EXHIBIT 1.1
12,500,000
Shares
TWO
HARBORS INVESTMENT CORP.
Common
Stock
UNDERWRITING
AGREEMENT
December
17, 2010
Credit
Suisse Securities (USA) LLC
As
Representative of the Several Underwriters listed in Schedule A
hereto,
c/o Credit
Suisse Securities (USA) LLC
Eleven
Madison Avenue
New York,
N.Y. 10010-3629
Dear
Sirs:
1. Introductory. Two Harbors
Investment Corp., a Maryland corporation (the “Company”), agrees with the
several Underwriters named in Schedule A hereto
(the “Underwriters”) to
issue and sell to the several Underwriters 12,500,000 shares (the “Firm Securities”) of its
common stock, par value $0.01 per share (the “Securities”), and also
proposes to issue and sell to the Underwriters, at the option of the
Underwriters, an aggregate of not more than 1,875,000 additional shares (the
“Optional Securities”)
of its Securities as set forth below. The Firm Securities and the Optional
Securities are herein collectively called the “Offered
Securities.”
2. Representations and Warranties of
the Company and Representations and Warranties of the
Manager.
(a) The
Company represents and warrants to, and agrees with, the several Underwriters
that:
(i) Filing and Effectiveness of
Registration Statement; Certain Defined Terms. The Company has filed
with the Commission a registration statement on Form
S-3 (No. 333-170251), including a related prospectus or prospectuses,
covering the registration of the Offered Securities under the Act, which has
become effective. “Registration Statement” at any
particular time means such registration statement in the form then filed with
the Commission, including any amendment thereto, any document incorporated by
reference therein and all 430B Information and all 430C Information with respect
to such registration statement, that in any case has not been superseded or
modified. “Registration Statement”
without reference to a time means the Registration Statement as of the Effective
Time. For purposes of this definition, 430B Information shall be
considered to be included in the Registration Statement as of the time specified
in Rule 430B.
For
purposes of this Agreement:
“430B Information” means
information included in a prospectus then deemed to be a part of the
Registration Statement pursuant to Rule 430B(e) or retroactively deemed to be a
part of the Registration Statement pursuant to Rule 430B(f).
“430C Information” means
information included in a prospectus then deemed to be a part of the
Registration Statement pursuant to Rule 430C.
“Act” means the Securities Act
of 1933, as amended.
“Applicable Time” means 9:00
a.m. (Eastern time) on the date of this Agreement.
“Closing Date” has the meaning
defined in Section 3 hereof.
“Commission” means the
Securities and Exchange Commission.
“Effective Time” of the
Registration Statement relating to the Offered Securities means the time of the
first contract of sale for the Offered Securities.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Final Prospectus” means the
Statutory Prospectus that discloses the public offering price, other 430B
Information and other final terms of the Offered Securities and otherwise
satisfies Section 10(a) of the Act.
“General Use Issuer Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is intended for
general distribution to prospective investors, as evidenced by its being so
specified in Schedule
B to this Agreement.
“Issuer Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433, relating to the Offered Securities 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).
“Limited Use Issuer Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is not a
General Use Issuer Free Writing Prospectus.
“Rules and Regulations” means
the rules and regulations of the Commission.
“Securities Laws” means,
collectively, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), the Act, the
Exchange Act, the Rules and Regulations, the auditing principles, rules,
standards and practices applicable to auditors of “issuers” (as defined in
Sarbanes-Oxley) promulgated or approved by the Public Company Accounting
Oversight Board and the rules of the NYSE Amex (“Exchange Rules”).
“Statutory Prospectus” with
reference to any particular time means the prospectus relating to the Offered
Securities (including the documents incorporated by reference therein) that is
included in the Registration Statement immediately prior to that time, including
all 430B Information and all 430C Information with respect to the Registration
Statement. For purposes of the foregoing definition, 430B Information shall be
considered to be included in the Statutory Prospectus only as of the actual time
that such form of prospectus (including a prospectus supplement) is filed with
the Commission pursuant to Rule 424(b) and not retroactively.
Unless
otherwise specified, a reference to a “rule” is to the indicated rule under the
Act.
