any Underwriter to the Company or (c) of any party hereto to any
other party except that the provisions of Section 8 ("Indemnification") and
Section 9 ("Contribution") shall at all times be effective and shall survive
such termination.
Section 8. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees
to indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter
within the meaning of the Securities Act and the Exchange Act against
any Loss (as hereinafter defined) to which such Underwriter or such
controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation,
if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), insofar as
such Loss (or actions in respect thereof as contemplated below) arises
out of or is based (i) upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A or Rule 434 under the Securities
Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (ii) upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, the Prospectus Supplement or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided,
however, that the Company shall not be liable under this paragraph (a)
to the extent that a court of competent jurisdiction shall have
determined by a final judgment that Loss resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its bad faith or willful misconduct; and to
reimburse each Underwriter and each such controlling person for any
and all expenses (including the reasonable fees and disbursements of
counsel chosen by JMP) as such expenses are incurred by such
Underwriter or such controlling person in connection with
investigating, defending, settling, compromising, or paying any such
Loss; provided, however, that the foregoing indemnity agreement shall
not apply to any Loss to the extent, but only to the extent based upon
any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representative expressly
for use in the Registration Statement, any preliminary prospectus, the
Prospectus Supplement or the Prospectus (or any amendment or
supplement thereto); provided, further, that with respect to any
preliminary prospectus, the foregoing indemnity agreement shall not
inure to the benefit of any Underwriter from whom the person asserting
any Loss purchased Offered Shares, or any person controlling such
Underwriter, if copies of the Prospectus Supplement or the Prospectus
were timely delivered to the Underwriter pursuant to Section 2 (the
"Purchase, Sale, and Delivery of the Offered Shares") and a copy of
the Prospectus Supplement or the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Offered Shares to such person, and if the Prospectus Supplement or the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such Loss. "Loss" shall be defined as any loss, claim,
damage, liability, expense, or action, as incurred, suffered by the
specified person (collectively, the "Losses"). The indemnity agreement
set forth in this Section 8(a) shall be in addition to any liabilities
that the Company may otherwise have.
(b) Indemnification of the Company, Its Directors and
Officers. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each
of its officers who signed the Registration Statement and each person,
if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, against any Loss to which the Company, or any
such director, officer or controlling person may become subject, under
the Securities Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such Loss (or
actions in respect thereof as contemplated below) arises out of or is
based upon (i) any untrue or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment or
supplement thereto), or arises out of or is based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading or (ii) any untrue or alleged untrue statement of a
material fact contained in any preliminary prospectus, the Prospectus
Supplement or the Prospectus (or any amendment or supplement thereto),
or arises out of or is based upon the omission or alleged omission to
state therein 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, in each case
to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
the Registration Statement, any preliminary prospectus, the Prospectus
Supplement or the Prospectus (or any amendment or supplement thereto),
in reliance upon and in conformity with written information furnished
to the Company by the Representative expressly for use therein; and to
reimburse the Company, or any such director, officer or controlling
person for any legal and other expense reasonably incurred by the
Company, or any such director, officer or controlling person in
connection with investigating, defending, settling, compromising, or
paying any such Loss. The indemnity agreement set forth in this
Section 8(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(c) Information Provided by the Underwriters. The Company and
each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, hereby acknowledges that the
only information that the Underwriters have furnished to the Company
expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus Supplement or the Prospectus (or any
amendment or supplement thereto) are the statements set forth in the
second, tenth, eleventh and twelfth paragraphs under the caption
"Underwriting" in the Prospectus, and the Underwriters confirm that
such statements are correct.
(d) Notifications and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying
party under this Section 8, notify the indemnifying party in writing
of the commencement thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability hereunder
to the extent it is not materially prejudiced as a proximate result of
such failure and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity
agreement. In case any such action is brought against any indemnified
party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with
all other indemnifying parties similarly notified, by written notice
delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and
to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval
by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso to
the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (together with local counsel), approved by the
indemnifying party (JMP in the case of Section 8(b) and Section 9
("Contribution")), representing the indemnified parties who are
parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party,
or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying
party, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying party.
(e) Settlements. The indemnifying party under this Section 8
shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably
withheld, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify
the indemnified party against any Loss by reason of such settlement or
judgment. 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 Section 8(d) hereof, 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 thirty (30) days after receipt by such indemnifying party of
the aforesaid request, and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior
to the date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement, compromise, or consent to the entry of judgment in any
pending or threatened action, suit, or proceeding in respect of which
any indemnified party is or could have been a party and indemnity was
or could have been sought hereunder by such indemnified party, unless
such settlement, compromise, or consent (i) includes an unconditional
release of such indemnified party from all liability on claims that
are the subject matter of such action, suit, or proceeding, and (ii)
does not include a statement as to or an admission of fault,
culpability, or a failure to act by or on behalf of any indemnified
party.
