E XHIBIT 1.21
E XECUTION C OPY
THORNBURG MORTGAGE, INC.
4,000,000
Series D Adjusting Rate Cumulative
Redeemable Preferred Stock
(Liquidation Preference $25.00 per
share)
UNDERWRITING AGREEMENT
November 15, 2006
November 15, 2006
B EAR ,
S TEARNS & C O .
I NC .
S TIFEL ,
N ICOLAUS & C OMPANY ,
I NCORPORATED
as Representatives of the Several
Underwriters
c/o Stifel, Nicolaus &
Company, Incorporated
One Financial Plaza
501 North Broadway
St. Louis, MO 63102
Ladies and Gentlemen:
Thornburg Mortgage, Inc., a Maryland
corporation (the “Company”), proposes to issue and
sell to the underwriters named in Schedule A hereto
(the “Underwriters”), including Stifel,
Nicolaus & Company, Incorporated (“Stifel”)
and Bear, Stearns & Co. Inc., as representatives of the
several Underwriters (together, the “Representatives”),
an aggregate of 4,000,000 shares (the “Firm Shares”) of
Series D Adjusting Rate Cumulative Redeemable Preferred Stock
(liquidation preference $25.00 per share) (the “Preferred
Stock”) of the Company. In addition, solely for the purpose
of covering over-allotments, the Company proposes to grant to the
Underwriters the option to purchase from the Company up to an
additional 600,000 shares of Preferred Stock (the “Additional
Shares”). The Firm Shares and the Additional Shares are
hereinafter collectively sometimes referred to as the
“Shares.” The Shares are described in the Prospectus
which is referred to below.
The Company has filed with the
Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3
(No. 333-125125), including the related preliminary prospectus
or prospectuses, which registration statement became effective on
June 16, 2005. Such registration statement covers the
registration of the Shares under the Securities Act of 1933, as
amended (the “Securities Act”) and the rules and
regulations of the Commission under the Securities Act (the
“1933 Act Regulations”). Promptly after execution and
delivery of this Underwriting Agreement (this
“Agreement”), the Company will prepare and file a
prospectus in accordance with the provisions of Rule 430B
(“Rule 430B”) and Rule 424(b) (“Rule
424(b)”) of the 1933 Act Regulations. Any information
included in such prospectus that was omitted from such registration
statement at the time it became effective but that is deemed to be
part of and included in such registration statement at the time it
became effective pursuant to Rule 430B is referred to as
“Rule 430B Information.” Each prospectus used in
connection with the offering of the Shares that omitted Rule 430B
Information is herein called a “preliminary
prospectus.” Such registration statement, at any given time,
including the amendments thereto to such time, the exhibits and any
schedules thereto at such time, the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the
Securities Act at such time and the documents otherwise deemed to
be a part thereof or included therein by virtue of the application
of the 1933 Act Regulations, is herein called the
“Registration Statement.” The Registration Statement at
the time it originally became effective is herein called the
“Original Registration Statement.” The final prospectus
in the form first furnished to the Underwriters for use in
connection with the offering of the Shares, including the documents
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act at the time of the execution of this
Agreement and any preliminary prospectuses that form a part
thereof, is herein called the “Prospectus.”
The title, specific number of
shares, rank, stated value, liquidation preference, dividend rate,
dividend payment dates, redemption provisions, sinking fund
requirements, conversion provisions
and other terms of the Preferred Stock are set
forth in Articles Supplementary relating to the Preferred Stock to
be filed with the State Department of Assessments and Taxation of
Maryland prior to the “time of purchase” (as defined
below) (the “Articles Supplementary”).
The Company and the Underwriters
agree as follows:
1. Sale and Purchase . Upon
the basis of the warranties and representations and subject to the
terms and conditions herein set forth, the Company agrees to issue
and sell the Firm Shares to the Underwriters, and each Underwriter,
severally and not jointly, agrees to purchase from the Company the
respective number of Firm Shares (subject to such adjustment as the
Representatives may determine to avoid fractional shares) set forth
opposite the name of such Underwriter in Schedule A hereto
at a purchase price of $24.2125 per Share. The Company is advised
that the Underwriters intend (i) to make a public offering of
the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered and (ii) initially
to offer the Firm Shares upon the terms set forth in the
Prospectus. The Underwriters may from time to time increase or
decrease the public offering price after the initial public
offering to such extent as they may determine.