(ii) Compliance with Securities Act
Requirements. (i) (A) At the time the Registration Statement
initially became effective, (B) at the time of each amendment thereto for the
purposes of complying with Section 10(a)(3) of the Act (whether by
post-effective amendment, incorporated report or form of prospectus), (C) at the
Effective Time relating to the Offered Securities, and (D) on each Closing Date,
the Registration Statement conformed and will conform in all respects to the
requirements of the Act and the Rules and Regulations and did not and will not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; and (ii) (A) on its date, (B) at the time of filing of the Final
Prospectus pursuant to Rule 424(b), and (C) on each Closing Date, the Final
Prospectus will conform in all respects to the requirements of the Act and the
Rules and Regulations and will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The preceding
sentence does not apply to statements in or omissions from any such document
based upon written information furnished to the Company by any Underwriter
through the Representative specifically for use therein, it being understood and
agreed that the only such information is that described as such in Section 8(b)
hereof.
(iii) Shelf Registration Statement.
The date of this Agreement is not more than three years subsequent to the
initial effective time of the Registration Statement. If, immediately
prior to the third anniversary of the initial effective time of the Registration
Statement, any of the Offered Securities remain unsold by the Underwriters, the
Company will prior to that third anniversary file, if it has not already done
so, a new shelf registration statement relating to the Offered Securities, in a
form satisfactory to the Representative, will use its best efforts to cause such
registration statement to be declared effective within 180 days after that third
anniversary, and will take all other action necessary or appropriate to permit
the public offering and sale of the Offered Securities to continue as
contemplated in the expired registration statement relating to the Offered
Securities. References herein to the Registration Statement shall
include such new shelf registration statement.
(iv) Ineligible Issuer
Status. (A) At the earliest time after the initial filing of
the Registration Statement that the Company or another offering participant made
a bona fide offer (within the meaning of Rule 164(h)(2)) of the Offered
Securities and (B) at the date of this Agreement, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405,
including (x) the Company or any other subsidiary in the preceding three
years not having been convicted of a felony or misdemeanor or having been made
the subject of a judicial or administrative decree or order as described in
Rule 405, or (y) the Company in the preceding three years not
having been the subject of a bankruptcy petition or insolvency or similar
proceeding, not having had a registration statement be the subject of a
proceeding under Section 8 of the Act and not being the subject of a
proceeding under Section 8A of the Act in connection with the offering of
the Offered Securities, all as described in Rule 405.
(v) General Disclosure
Package. As of the Applicable Time, neither (A) the General Use
Issuer Free Writing Prospectus(es) issued at or prior to the Applicable Time,
the preliminary prospectus supplement, December 15, 2010, including the base
prospectus, dated November 30, 2010 (which is the most recent Statutory
Prospectus distributed to investors generally) and the other
information, if any, stated in Schedule B to this
Agreement to be included in the General Disclosure Package, all considered
together (collectively, the “General Disclosure Package”),
nor (B) any individual Limited Use Issuer Free Writing Prospectus, 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. The preceding sentence does not apply
to statements in or omissions from any Statutory Prospectus or any Issuer Free
Writing Prospectus in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representative
specifically for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described
as such in Section 8(b) hereof.
(vi) Incorporated Documents. The
documents incorporated by reference in the Registration Statement and the
General Disclosure Package, when they were filed with the Commission or became
effective, conformed in all material respects to the requirements of the
Exchange Act, and none of such documents contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and any further documents so filed and incorporated by
reference in the Registration Statement or the General Disclosure Package, when
such documents are filed with the Commission, will conform in all material
respects to the requirements of the Exchange Act and will not contain any 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.
(vii) Issuer Free Writing
Prospectuses. Each Issuer Free Writing Prospectus, as of its issue
date and at all subsequent times through the completion of the public offer and
sale of the Offered Securities or until any earlier date that the Company
notified or notifies the Representative as described in the next sentence, did
not, does not and will not include any information that conflicted, conflicts or
will conflict with the information then contained in the Registration
Statement. If at any time following the issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as a result of which
such Issuer Free Writing Prospectus conflicted or would conflict with the
information then contained in the Registration Statement or as a result of which
such Issuer Free Writing Prospectus, if republished immediately following such
event or development, would include an untrue statement of a material fact or
omitted or would 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, (i) the Company has promptly notified or will promptly
notify the Representative and (ii) the Company has promptly amended or will
promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or
correct such conflict, untrue statement or omission.
