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EXHIBIT 1.15
CONTROLLED EQUITY OFFERING(SM)
SALES AGREEMENT
March 19, 2004
CANTOR FITZGERALD & CO.
135 East 57th Street
New York, New York 10022
Ladies and Gentlemen:
Thornburg Mortgage, Inc., a Maryland corporation (the
"Company"),
confirms its agreement ("Agreement") with
Cantor Fitzgerald & Co. ("CF&Co"), as
follows:
1.
Issuance and Sale of Placement Shares. The Company agrees that,
from
time to time during the term of this
Agreement, on the terms and subject to the
conditions set forth herein, it will issue
and sell through CF&Co, acting as
agent and/or principal, up to 10,000,000
shares (the "Placement Shares") of the
Company's common stock, par value $0.01 per
share ("Common Stock"); provided,
however, that with respect to "At The
Market" sales (as defined in Section 3
hereof), the aggregate sales price shall
not exceed $233.7 million. The issuance
and sale of Placement Shares through
CF&Co will be effected pursuant to a
registration statement on Form S-3 filed by
the Company and declared effective
by the Securities and Exchange Commission
(the "Commission").
2.
Placements. Each time that the Company wishes to issue and sell
Placement Shares hereunder (each, a
"Placement"), it will notify CF&Co of the
proposed terms of such Placement. If
CF&Co wishes to accept such proposed terms
(which it may decline to do for any reason
in its sole discretion) or, following
discussions with the Company, wishes to
accept amended terms, CF&Co will, prior
to 4:30 p.m. (eastern time) on the Business
Day following the Business Day on
which such notice is delivered to
CF&Co, issue to the Company a written notice
setting forth the terms that CF&Co is
willing to accept, including without
limitation the number of Placement Shares
to be issued, the manner(s) in which
sales are to be made, the date or dates on
which such sales are anticipated to
be made, any minimum price below which
sales may not be made, and the capacity
in which CF&Co may act in selling
Placement Shares hereunder (as principal,
agent or both) (a "Placement Notice"), the
form of which is annexed hereto as
Schedule 1. The amount of any discount,
commission or other compensation (other
than expenses pursuant to Section 7(h)
hereunder) to be paid by the Company to
CF&Co for effecting sales hereunder
shall be equal to (i) two percent (2%) of
the initial Fifteen Million Dollars
($15,000,000) of the gross proceeds with
respect to sales actually effected by
CF&Co during any calendar month (the
"Monthly Sales Threshold") prior to the
termination of this Agreement, plus (ii)
three percent (3%) of the gross proceeds in
excess of the Monthly Sales
Threshold for sales actually effected by
CF&Co during that same calendar month
prior to the termination of this Agreement.
For the avoidance of doubt, the date
that any sale shall be deemed to have been
effected for purposes of
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determining whether the Monthly Sales
Threshold has been achieved in any
calendar month and the corresponding,
applicable discount to be applied pursuant
to the immediately preceding sentence (i.e.
2% or 3%) shall be conclusively
determined by the trade date set forth on
the relevant confirmation sales
ticket, and such determination shall be
final and binding upon the parties. The
terms set forth in a Placement Notice will
not be binding on the Company or
CF&Co unless and until the Company
delivers written notice of its acceptance of
all of the terms of such Placement Notice
(an "Acceptance"), the form of which
is annexed hereto as Schedule 2; provided,
however, that neither the Company nor
CF&Co will be bound by the terms of a
Placement Notice unless the Company
delivers to CF&Co an Acceptance with
respect thereto prior to 4:30 p.m. (eastern
time) on the Business Day following the
Business Day on which such Placement
Notice is delivered to the Company. It is
expressly acknowledged and agreed that
neither the Company nor CF&Co will have
any obligation whatsoever with respect
to a Placement or any Placement Shares
unless and until CF&Co delivers a
Placement Notice to the Company and the
Company accepts such Placement Notice by
means of an Acceptance, and then only upon
the terms specified therein and
herein. In the event of a conflict between
the terms of this Agreement and the
terms of a Placement Notice, the terms of
such Placement Notice will control.