In addition, the Company hereby
grants to the several Underwriters the option to purchase, and upon
the basis of the warranties and representations and subject to the
terms and conditions herein set forth, the Underwriters shall have
the right to purchase, severally and not jointly, from the Company
ratably in accordance with the number of Firm Shares to be
purchased by each of them (subject to such adjustment as the
Representatives may determine to avoid fractional shares), all or a
portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm
Shares, at a purchase price of $24.2125 per share to be paid by the
Underwriters to the Company for the Firm Shares. This option may be
exercised by the Representatives on behalf of the several
Underwriters at any time from time to time on or before the
thirtieth day following the date hereof, by written notice to the
Company. Such notice shall set forth the aggregate number of
Additional Shares as to which the option is being exercised and the
date and time when the Additional Shares are to be delivered (any
such date and time being hereinafter referred to as an
“additional time of purchase”); provided, however, that
no additional time of purchase shall be (i) earlier than the
time of purchase or (ii) later than the tenth Business Day
after the date on which the option shall have been exercised. The
number of Additional Shares to be sold to each Underwriter shall be
the number which bears the same proportion to the aggregate number
of Additional Shares being purchased as the number of Firm Shares
set forth opposite the name of such Underwriter on Schedule
A hereto bears to the aggregate number of Firm Shares (subject,
in each case, to such adjustment as the Representatives may
determine to eliminate fractional shares). As used herein,
“Business Day” shall mean a day on which the New York
Stock Exchange (the “NYSE”) is open for trading and
commercial banks in The City of New York are open for
business.
2. Payment and Delivery .
Payment of the purchase price for the Firm Shares shall be made to
the Company by federal funds wire transfer against delivery of the
certificates for the Firm Shares to Stifel through the facilities
of The Depository Trust Company (“DTC”) for the
respective accounts of the Underwriters. Such payment and delivery
shall be made at 10:00 A.M., New York City time, on
November 21, 2006 (unless another time shall be agreed to by
the Representatives and the Company or unless postponed in
accordance with the provisions of Section 8 hereof). The time
at which such payment and delivery are actually made is herein
sometimes called the “time of purchase.” Certificates
for the Firm Shares shall be delivered to Stifel, through the
facilities of DTC, in book-entry form in such names and in such
denominations as the Representatives shall specify no later than
the second Business Day preceding the time of purchase. For the
purpose of expediting the checking of the form of certificate for
the Firm Shares by the Representatives, the Company agrees to make
such form of certificate available to the Representatives for such
purpose at least one full Business Day preceding the time of
purchase.
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Payment of the purchase price (and
accrued and undeclared dividends from November 21, 2006), for
the Additional Shares shall be made at any additional time of
purchase in the same manner as the payment for the Firm Shares.
Certificates for the Additional Shares shall be delivered to Stifel
through the facilities of DTC, in book-entry form at the additional
time of purchase in such names and in such denominations as the
Representatives shall specify no later than the second Business Day
preceding the additional time of purchase. For the purpose of
expediting the checking of the certificates for the Additional
Shares by the Representatives, the Company agrees to make a form of
such certificate available to the Representatives for such purpose
at least one full Business Day preceding the additional time of
purchase.
3. Representations and Warranties
of the Company . The Company and, where applicable, Thornburg
Mortgage Advisory Corporation, the Company’s external manager
(the “Manager”), represent and warrant to the
Underwriters that as of the date hereof, as of the Applicable Time
referred to in Section 3(b) hereof, and as of the time of
purchase provided in Section 2 hereof, as follows:
(a) At the time of filing and at the
effective date of the Original Registration Statement, the Company
met and continues to meet the requirements for use of Form S-3
under the Securities Act. The Original Registration Statement was
filed with, and was declared effective under the Securities Act by
the Commission. The Company has not received, and has no notice of,
any order of the Commission preventing or suspending the use of the
Registration Statement or threatening or instituting proceedings
for that purpose. Any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement, the General Disclosure Package (as defined below) or the
Prospectus or to be filed as exhibits to the Registration Statement
have been so described or filed. The Prospectus has been or will be
so prepared and will be filed pursuant to Rule 424(b) of the
Securities Act on or before the second Business Day following the
date hereof. Neither the Company nor the Manager has distributed
any offering material in connection with the offering or sale of
the Shares other than the Registration Statement, the General
Disclosure Package, the Prospectus or any other materials, if any,
permitted by the Securities Act.