(viii) Good Standing of the
Company. The Company has been duly incorporated and is existing and
in good standing under the laws of the State of Maryland, with power and
authority (corporate and other) to own its properties and conduct its business
as described in the General Disclosure Package; and the Company is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, result in a material
adverse effect on the condition (financial or otherwise), results of operations,
business, properties or prospects of the Company and its subsidiaries taken as a
whole (a “Material
Adverse
Effect”).
(ix) Subsidiaries. Each
subsidiary of the Company has been duly incorporated or organized and is
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with power and authority (corporate and other) to
own its properties and conduct its business as described in the General
Disclosure Package; and each subsidiary of the Company is duly qualified to do
business as a foreign corporation or organization in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect; all of the issued and
outstanding capital stock or membership interests of each subsidiary of the
Company has been duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock or membership interests of each subsidiary
owned by the Company, directly or through subsidiaries, is owned free from
liens, encumbrances and defects.
(x) Offered Securities. The
Offered Securities and all other outstanding shares of capital stock of the
Company have been duly authorized; the authorized equity capitalization of the
Company is as set forth in the General Disclosure Package; all outstanding
shares of capital stock of the Company are, and, when the Offered Securities
have been delivered and paid for in accordance with this Agreement on each
Closing Date, such Offered Securities will have been, validly issued, fully paid
and nonassessable, will conform to the information in the General Disclosure
Package and to the description of such Offered Securities contained in the Final
Prospectus; the stockholders of the Company have no preemptive rights with
respect to the Securities; and none of the outstanding shares of capital stock
of the Company have been issued in violation of any preemptive or similar rights
of any security holder. Except as disclosed in the General Disclosure
Package and the Final Prospectus, there are no outstanding (a) securities or
obligations of the Company convertible into or exchangeable for any capital
stock of the Company, (b) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such convertible or
exchangeable securities or obligations or (c) obligations of the Company to
issue or sell any shares of capital stock, partnership interests or membership
interests, as applicable, any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options.
(xi) No Finder’s Fee. Except as
disclosed in the General Disclosure Package, there are no contracts, agreements
or understandings between the Company or any of its affiliates, including, but
not limited to, PRCM Advisers LLC (the “Manager”) and Pine River
Capital Management L.P., a Delaware Limited partnership (“Pine River”), or any of their
respective direct or indirect subsidiaries, and any person that would give rise
to a valid claim against the Company or any Underwriter for a brokerage
commission, finder’s fee or other like payment in connection with this
offering.
(xii) Registration
Rights. Except as disclosed in the General Disclosure Package, there
are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act (collectively, “registration rights”), any
person to whom the Company has granted registration rights has agreed not to
exercise such rights until after the expiration of the Lock-Up Period referred
to in Section 5 hereof.
(xiii) Listing. The Offered
Securities have been approved for listing on the NYSE Amex, subject to notice of
issuance.
(xiv) Absence of Further Requirements. No
consent, approval, authorization, or order of, or filing or registration with,
any person (including any governmental agency or body or any court) is required
for the consummation of the transactions contemplated by this Agreement in
connection with the offering, issuance and sale of the Offered Securities by the
Company, except such as have been obtained, or made and such as may be required
under state securities laws.
(xv) Title to
Property. Except as disclosed in the General Disclosure Package, the
Company and its subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each case free
from liens, charges, encumbrances and defects that would materially affect the
value thereof or materially interfere with the use made or to be made thereof by
them and, except as disclosed in the General Disclosure Package, the Company and
its subsidiaries hold any leased real or personal property under valid and
enforceable leases with no terms or provisions that would materially interfere
with the use made or to be made thereof by them.