3. Sale
of Placement Shares by CF&Co. Subject to the terms and
conditions
of this Agreement, upon the Acceptance of a
Placement Notice, and unless the
sale of the Placement Shares described
therein has been suspended or otherwise
terminated in accordance with the terms of
this Agreement, CF&Co will use its
commercially reasonable efforts consistent
with its normal trading and sales
practices to sell such Placement Shares up
to the amount specified, and
otherwise in accordance with the terms of
such Placement Notice. CF&Co will
provide written confirmation to the Company
no later than the opening of the
Trading Day next following the Trading Day
on which it has made sales of
Placement Shares hereunder setting forth
the number of Placement Shares sold on
such day, the compensation payable by the
Company to CF&Co with respect to such
sales, and the Net Proceeds (as defined in
Section 5(a)) payable to the Company,
with an itemization of the deductions made
by CF&Co (as set forth in Section
5(a)) from the gross proceeds that it
receives from such sales. CF&Co may sell
any Placement Shares in privately
negotiated transactions and/or any other
method permitted by law, including but not
limited to sales at other than a
fixed price made on or through the
facilities of the New York Stock Exchange
(the "NYSE"), the existing trading market
for the Common Stock, or sales made to
or through a market maker or through an
electronic communications network, or in
any other manner that may be deemed to be
an "At The Market" offering as defined
in Rule 415 of the Securities Act of 1933,
as amended (the "Act"). The Company
acknowledges and agrees that (i) there can
be no assurance that CF&Co will be
successful in selling Placement Shares, and
(ii) CF&Co will incur no liability
or obligation to the Company or any other
person or entity if it does not sell
Placement Shares for any reason other than
a failure by CF&Co to use its
commercially reasonable efforts consistent
with its normal trading and sales
practices to sell such Placement Shares as
required under this Section 3. For
the purposes hereof, "Trading Day" means
any day on which Common Stock is
purchased and sold on the principal market
on which the Common Stock is listed
or quoted.
4.
Suspension of Sales. The Company or CF&Co may, upon notice to
the other
party hereto in writing or by telephone
(confirmed immediately by verifiable
facsimile transmission), suspend any sale
of Placement Shares; provided,
however, that such suspension shall not
affect or impair
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either party's obligations with respect to
any Placement Shares sold hereunder
prior to the receipt of such notice. The
Company agrees that no such notice
shall be effective against CF&Co unless
it is made to one of the individuals
named on Schedule 3 annexed hereto, as such
Schedule may be amended from time to
time. CF&Co agrees that no such notice
shall be effective against the Company
unless it is made to one of the individuals
named on Schedule 3 annexed hereto,
as such Schedule may be amended from time
to time.
5.
Settlement.
(a) Settlement
of Placement Shares. Unless otherwise specified in
the applicable Placement Notice, settlement
for sales of Placement Shares will
occur on the third (3rd) Business Day (or
such earlier day as is industry
practice for regular-way trading) following
the date on which such sales are
made (each a "Settlement Date"). The amount
of proceeds to be delivered to the
Company on a Settlement Date against the
receipt of the Placement Shares sold
("Net Proceeds") will be equal to the
aggregate sales price at which such
Placement Shares were sold, after deduction
by CF&Co for all (i) CF&Co's
commission, discount, or other compensation
for such sales payable by the
Company pursuant to Section 2 hereof, (ii)
any other amounts due and payable by
the Company to CF&Co hereunder pursuant
to Section 7(h) hereof, and (iii) any
transaction fees imposed by any
governmental or self-regulatory organization in
respect of such sales.
(b) Delivery
of Placement Shares. On or before each Settlement
Date, the Company will, or will cause its
transfer agent to, electronically
transfer the Placement Shares being sold by
crediting CF&Co's or its designee's
account at The Depository Trust Company
through its Deposit Withdrawal Agent
Commission System, or by such other means
of delivery as may be mutually agreed
upon by the parties hereto, and, upon
receipt of such Placement Shares, which in
all cases shall be freely tradeable,
transferable, registered shares of Common
Stock in good deliverable form, CF&Co
will cause the related Net Proceeds to be
delivered in same day funds to an account
designated by the Company prior to the
Settlement Date. If the Company defaults in
its obligation to deliver Placement
Shares on a Settlement Date, the Company
agrees that in addition to and in no
way limiting the rights and obligations set
forth in Section 9(a) hereto, it
will (i) hold CF&Co harmless against
any loss, claim, damage, or expense
(including reasonable legal fees and
expenses) of any nature whatsoever, as
incurred, arising out of or in connection
with such default by the Company, and
(ii) immediately pay to CF&Co any
commission, discount, or other compensation or
other amounts due and payable pursuant to
Section 7(h) hereof to which it would
otherwise have been entitled absent such
default.