(b) At the time the Original
Registration Statement and each amendment thereto became effective,
at each deemed effective date of the Registration Statement with
respect to the Underwriters pursuant to Rule 430B(f)(2) of the 1933
Act Regulations and at the time of purchase and at the additional
time of purchase, as the case may be, the Registration Statement
complied and will comply as to form in all material respects with
the requirements of the Securities Act and the 1933 Act
Regulations, and did not 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; provided , however , that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with the
information concerning the Underwriters furnished in writing to the
Company by the Underwriters specifically for use in the preparation
thereof. Neither the Commission nor any state or other jurisdiction
or other regulatory body has issued, or, to the knowledge of the
Company, is threatening to issue, any stop order under the
Securities Act or other order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of the
Prospectus or suspending the qualification or registration of the
Shares for offering or sale in any jurisdiction nor has instituted
or, to the knowledge of the Company, threatened to institute
proceedings for any such purpose.
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Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or
any such amendment or supplement was issued and at the time of
purchase or at the additional time of purchase, as the case may be,
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided ,
however , that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with the information concerning the Underwriters
furnished in writing to the Company by the Underwriters
specifically for use in the preparation thereof.
Each preliminary prospectus
(including the prospectus or prospectuses filed as part of the
Original Registration Statement or any amendment thereto) complied
as to form when so filed in all material respects with the
Securities Act and the 1933 Act Regulations.
As of the Applicable Time, neither
(i) any Issuer General Use Free Writing Prospectus (as defined
below) issued at or prior to the Applicable Time and the Statutory
Prospectus (as defined below) and the information included on
Schedule B hereto, all considered together (collectively,
the “General Disclosure Package”), nor (ii) any
individual Issuer Limited Use Free Writing Prospectus (as defined
below), when considered together with the General Disclosure
Package, included any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided , however ,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity
with the information concerning the Underwriters furnished in
writing to the Company by the Underwriters specifically for use in
the preparation thereof.
As used in this subsection and
elsewhere in this Agreement:
“Applicable Time” means
4:45 PM (Eastern time) on November 15, 2006 or such other time
as agreed by the Company and the Underwriters.
“Issuer Free Writing
Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the 1933 Act
Regulations (“Rule 433”), relating to the Shares that
(i) is required to be filed with the Commission by the
Company, (ii) is a “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i),
whether or not required to be filed with the Commission or
(iii) is exempt from filing pursuant to Rule
433(d)(5)(i) because it contains a description of the Shares
or of the offering that does not reflect the final terms, in each
case in the form filed or required to be filed with the Commission
or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g).
“Issuer General Use Free
Writing Prospectus” means any Issuer Free Writing Prospectus
that is intended for general distribution to prospective investors,
as evidenced by its being specified in Schedule C
hereto.
“Issuer Limited Use Free
Writing Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing
Prospectus.
“Statutory Prospectus”
as of any time means the prospectus relating to the Shares that is
included in the Registration Statement immediately prior to that
time, including any document incorporated by reference therein and
any preliminary or other prospectus deemed to be a part
thereof.
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(c) Any Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times
through the completion of the offering and sale of the Shares or
until any earlier date that the Company notified or notifies the
Representatives, did not, does not and will not include any
information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, the General
Disclosure Package or the Prospectus, including any document
incorporated by reference therein and any preliminary or other
prospectus deemed to be a part thereof that has not been superseded
or modified and the Company has not made any prior offer relating
to the Shares that would constitute an “issuer free writing
prospectus” as defined in Rule 433, or that would
otherwise constitute a “free writing prospectus” as
defined in Rule 405, required to be filed with the
Commission.