(xvi) Absence of Defaults and Conflicts
Resulting from Transaction. The execution, delivery and performance
of this Agreement, and the issuance and sale of the Offered Securities will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default or a Debt Repayment Triggering Event (as defined below)
under, or result in the imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, (A)
the Organizational Documents of the Company or any of its subsidiaries, (B) any
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their properties, or (C) any agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the properties of the
Company or any of its subsidiaries is subject, except in the cases of clauses
(B) and (C) only, for such defaults, violations, liens, charges or encumbrances
that would not, individually or in the aggregate, have a Material Adverse
Effect; a “Debt Repayment
Triggering Event” means any event or condition that gives, or with the
giving of notice or lapse of time would give, the holder of any note, debenture,
or other evidence of indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries; the term “Organizational Documents” as
used herein means (a) in the case of a corporation, its charter and by-laws; (b)
in the case of a limited or general partnership, its partnership certificate,
certificate of formation or similar organizational documents and its partnership
agreement; (c) in the case of a limited liability company, its articles of
organization, certificate of formation or similar organizational documents and
its operating agreement, limited liability company agreement, membership
agreement or other similar agreement; and (d) in the case of any other entity,
the organizational and governing documents of such entity.
(xvii) Absence of Existing Defaults and
Conflicts. Neither the Company nor any of its subsidiaries is in
violation of its Organizational Documents or in default (or with the giving of
notice or lapse of time would be in default) under any existing obligation,
agreement, covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which any of them is a party
or by which any of them is bound or to which any of the properties of any of
them is subject, except such defaults that would not, individually or in the
aggregate, result in a Material Adverse Effect.
(xviii) Authorization of
Agreement. This Agreement has been duly authorized, executed and
delivered by the Company.
(xix) Authorization and Enforceability of Management
Agreement. The Management Agreement, dated October 28, 2009 (the
“Management Agreement”),
by and among the Company and the Manager, 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 to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization or
other laws affecting enforcement of creditors’ rights or by general equitable
principles.
(xx) Possession of Licenses and
Permits. The Company and its subsidiaries possess, and are in
compliance with the terms of, all adequate certificates, authorizations,
franchises, licenses and permits (“Licenses”) necessary or
material to the conduct of the business now conducted or proposed in the General
Disclosure Package to be conducted by them and have not received any notice of
proceedings relating to the revocation or modification of any Licenses that, if
determined adversely to the Company or any of its subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect.
(xxi) Absence of Labor
Dispute. No labor dispute exists between any officers or other key
persons of the Company or the Manager named in the General Disclosure Package
(each, a “Company−Focused Professional”) on the
one hand and the employer of each such individual on the other hand nor, to
the knowledge of the Company, is such a labor dispute imminent that could have a
Material Adverse Effect; and to the knowledge of the Company, no labor dispute
exists between any employee of the Company or the Manager on the one hand and
the employer of each such individual on the other hand nor, to the knowledge of
the Company, is such a labor dispute imminent that could have a Material Adverse
Effect
(xxii) Employment; Noncompetition;
Nondisclosure. Neither the Company nor, to the best of the Company’s
knowledge, any employer of any Company−Focused Professional has been notified
that any such Company−Focused Professional plans to terminate his or her
employment with his or her employer. Neither the Company nor, to the best of the
Company’s knowledge, any Company−Focused Professional is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreement that would be violated by the present or proposed business activities
of the Company or the Manager as described in the General Disclosure
Package.
(xxiii) Accurate Disclosure. The
disclosure set forth in (A) the Company’s Annual Report on Form 10-K for
the year ended December 31, 2009 under the headings “Business—Management
Agreement” and “Business—Regulation”, (B) the Company’s Definitive Proxy
Statement on Schedule 14A filed on April 30, 2010, under the heading “Certain
Transactions with Related Persons― Management
Agreement and Shared Facilities and Services Agreement”, and (C) in the General
Disclosure Package and the Final Prospectus under the headings “Description of
Capital Stock”, “Certain Provisions of the Maryland General Corporation Law and
Two Harbors’ Charter and Bylaws”, “U.S. Federal Income Tax Considerations” and
“Underwriting”, insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate and fair summaries of
such legal matters, agreements, documents or proceedings and present the
information required to be shown.
(xxiv) Possession of Intellectual
Property. The Company does not have any trademark, trade names and other
rights to inventions, know-how, patents, copyrights, confidential information
and other intellectual property that is material to the present or proposed
business activities of the Company as described in the General Disclosure
Package.