6.
Representations and Warranties of the Company. The Company and,
where
applicable, the Manager (as defined
herein), represent and warrant to, and agree
with, CF&Co that:
(a) The Common
Stock is registered pursuant to Section 12(b) of
the Exchange Act (as hereinafter defined)
and the Company has filed all reports,
schedules, forms, statements and other
documents required to be filed by it with
the Commission (the "Commission Documents")
for at least two (2) years, and all
of such filings have been made on a timely
basis. The Common Stock is currently
listed and quoted on the NYSE under the
trading symbol "TMA". The Company meets
the requirements of Form S-3 under the Act
and the rules and regulations
thereunder ("Rules and Regulations")
including but not limited to the
transactions requirements for a primary
offering. A registration statement on
Form S-3 (Registration No. 333-111784)
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with respect to the Placement Shares, as
amended or supplemented (the
"Registration Statement"), including the
form of prospectus contained therein,
as amended or supplemented (the
"Prospectus"), has been prepared by the Company
in conformity with the requirements of the
Act and the Rules and Regulations and
has been filed with the Commission and has
been declared effective by the
Commission. The Company shall promptly
prepare and file any amendment or
supplement to the Registration Statement or
Prospectus required by this
Agreement or otherwise and the Company will
use its best efforts to cause any
such amendment to become effective as soon
as reasonably practicable. No stop
order suspending the effectiveness of the
Registration Statement has been
issued, and no proceeding for that purpose
has been instituted or threatened by
the Commission. Copies of all filings made
by the Company under the Act and all
Commission Documents that were filed with
the Commission on or prior to the date
of this Agreement which relate to the
Registration Statement have been delivered
to CF&Co. Any reference herein to the
Registration Statement, the Prospectus, or
any amendment or supplement thereto shall
be deemed to refer to and include the
documents incorporated (or deemed to be
incorporated) by reference therein, and
any reference herein to the terms "amend,"
"amendment" or "supplement" with
respect to the Registration Statement or
Prospectus shall be deemed to refer to
and include the filing after the execution
hereof of any document with the
Commission deemed to be incorporated by
reference therein. The Prospectus
delivered to CF&Co for use in
connection with this Agreement will be identical
to the version of the Prospectus created to
be transmitted to the Commission for
filing via EDGAR, except to the extent
permitted by Regulation S-T.
(b) Each part
of the Registration Statement, when such part became
or becomes effective, and the Prospectus,
on the date of filing thereof with the
Commission and at each Settlement Date,
conformed or will conform with the
requirements of the Act and the Rules and
Regulations; each part of the
Registration Statement, when such part
became or becomes effective, did not or
will not contain an untrue statement of a
material fact or omit to state a
material fact required to be stated therein
or necessary to make the statements
therein not misleading; and the Prospectus,
on the date of filing thereof with
the Commission and at each Settlement Date,
did not or will not include an
untrue statement of a material fact or omit
to state a material fact necessary
to make the statements therein, in the
light of the circumstances under which
they were made, not misleading; except that
the foregoing shall not apply to
statements or omissions in any such
document made in reliance on information
furnished to the Company by CF&Co
specifically stating that it is intended for
use in the Registration Statement, the
Prospectus, or any amendment or
supplement thereto.
(c) The
documents incorporated by reference in the Registration
Statement or the Prospectus, or any
amendment or supplement thereto, when they
became or become effective under the Act or
were or are filed with the
Commission under the Securities Exchange
Act of 1934, as amended (the "Exchange
Act"), as the case may be, conformed or
will conform with the requirements of
the Act or the Exchange Act, as applicable,
and the rules and regulations of the
Commission thereunder, and none of such
documents contained or will contain an
untrue statement of a material fact or
omitted to state a material fact required
to be stated therein or necessary to make
the statements therein not misleading;
and any further documents so filed and
incorporated by reference in the
Prospectus or any further amendment or
supplement thereto, when such documents
become effective or are filed with the
Commission, as the case may be, will
conform to the requirements of the Act or
the Exchange Act, as applicable, and
the rules and
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regulations of the Commission thereunder
and will not contain an untrue
statement of a material fact or omit to
state a material fact required to be
stated therein or necessary to make the
statements therein not misleading;
except that the foregoing will not apply to
statements or omissions in any such
document made in reliance on information
furnished to the Company by CF&Co
specifically stating that it is intended
for use in any such document.