Section 9. Contribution.
If the indemnification provided for in Section 8
("Indemnification") is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party in respect of any Loss
referred to therein, then each indemnifying party shall contribute to the
aggregate amount paid or payable by such indemnified party, as incurred, as a
result of any Loss referred to therein (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 Offered Shares
pursuant to this Agreement or (ii) 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 the Underwriters,
on the other hand, in connection with the statements, omissions, or
inaccuracies in the representations and warranties herein which resulted in
such Loss, 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 hand, in connection with the offering of the Offered Shares pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Offered Shares pursuant to this
Agreement (before deducting expenses) received by the Company, and the total
underwriting discount received by the Underwriters, in each case as set forth
on the front cover page of the Prospectus (or, if Rule 434 under the Securities
Act is used, the corresponding location on the Term Sheet) bear to the
aggregate initial public offering price of the Offered Shares as set forth on
such cover. The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact or any such
inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company, on the one hand, or the Underwriters, on
the other hand, 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 an indemnified party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in Section 8(d) ("Notifications and Other
Indemnification Procedures"), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim. The provisions set forth in Section 8(d) with respect to notice of
commencement of any action shall apply if a claim for contribution is to be
made under this Section 9; provided, however, that no additional notice shall
be required with respect to any action for which notice has been given under
Section 8(d) for purposes of indemnification.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 9.
The Underwriters' obligations to contribute pursuant to this
Section 9 are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in Schedule A (the
"List of Underwriters") attached hereto. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in excess
of the underwriting commissions received by such Underwriter in connection with
the Offered Shares underwritten by it and distributed to the public. 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. For purposes of this Section
9, each officer and employee of an Underwriter and each person, if any, who
controls an Underwriter within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company with
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company.
Any Loss for which an indemnified party is entitled to
indemnification or contribution under this Section 9 shall be paid by the
indemnifying party to the indemnified party as such Loss is incurred, but in
all cases, no later than forty-five (45) days of invoice to the indemnifying
party.
Section 10. Default of One or More of the Several Underwriters. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Offered
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Offered Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed ten
percent (10%) of the aggregate number of the Offered Shares to be purchased on
such date, the other Underwriters shall be obligated, severally, in the
proportions that the number of Firm Offered Shares set forth opposite their
respective names on Schedule A (the "List of Underwriters") attached hereto
bears to the aggregate number of Firm Offered Shares set forth opposite the
names of all such non-defaulting Underwriters, or in such other proportions as
may be specified by the Representative with the consent of the non-defaulting
Underwriters, to purchase the Offered Shares which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase on such date. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the Underwriters shall fail or refuse to purchase Offered Shares and
the aggregate number of Offered Shares with respect to which such default
occurs exceeds ten percent (10%) of the aggregate number of Offered Shares to
be purchased on such date, and arrangements satisfactory to the Representative
and the Company for the purchase of such Offered Shares are not made within
forty-eight (48) hours after such default, this Agreement shall terminate
without liability of any party to any other party except that the provisions of
Section 5 (the "Payment of Expenses"), Section 6 (the "Reimbursement of
Underwriters' Expenses"), Section 8 ("Indemnification"), and Section 9
("Contribution") shall at all times be effective and shall survive such
termination. In any such case, either the Representative or the Company shall
have the right to postpone the First Closing Date or the Second Closing Date,
as the case may be, but in no event for longer than seven (7) days in order
that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter under
this Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
Section 11. Termination of This Agreement. Prior to the First Closing
Date, this Agreement may be terminated by the Representative by notice given to
the Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the New
York Stock Exchange, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD, (ii) a general
banking moratorium shall have been declared by any of federal or New York
authorities, (iii) there shall have occurred any outbreak or escalation of
national or international hostilities or any crisis or calamity, or any change
in the United States or international financial markets, or any substantial
change or development involving a prospective substantial change in United
States' or international political, financial, or economic conditions, as in
the judgment of the Representative is material and adverse and makes it
impracticable to market the Common Shares in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of securities,
(iv) in the judgment of the Representative there shall have occurred any
material adverse change in the Company or any of the Subsidiaries taken as a
whole, or (v) the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident, or other calamity of such character as in the sole
judgment of the Representative may interfere materially with the conduct of the
business and operations of the Company regardless of whether or not such loss
shall have been insured. Any termination pursuant to this Section 11 shall be
without liability on the part of (a) the Company to any Underwriter, except
that the Company shall be obligated to reimburse the expenses of the
Representative and the Underwriters pursuant to Section 5 (the "Payment of
Expenses") and Section 6 (the "Reimbursement of Underwriters' Expenses")
hereof, (b) any Underwriter to the Company, or (c) of any party hereto to any
other party except that the provisions of Section 8 ("Indemnification") and
Section 9 ("Contribution") shall at all times be effective and shall survive
such termination.