(d) The documents incorporated or
deemed incorporated by reference in the Registration Statement, the
Prospectus or any amendment or supplement thereto, at the time they
became or become effective, conformed or will conform in all
material respects with the requirements of the Securities Act and
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), as applicable, and the rules and
regulations of the Commission under the Exchange Act (the
“1934 Act Regulations”), and when read together with
the information in the Prospectus (1) at the time the Original
Registration Statement became effective, (2) at the earlier of
the time the Prospectus was issued and first used and the date and
time of the first contract of sale of Shares in this offering and
(3) at the time of purchase and at the additional time of
purchase, as the case may be, none of the documents contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(e) The Shares have been duly and
validly authorized by the Company for issuance and sale pursuant to
this Agreement and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and
fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest or other claim, including any
statutory or contractual preemptive rights, resale rights, rights
of first refusal or other similar rights, and will be registered
pursuant to Section 12 of the Exchange Act; the Articles
Supplementary will be in full force and effect prior to the time of
purchase and any additional time of purchase, as applicable, and
will comply with all applicable legal requirements.
(f) 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, the General Disclosure Package and the Prospectus are
accurate in all material respects and 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 and related summary data included or
incorporated by reference in the Registration Statement, the
General Disclosure Package 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, the General Disclosure Package 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 incorporated
by reference in the Registration Statement, General Disclosure
Package or the Prospectus under the Securities Act that are not so
set forth or incorporated by reference therein.
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(g) The Prospectus delivered to the
Underwriters for use in connection with this offering 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.
(h) The Company has been duly formed
and incorporated and is validly existing as a corporation in good
standing under the laws of the State of Maryland, is duly qualified
to do business and is in good standing as a foreign corporation in
each jurisdiction, each of which is listed on
Schedule D hereto, in which its ownership or lease of
property or assets or the conduct of its business requires such
qualification, except where the failure to so qualify would not
have a material adverse effect on the business, assets, properties,
prospects, financial condition or results of operation of the
Company and the Subsidiaries taken as a whole (a “Material
Adverse Effect”), and has full corporate power and authority
necessary to own, hold, lease and/or operate its assets and
properties, to conduct the business in which it is engaged and as
described in the Registration Statement, the General Disclosure
Package and the Prospectus and to enter into and perform its
obligations under this Agreement and to execute, deliver and file
the Articles Supplementary and to consummate the transactions
contemplated hereby. The Company 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 charter and the by-laws of the Company and all
amendments thereto have been delivered to the Underwriters and,
except as set forth in the exhibits to the Registration Statement,
no changes therein will be made subsequent to the date hereof and
prior to the time of purchase and, if applicable, any additional
time of purchase, other than the filing of the Articles
Supplementary.
(i) The Company has no
“subsidiaries” (as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the Securities Act) other
than Thornburg Mortgage Depositor, L.L.C. (“TMD”),
Thornburg Mortgage Capital Resources, LLC (“TMCR”),
Thornburg Mortgage Home Loans, Inc. (“TMHL”), Thornburg
Mortgage Hedging Strategies, Inc. (“TMHL”), Thornburg
Acquisition Subsidiary, Inc. (“TAS”) and Adfitech, Inc.
(“Adfitech”), all of which are identified on
Schedule E hereto (each a “Subsidiary” and,
collectively, the “Subsidiaries”). Each of the
Subsidiaries has been duly organized and is validly existing as a
corporation or limited liability company in good standing under the
laws of the State of Delaware, with the exception of Adfitech,
which has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada,
is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction, each of which is listed
on Schedule E hereto, 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 or to be in
good standing would not have a Material Adverse Effect, and has
full corporate or limited liability company 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, the General Disclosure
Package and the Prospectus. Each of the Subsidiaries 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 certificates or
articles of incorporation and of the by-laws or the organizational
documents of the Subsidiaries and all amendments thereto have been
delivered to the Underwriters and, except as set forth in the
exhibits to the Registration Statement, no changes therein will be
made subsequent to the date hereof and prior to the time of
purchase and, if applicable, any additional time of
purchase.
(j) 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
6
interest in any firm, partnership, joint
venture, association or other entity. All of the outstanding equity
interests 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 indirectly, 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 TMD, TMHL and TMHS. TMCR is wholly-owned by TMD. TAS and
Adfitech 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.