(d) The
consolidated financial statements of the Company and the
Subsidiaries (as defined below), together
with the related schedules and notes
thereto, set forth or included or
incorporated by reference in the Registration
Statement and Prospectus fairly present the
financial condition of the Company
and the Subsidiaries as of the dates
indicated and the results of operations,
changes in financial position,
shareholders' equity and cash flows for the
periods therein specified are in conformity
with generally accepted accounting
principles consistently applied throughout
the periods involved (except as
otherwise stated therein). The selected
financial and statistical data included
or incorporated by reference in the
Registration Statement and the Prospectus
present fairly the information shown
therein and, to the extent based upon or
derived from the financial statements, have
been compiled on a basis consistent
with the financial statements presented
therein. Any pro forma financial
statements of the Company and the
Subsidiaries, and the related notes thereto,
included or incorporated by reference in
the Registration Statement and the
Prospectus present fairly the information
shown therein, have been prepared in
accordance with the Commission's rules and
guidelines with respect to pro forma
financial statements and have been properly
compiled on the basis described
therein, and the assumptions used in the
preparation thereof are reasonable and
the adjustments used therein are
appropriate to give effect to the transactions
and circumstances referred to therein. No
other financial statements are
required to be set forth or to be
incorporated by reference in the Registration
Statement or the Prospectus under the Act
that are not so set forth or
incorporated by reference therein.
(e) The
Company has been duly incorporated and is validly existing
as a corporation in good standing under the
laws of the state of Maryland with
full corporate power and authority
necessary to own, hold, lease and/or operate
its assets and properties and to conduct
the business in which it is engaged and
as described in the Registration Statement
and Prospectus; and the Company is
duly qualified as a foreign entity to
transact business and is in good standing
in each jurisdiction in which such
qualification is required, whether by reason
of the ownership or leasing of property or
the conduct of business, except where
the failure, individually or in the
aggregate, to be so qualified and be in good
standing would not have a material adverse
effect on (i) the consolidated
business, operations, properties, financial
condition, reputation, prospects or
results of operations of the Company and
the Subsidiaries (as defined herein)
and the Trust (as defined herein) taken as
a whole, (ii) the transactions
contemplated hereby, (iii) the shares of
Common Stock, including the Placement
Shares, or (iv) the ability of the Company
to perform its obligations under this
Agreement (collectively, a "Material
Adverse Effect"). The Company has full
corporate power and authority necessary to
enter into and perform its
obligations under this Agreement and to
consummate the transactions contemplated
hereby. The Company is in compliance in all
material respects with the laws,
orders, rules, regulations and directives
applicable to it. Complete and correct
copies of the articles of incorporation and
of the bylaws of the Company and all
amendments thereto have been delivered to
CF&Co.
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(f) (1) The
Company has no "subsidiaries" (as such term is defined
in Rule 1-02 of Regulation S-X promulgated
under the Act) other than Thornburg
Mortgage Funding Corporation ("Funding I"),
Thornburg Mortgage Acceptance
Corporation ("Acceptance I"), Thornburg
Mortgage Home Loans, Inc. ("TMHL"),
Thornburg Mortgage Funding Corporation II
("Funding II") and Thornburg Mortgage
Acceptance Corporation II ("Acceptance II")
(each a "Subsidiary" and,
collectively, the "Subsidiaries"). Each of
the Subsidiaries has been duly formed
and incorporated and is validly existing as
a corporation in good standing under
the laws of the State of Delaware, is duly
qualified to do business and is in
good standing as a foreign corporation in
each jurisdiction, in which its
ownership or lease of property or assets or
the conduct of its business requires
such qualification, except where the
failure to so qualify would not have a
Material Adverse Effect, and has full
corporate power and authority necessary to
own, hold, lease and/or operate its assets
and properties, to conduct the
business in which it is engaged and as
described in the Prospectus and to enter
into and perform its obligations under this
Agreement and to consummate the
transactions contemplated hereby. Each of
the Subsidiaries is in compliance in
all material respects with the laws,
orders, rules, regulations and directives
applicable to it. Complete and correct
copies of the certificates of
incorporation and of the bylaws of the
Subsidiaries and all amendments thereto
have been delivered to CF&Co.