Section 12. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, officers, or directors or any
controlling person, as the case may be, and will survive delivery of and
payment for the Offered Shares sold hereunder and any termination of this
Agreement.
Section 13. Notices. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representative:
JMP Securities LLC
One Embarcadero Center, Suite 2100
San Francisco, California 94111
Facsimile: (415) 263-1337
Attention: Mr. Joseph A. Jolson
with a copy to:
O'Melveny & Myers LLP
275 Battery Street, Suite 2600
San Francisco, California 94111-3305
Facsimile: (415) 984-8701
Attention: Peter T. Healy, Esq.
If to the Company:
Anthracite Capital, Inc.
40 East 52nd Street
New York, New York 10022
Facsimile: (212) 754-8758
Attention: Mr. Richard Shea
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Facsimile: (917) 777-3574
Attention: David J. Goldschmidt, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 14. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 (the "Default of One or More of the Several
Underwriters"), and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8 ("Indemnification") and Section 9
("Contribution"), and in each case their respective successors, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Offered Shares as such from any of the
Underwriters merely by reason of such purchase.
Section 15. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph, or provision of this Agreement
shall not affect the validity or enforceability of any other Section, paragraph
or provision hereof. If any Section, paragraph, or provision of this Agreement
is for any reason determined to be invalid or unenforceable, there shall be
deemed to be made such changes (and only such changes) as are necessary to make
it valid and enforceable.
Section 16. Governing Law Provisions.
(a) Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action, or
proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby ("Related Proceedings") may be
instituted in the federal courts of the United States of America
located in the City and County of New York or the courts of the State
of New York in each case located in the City and County of New York
(collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such
court (a "Related Judgment"), as to which such jurisdiction is
non-exclusive) of such courts in any such suit, action, or proceeding.
Service of any process, summons, notice, or document by mail to such
party's address set forth above shall be effective service of process
for any suit, action, or other proceeding brought in any such court.
The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action, or other proceeding in the
Specified Courts and irrevocably and unconditionally waive and agree
not to plead or claim in any such court that any such suit, action, or
other proceeding brought in any such court has been brought in an
inconvenient forum.
Section 17. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings, and negotiations
with respect to the subject matter hereof. This Agreement may be executed in
two or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the Section headings herein are for the convenience
of the parties only and shall not affect the construction or interpretation of
this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 ("Indemnification") and the
contribution provisions of Section 9 ("Contribution"), and is fully informed
regarding said provisions. Each of the parties hereto further acknowledges that
the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs, and its
business in order to assure that adequate disclosure has been made in the
Registration Statement, any preliminary prospectus, and the Prospectus (and any
amendments and supplements thereto), as required by the Securities Act and the
Exchange Act.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
ANTHRACITE CAPITAL, INC.
By: /s/ Richard Shea
----------------------
Richard Shea
Chief Operating Officer
and Chief Financial Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representative as of the date first above written.
JMP SECURITIES LLC
Acting as Representative of the several Underwriters named in the Schedule A
(the "List of the Underwriters") attached hereto.
By JMP SECURITIES LLC
By: /s/ Stephen P. Ortiz
----------------------
Stephen P. Ortiz
Managing Director
SCHEDULE A
List of the Underwriters
Underwriters Number of Firm
Common Shares To
be Purchased
- ------------------------------------------------------ --------------------
JMP Securities LLC ................................... 2,100,000
- ------------------------------------------------------ --------------------
Total........................................ 2,100,000
====================
SCHEDULE B
List of the Subsidiaries
1. Newpa/AHR Equity, LP
2. Newpa/AHR GP, LLC
3. Newpa/AHR Equity GP LLC
4. 1940 Monroe Street LLC
5. LEAFS CMBS I, Ltd.
6. Carbon Capital, Inc.
7. Anthracite Funding, LLC
8. Anthracite CDO Depositor, LLC
9. Anthracite CDO II Depositor, LLC
10. Anthracite CDO III Depositor, LLC
11. Anthracite CDO I, Ltd.
12. Anthracite CDO I Corp.
13. Anthracite CDO II, Ltd.
14. Anthracite CDO II Corp.
15. Anthracite CDO III, Ltd.
16. Anthracite CDO III Corp.