(k) 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, each of which is listed on
Schedule F hereto, 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 or be in good
standing would not have a material adverse effect on the ability of
the Manager to perform its obligations under the Amended and
Restated Management Agreement, dated as of July 1, 2004,
between the Company and the Manager (the “Management
Agreement”), 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 Registration Statement, the General Disclosure
Package and the Prospectus and to enter into this Agreement, 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 by-laws of the Manager
and all amendments thereto have been delivered to the Underwriters
and no changes therein will be made subsequent to the date hereof
and prior to the time of purchase and, if applicable, any
additional time of purchase. The Manager has no
“subsidiaries” (as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the Securities Act).
(l) Neither the Company, any of the
Subsidiaries 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, by-laws 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 or the Manager is a party or by which the Company, the
Subsidiaries, 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 Shares and the consummation of the transactions contemplated
hereby will not conflict with, or result in any breach of or
constitute a default under (or 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,
by-laws or organizational documents, as the case may be, of the
Company, any of the Subsidiaries 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 or the Manager is a party or
by which the Company, any of the Subsidiaries 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, 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
7
Subsidiaries 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).
(m) As of September 30, 2006,
as of the date hereof and as of the date of the time of purchase,
the Company had, has or will have an authorized, issued and
outstanding capitalization as set forth in the General Disclosure
Package and under the headings “Actual,” and “As
Adjusted,” respectively, in the Section of the Prospectus
entitled “Capitalization.” All of the issued and
outstanding shares of capital stock have been duly and validly
authorized and issued and are fully paid and non-assessable, have
been issued in compliance with all federal and state securities
laws and were not issued in violation of any preemptive right,
resale right, right of first refusal or similar right.
(n) This Agreement has been duly
authorized, executed and delivered by the Company and the Manager
and is a legal, valid and binding agreement of the Company and the
Manager enforceable in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(o) The capital stock of the
Company, including the Shares, conforms in all material respects to
the description thereof contained in the Registration Statement,
General Disclosure Package and Prospectus and such description
conforms in all material respects to the rights set forth in the
instruments defining the same. The certificates for the Shares
shall be in due and proper form and the holders of the Shares will
not be subject to personal liability by reason of being such
holders.
(p) No approval, authorization,
consent or order of or filing with any national, state or local
governmental or regulatory commission, board, body, authority or
agency is required in connection with the issuance and sale of the
Shares or the consummation by the Company of the transactions
contemplated by this Agreement or with the taking by the Company of
any action contemplated hereunder other than (i) registration
of the Shares under the Securities Act and the Exchange Act,
(ii) any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Shares are being
offered by the Underwriters or (iii) such approvals as have
been or will be obtained in connection with the approval of the
listing of the Shares on the NYSE.
(q) No person, as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the
Securities Act (each, a “Person”), has the right,
contractual or otherwise, to cause the Company to issue to it any
shares of capital stock or other securities of the Company upon the
issuance and sale of the Shares to the Underwriters hereunder, nor
does any Person have preemptive rights, co-sale rights, rights of
first refusal or other rights to purchase or subscribe for any of
the Shares or any securities or obligations convertible into or
exchangeable for, or any contracts or commitments to issue or sell
any of, the Shares or any options, rights or convertible securities
or obligations, other than those that have been expressly waived
prior to the date hereof.
(r) 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 Securities Act. KPMG LLP
(“KPMG”), the Company’s independent public
accountants effective August 8, 2006, and PWC are not in
violation of the auditor independence requirements of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”) with respect to the Company. Both PWC and KPMG are
registered with the Public Company Accounting Oversight
Board.
8
(s) Each of the Company, the
Subsidiaries 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, in order
to conduct its business as described in the Registration Statement,
the General Disclosure Package and the Prospectus, except where the
failure to obtain such licenses, permits, authorizations, consents
and approvals or to make such filings would not have a Material
Adverse Effect. Each of the Company, the Subsidiaries 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 nor the
Manager is in violation of, or in default under, any such license,
permit, authorization, consent or approval or any related federal,
state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Company, any of the
Subsidiaries or the Manager except where such violation or default
would not have a Material Adverse Effect.