(2) Other than the Subsidiaries, the Company does not own,
directly or indirectly, any shares of stock
or any other equity or long-term
debt securities of any corporation or have
any equity interest in any firm,
partnership, joint venture, association or
other entity. All of the outstanding
shares of capital stock of each of the
Subsidiaries have been duly authorized
and validly issued, are fully paid and
non-assessable, and are wholly owned by
the Company, directly or through TMHL, free
and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim
or other equity or adverse claims.
The Company directly owns 100% of each of
Funding I, Acceptance I and TMHL.
Funding II and Acceptance II are wholly
owned by TMHL. No options, warrants or
other rights to purchase, agreements or
other obligations to issue or other
rights to convert any obligation into
shares of capital stock or ownership
interests in the Subsidiaries are
outstanding.
(3) Thornburg Mortgage Advisory Corporation (the "Manager")
has been duly formed and incorporated and
is validly existing as a corporation
in good standing under the laws of the
State of Delaware, is duly qualified to
do business and is in good standing as a
foreign corporation in each
jurisdiction, in which its ownership or
lease of property or assets or the
conduct of its business requires such
qualification, except where the failure to
so qualify would not have a material
adverse effect on the Manager, and has full
corporate power and authority necessary to
own, hold, lease and/or operate its
assets and properties, to conduct the
business in which it is engaged and as
described in the Prospectus, and the
Manager is in compliance in all material
respects with the laws, orders, rules,
regulations and directives issued or
administered by such jurisdictions.
Complete and correct copies of the
certificate of incorporation and of the
bylaws of the Manager and all amendments
thereto have been delivered to CF&Co.
The Manager has no "subsidiaries" (as such
term is defined in Rule 1-02 of Regulation
S-X promulgated under the Act).
(4) TMA Mortgage Funding Trust II (the "Trust") has been duly
formed and is validly existing as a
business trust under the Delaware Statutory
Trust Act, in good standing under the laws
of Delaware, with full authority to
perform all functions (i) which business
trusts
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are authorized to perform and (ii) which
are described in the Prospectus. The
trustee for the Trust is the Wilmington
Trust Company.
(g) This
Agreement has been duly authorized, executed and
delivered by the Company and is a legal,
valid and binding agreement of the
Company enforceable in accordance with its
terms, except to the extent that (i)
enforceability may be limited by
bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting
creditors' rights generally and by general
equitable principles and (ii) the
indemnification and contribution provisions of
Section 9 hereof may be limited by federal
or state securities laws and public
policy considerations in respect
thereof.
(h) The
Company has an authorized capitalization as set forth in
its Annual Report on Form 10-K for the year
ending December 31, 2003, as amended
(the "2003 Form 10-K"), and all of the
issued shares of capital stock of the
Company have been duly and validly
authorized and issued and are fully paid and
non-assessable and have been issued in
compliance with all applicable federal
and state securities laws. The capital
stock of the Company conforms in all
material respects to the description
thereof contained in the Registration
Statement and Prospectus and such
description conforms to the rights set forth
in the instruments defining the same.
(i) The
Placement Shares have been duly authorized and, when
issued, delivered and paid for pursuant to
this Agreement, will be validly
issued and fully paid and non-assessable,
free and clear of all liens, charges,
claims, security interests or encumbrances
(collectively "Encumbrances") and
will be issued in compliance with all
applicable federal and state securities
laws; the Placement Shares conform to the
description thereof contained in the
Registration Statement and the Prospectus.
The certificates for the Placement
Shares shall be in due and proper form and
the holders of the Placement Shares
will not be subject to personal liability
by reason of being such holders.
Neither the stockholders of the Company,
nor any other person or entity have any
preemptive rights or anti-dilution rights
or rights of first refusal or first
offer or any similar rights (whether
pursuant to a so-called "poison pill"
provision or otherwise) with respect to the
Placement Shares or other rights to
purchase or receive any of the Placement
Shares or any other securities or
assets of the Company, except as set forth
in Exhibit 6(i); and no person has
the right, contractual or otherwise, to
cause the Company to issue to it, or
register pursuant to the Act, any shares of
capital stock or other securities or
assets of the Company upon the issuance or
sale of the Placement Shares, except
under the Company's Amended and Restated
2002 Long-Term Incentive Plan or its
Dividend Reinvestment and Stock Purchase
Plan (collectively, the "Stock Plans").
(j) All
necessary action has been duly and validly taken by the
Company to authorize the execution,
delivery and performance of this Agreement.
No approval, authorization, consent or
order of or filing with any national,
state or local governmental or regulatory
commission, board, body, authority or
agency is required in connection with the
issuance and sale of the Placement
Shares or the consummation by the Company
of the transaction contemplated hereby
other than (i) registration of the
Placement Shares under the Act, (ii) any
necessary qualification under the
securities or blue sky laws of the various
jurisdictions in which the Placement Shares
are being offered, or (iii) such
approvals as shall be obtained in
connection with the approval of the listing of
the Placement Shares on the NYSE.
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(k) Neither
the Company, any of the Subsidiaries, the Trust nor
the Manager is in breach of, or in default
under (nor has any event occurred
which with notice, lapse of time or both
would result in any breach of, or
constitute a default under), (i) their
respective charters, bylaws or
organizational documents, as the case may
be, or (ii) any obligation, agreement,
covenant or condition contained in any
contract, license, repurchase agreement,
management agreement, indenture, mortgage,
deed of trust, bank loan or credit
agreement, note, lease or other evidence of
indebtedness, or any lease, contract
or other agreement or instrument to which
the Company, any of the Subsidiaries,
the Trust or the Manager is a party or by
which the Company, the Subsidiaries,
the Trust, the Manager or any of their
respective assets or properties may be
bound or affected. To the knowledge of the
Company and the Manager, no other
party under any contract or other agreement
to which the Company or any of the
Subsidiaries is a party is in default in
any respect thereunder. The execution,
delivery and performance of this Agreement,
the issuance and sale of the
Placement Shares and the consummation of
the transactions contemplated hereby
will not conflict with, or result in any
breach of or constitute a default under
(nor constitute any event which with
notice, lapse of time or both would result
in any breach of, or constitute a default
under), (i) any provision of the
charter, bylaws or organizational
documents, as the case may be, of the Company,
any of the Subsidiaries, the Trust or the
Manager, (ii) any provision of any
contract, license, repurchase agreement,
management agreement, indenture,
mortgage, deed of trust, bank loan or
credit agreement, note, lease or other
evidence of indebtedness, or any lease,
contract or other agreement or
instrument to which the Company, any of the
Subsidiaries, the Trust or the
Manager is a party or by which the Company,
any of the Subsidiaries, the Trust
or the Manager, or any of their respective
assets or properties may be bound or
affected, or, with respect to the Manager,
which would have a material adverse
effect on the ability of the Manager to
perform its obligations under the
Management Agreement (as defined below) or
(iii) 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.
Neither the Company, any of the
Subsidiaries, the Trust nor the Manager
has, at any time during the past five
years, (i) made any unlawful contributions
to any candidate for any political
office or failed fully to disclose any
contribution in violation of law, or (ii)
made any payment to any state, federal or
foreign government official or other
person charged with similar public or
quasi-public duty (other than payment
required or permitted by applicable
law).
(l) Executing
and delivering this Agreement and the issuance and
sale of the Placement Shares and the
compliance by the Company with all of the
provisions of this Agreement and the
consummation of the transactions
contemplated herein will not result in the
creation of any Encumbrance upon any
assets of the Company or of any of the
Subsidiaries or the triggering of any
preemptive or anti-dilution rights or
rights of first refusal or first offer, or
any similar rights (whether pursuant to a
so-called "poison pill" provision or
otherwise), on the part of holders of the
Company's securities or any other
person. Neither the Company nor any of the
Subsidiaries, nor any person acting
on its or their behalf, has issued or sold
any shares of Common Stock or
securities or instruments convertible into,
exchangeable for and/or otherwise
entitling the holder thereof to acquire
shares of Common Stock which would be
integrated with the offer and sale of the
Placement Shares hereunder, including,
without limitation, for purposes of any
applicable stockholder approval
provisions, including, without limitation,
under the rules and regulations of
any exchange or automated quotation system
on which any of the securities of the
Company are listed or designated.