(t) The descriptions in the
Registration Statement, the General Disclosure Package 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,
the General Disclosure Package 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 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 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 (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(u) Except as set forth in
Schedule G hereto, 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 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 that, if determined adversely to the
Company or any of its Subsidiaries, would individually or in the
aggregate have a Material Adverse Effect, or would materially and
adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise material
in the context of the sale of the Shares.
(v) During the period of at least
the last 36 calendar months prior to the date hereof, 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) of 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) of the Exchange
Act. As of the date hereof, the aggregate market value of the
Company’s voting stock held by nonaffiliates of the Company
was equal to or greater than $150 million.
9
(w) Except as disclosed in the
General Disclosure Package and the Prospectus, since the date of
the latest audited financial statements included in the General
Disclosure Package and the Prospectus there has been no material
adverse change, nor any development or event involving a
prospective material adverse change in the condition (financial or
otherwise), business, net worth, properties, assets or results of
operations of the Company and the Subsidiaries, taken as a whole.
Subsequent to the respective dates as of which information is given
in the Registration Statement, the General Disclosure Package and
the Prospectus and during the time that a prospectus relating to
the Shares is required to be delivered under the Securities Act,
there has not been and will not be (i) any transaction which
is material to the Company and the Subsidiaries, except
transactions in the ordinary course of business, (ii) any
obligation, direct or contingent, which 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, (iii) any change in the capital stock or
outstanding indebtedness of the Company or the Subsidiaries, other
than pursuant to the Company’s Dividend Reinvestment and
Stock Purchase Program, the Company’s Controlled Equity
Offering Program or in the ordinary course of business, or
(iv) except for regular quarterly dividends on the common
stock, par value $0.01 per share, of the Company (the “Common
Stock”), in amounts per share that are consistent with past
practice, or on the existing preferred stock in amounts per share
determined in accordance with the Company’s charter, any
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock. Neither the Company nor
any of the Subsidiaries has any material contingent obligation
which is not disclosed in the Registration Statement, General
Disclosure Package or Prospectus.
(x) There are no Persons with
registration or other similar rights to have any equity or debt
securities, including securities which are convertible into or
exchangeable for equity securities, registered pursuant to the
Registration Statement or otherwise registered by the Company under
the Securities Act.
(y) Neither the Company nor any of
the Subsidiaries 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. 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.
(z) Each of the Company, the
Subsidiaries, 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 outstanding
equity securities of the Company to facilitate the sale of the
Shares.
(aa) The Shares have been or will be
approved for listing on the NYSE, subject to official notice of
issuance.
(bb) Except as set forth in
Schedule H hereto, neither the Company, nor any of the
Subsidiaries or its affiliates (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 of the
By-laws of the National Association of Securities Dealers
(“NASD”)) any member firm of the NASD.
10
(cc) The Company has not relied upon
the Underwriters or their legal counsel for any legal, tax or
accounting advice in connection with the offering and sale of the
Shares.
(dd) Any certificate signed by any
officer of the Company delivered to the Underwriters or to counsel
for the Underwriters pursuant to or in connection with this
Agreement shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered
thereby.
(ee) As of the date hereof, the
investment portfolio (other than cash and cash equivalents) of
the Company consists of adjustable-rate mortgage securities and
adjustable-rate mortgage loans. As of the date hereof, the
derivative financial instruments held by the Company consist solely
of interest rate cap agreements, interest rate swap agreements and
eurodollar futures contracts. As of the date hereof and except as
otherwise disclosed in the Registration Statement, General
Disclosure Package or Prospectus, if applicable, 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 Company’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2006 filed with the
Commission, including making any change to any stated investment
percentages or guidelines or the stated equity-to-assets ratio
currently employed by the Company and the Subsidiaries. The Company
and the Subsidiaries have good and marketable title to all
properties and assets owned, directly or indirectly, by the Company
and the Subsidiaries, 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 and the Subsidiaries.
Except for “real estate owned” properties owned by the
Company as a result of foreclosures on delinquent loans, if any,
and commercial property owned by Adfitech, the Company and the
Subsidiaries do not own any real property. Any real property and
buildings held under lease by the Company and the Subsidiaries are
held