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(m)
PricewaterhouseCoopers LLP ("PWC"), whose report on the
consolidated financial statements of the
Company is filed with the Commission as
part of the Registration Statement and the
Prospectus, are and, during the
periods covered by their report, were
independent public accountants as required
by the Act. PWC is not in violation of the
auditor independence requirements of
the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act") with respect to the
Company.
(n) Each of
the Company, the Subsidiaries, the Trust and the
Manager has all necessary licenses,
permits, authorizations, consents and
approvals and has made all necessary
filings required under any federal, state,
local or foreign law, regulation or rule,
and has obtained all necessary
permits, authorizations, consents and
approvals from other Persons (as defined
below), in order to conduct its business as
described in the Prospectus, except
where the failure to obtain such licenses,
permits, authorizations, consents and
approvals would not have a Material Adverse
Effect. Each of the Company, the
Subsidiaries, the Trust and the Manager has
obtained all accreditation or
certification required by any applicable
law from any governmental agency or
authority in order to provide the products
and services which it currently
provides or which it proposes to provide as
set forth in the Prospectus. Neither
the Company, any of the Subsidiaries, the
Trust nor the Manager is in violation
of, or in default under, any such license,
permit, authorization, consent or
approval or any federal, state, local or
foreign law, regulation or rule or any
decree, order or judgment applicable to the
Company, any of the Subsidiaries,
the Trust or the Manager, except where any
such violation or default would not
have a Material Adverse Effect.
(o) The
descriptions in the Registration Statement and the
Prospectus of the legal or governmental
proceedings, contracts, leases and other
legal documents therein described present
fairly the information required to be
shown, and there are no legal or
governmental proceedings, contracts, leases, or
other documents of a character required to
be described in the Registration
Statement or the Prospectus or to be filed
as exhibits to the Registration
Statement which are not described or filed
as required. All agreements between
the Company, any of the Subsidiaries, the
Trust or the Manager, as the case may
be, and third parties expressly referenced
in the Prospectus are legal, valid
and binding obligations of the Company, the
Subsidiaries, the Trust or the
Manager, as the case may be, enforceable in
accordance with their respective
terms, except to the extent enforceability
may be limited by bankruptcy,
insolvency, reorganization, moratorium or
similar laws affecting creditors'
rights generally and by general equitable
principles.
(p) There are
no actions, suits, claims, investigations, inquiries
or proceedings pending or, to the Company's
knowledge, threatened to which the
Company, any of the Subsidiaries, the Trust
or the Manager or any of their
respective officers or directors is a party
or of which the properties or other
assets of any such entity is subject at law
or in equity, or before or by any
federal, state, local or foreign
governmental or regulatory commission, board,
body, authority or agency which could
result in a judgment, decree or order.
(q) During the
period of at least the last 24 calendar months
prior to the date of this Agreement, the
Company has timely filed with the
Commission all documents and other material
required to be filed pursuant to
Sections 13, 14 and 15(d) under the
Exchange Act. During the period of at least
the last 36 calendar months preceding the
filing of the Registration Statement,
the Company has filed all reports required
to be filed pursuant to Sections 13,
14 and 15(d) under the Exchange Act. As of
the date of this Agreement, the
aggregate market value of the
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<PAGE>
Company's voting stock held by
nonaffiliates of the Company was equal to or
greater than $150 million.
(r) Except as
disclosed in the Prospectus, since the date of the
latest audited financial statements
included in the Prospectus there has been no
event which would result in a Material
Adverse Effect. Subsequent to the
respective dates as of which information is
given in the Registration Statement
and the Prospectus and during the time that
a prospectus relating to the
Placement Shares is required to be
delivered under the Act, there shall not be
(i) any transaction which is material to
the Company, the Subsidiaries and the
Trust, except transactions in the ordinary
course of business, (ii) any
obligation, direct or contingent, which is
material to the Company, the
Subsidiaries and the Trust taken as a
whole, incurred by the Company, the
Subsidiaries or the Trust, except
obligations incurred in the ordinary course of
business, or (iii) except for regular
quarterly dividends on the Common Stock in
amounts per share that are consistent with
past practice, any dividend or
distribution of any kind declared, paid or
made by the Company on any class of
its capital stock. Neither the Company, any
of the Subsidiaries nor the Trust
has any material contingent obligation
which is not disclosed in the
Registration Statement or Prospectus.
(s) There are
no persons (as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the Act)
("Persons") with registration or other
similar rights to have any equity or debt
securities, including securities which
are convertible into or exchangeable for
equity securities, registered pursuant
to the Registration Statement or otherwise
registered by the Company under the
Act.
(t) Neither
the Company nor any of the Subsidiaries nor the Trust
has defaulted on any installment on
indebtedness for borrowed money or on any
rental on one or more long term leases,
which defaults would have a Material
Adverse Effect on the financial position of
the Company or any of the
Subsidiaries. Since it first became a
publicly-registered entity, the Company
has not filed a report pursuant to Section
13(a) or 15(d) of the Exchange Act
indicating that it (i) has failed to pay
any dividend or sinking fund
installment on preferred stock or (ii) has
defaulted on any installment on
indebtedness for borrowed money or on any
rental on one or more long term
leases, which defaults would have a
Material Adverse Effect on the financial
position of the Company or any of the
Subsidiaries.
(u) Each of
the Company, the Subsidiaries, the Trust, the Manager
and each of their respective officers,
directors and controlling Persons has
not, directly or indirectly, taken any
action designed to cause or to result in,
or that has constituted or which might
reasonably be expected to constitute, the
stabilization or manipulation of the price
of the Common Stock.
(v) The
Placement Shares will be approved prior to their issuance
for listing on the NYSE, subject to
official notice of issuance.
(w) Except for
Thornburg Securities Corporation which shall in no
way participate in the sale of Placement
Shares, neither the Company nor any of
the Subsidiaries, the Trust or related
entities (including the Manager) (i) is
required to register as a "broker" or
"dealer" in accordance with the provisions
of the Exchange Act or (ii) directly or
indirectly through one or more
intermediaries, controls or has any other
association with (within the meaning
of Article I
10
<PAGE>
of the Bylaws of the National Association
of Securities Dealers ("NASD")) any
member firm of the NASD.
(x) As of the
date of this Agreement, the investment portfolio
(other than cash and cash equivalents) of
the Company consists of adjustable and
variable-rate mortgage securities and
adjustable and variable-rate mortgage
loans. As of the date of this Agreement,
the derivative financial instruments
held by the Company consist solely of
interest rate cap agreements, eurodollar
futures contracts and interest rate swap
agreements. As of the date of this
Agreement and except as otherwise disclosed
in the Prospectus, the Company has
no plan or intention to materially alter
its stated investment policies and
operating policies and strategies, as such
are described in the 2003 Form 10-K,
including making any change to any stated
investment percentages or guidelines
or the stated equity-to-assets ratio
currently employed by the Company, the
Subsidiaries and the Trust. The Company,
the Subsidiaries and the Trust have
good and marketable title to all properties
and assets owned, directly or
indirectly, by the Company, the
Subsidiaries and the Trust, in each case free
and clear of any security interests, liens,
encumbrances, equities, claims and
other defects (except for any security
interest, lien, encumbrance or claim that
may otherwise exist under any applicable
repurchase agreement), except such as
do not interfere with the use made or
proposed to be made of such property or
asset by the Company, the Subsidiaries and
the Trust. Except for real estate
properties owned by the Company as a result
of foreclosure on delinquent loans,
if any, the Company, the Subsidiaries and
the Trust do not own any real
property. Any real property and buildings
held under lease by the Company, the
Subsidiaries and the Trust 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 and
the Subsidiaries.
(y) Each of
the Company, the Subsidiaries and the Trust has filed
all federal, state and foreign income and
franchise tax returns required to be
filed on or prior to the date hereof and
has paid taxes shown as due thereon (or
that are otherwise due and payable), other
than taxes which are being contested
in good faith and for which adequate
reserves have been established in
accordance with generally accepted
accounting principles. Neither the Company
nor the Manager has knowledge, after due
inquiry, of any tax deficiency which
has been asserted or threatened against the
Company, any of the Subsidiaries or
the Trust. To the knowledge of the Company
and the Manager, there are no tax
returns of the Company, the Subsidiaries or
the Trust that are currently being
audited by federal, state or local taxing
authorities or agencies which would
have a Material Adverse Effect.
(z) Each of
the Company, the Subsidiaries and the Trust owns or
possesses adequate license or other rights
to use all patents, trademarks,
service marks, trade names, copyrights,
software and design licenses, trade
secrets, manufacturing processes, other
intellectual property rights and
know-how (collectively, "Intangibl