(xxv) Absence of
Manipulation. None of the Company, the Manager or their respective
subsidiaries or affiliates has taken, directly or indirectly, any action that is
designed to or that has constituted or that would reasonably be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Offered
Securities.
(xxvi) Pine River-Related
Data. Any financial or other data regarding Pine River and its
direct and indirect subsidiaries, including but not limited to, the Manager that
is included in a Registration Statement, a Statutory Prospectus or the General
Disclosure Package is derived from Pine River’s accounting or other applicable
records and is accurate in all material respects.
(xxvii) Statistical and Market-Related
Data. Any third-party statistical and market-related data included
in a Registration Statement, a Statutory Prospectus or the General Disclosure
Package are based on or derived from sources that the Company believes to be
reliable and accurate.
(xxviii) Internal Controls and Compliance
with the Sarbanes-Oxley Act. Except as set forth in the General
Disclosure Package, the Company, its subsidiaries and the Company’s Board of
Directors (the “Board”)
are in compliance with Sarbanes-Oxley and all applicable Exchange Rules. The
Company maintains a system of internal controls, including, but not limited to,
disclosure controls and procedures, internal controls over accounting matters
and financial reporting, an internal audit function and legal and regulatory
compliance controls (collectively, “Internal Controls”) that
comply with the Securities Laws and are sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management’s
general or specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with U.S. Generally
Accepted Accounting Principles (“US GAAP”) and to maintain
accountability for assets; (C) receipts and expenditures are being made only in
accordance with management’s general or specific authorization; (D) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (E) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Internal Controls are, or upon consummation of
the offering of the Offered Securities will be, overseen by the Audit Committee
(the “Audit Committee”)
of the Board in accordance with Exchange Rules. The Company has not publicly
disclosed or reported to the Audit Committee or the Board, and within the next
135 days the Company does not reasonably expect to publicly disclose or report
to the Audit Committee or the Board, a significant deficiency, material
weakness, change in Internal Controls or fraud involving management or other
employees who have a significant role in Internal Controls (each, an “Internal Control Event”), any
violation of, or failure to comply with, the Securities Laws, or any matter
which, if determined adversely, would have a Material Adverse
Effect.
(xxix) Litigation. Except as
disclosed in the General Disclosure Package, there are no pending actions, suits
or proceedings (including any inquiries or investigations by any court or
governmental agency or body, domestic or foreign) against or affecting the
Company, any of its subsidiaries or any of their respective properties 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 Offered Securities; and no such actions, suits or proceedings
(including any inquiries or investigations by any court or governmental agency
or body, domestic or foreign) are threatened or, to the Company’s knowledge,
contemplated.
(xxx) Financial
Statements. The financial statements included in each Registration
Statement and the General Disclosure Package present fairly the financial
position of the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with US GAAP applied on a
consistent basis and the schedules included in each Registration Statement
present fairly the information required to be stated therein. The summary and
selected financial and statistical data included in the Registration Statement,
the General Disclosure Package and the Prospectus presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company. There are no financial statements that are required to be included in
the Registration Statement, the General Disclosure Package or the Prospectus
that are not included as required.
(xxxi) Non-GAAP Financial Measures. All
“non-GAAP financial measures” (as defined in the Rules and Regulations) included
in the Registration Statement, the General Disclosure Package or the Prospectus
comply with the requirements of Regulation G and Item 10 of Regulation S-K under
the Rules and Regulations.
(xxxii) No Material Adverse Change in
Business. Except as disclosed in the General Disclosure Package,
since the end of the period covered by the latest audited financial statements
included in the General Disclosure Package (A) there has been no change,
nor any development or event involving a prospective change, in the condition
(financial or otherwise), results of operations, business, properties or
prospects of the Company and its subsidiaries, taken as a whole that
is material and adverse, (B) except as disclosed in or contemplated by
the General Disclosure Package, there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock, (C) except as disclosed in or contemplated by the General Disclosure
Package, there has been no material adverse change in the capital stock,
short-term indebtedness, long-term indebtedness, net current assets or net
assets of the Company and subsidiaries, (D) there has not been any material
transaction entered into or any material transaction that is probable of being
entered into by the Company, other than transactions in the ordinary course of
business and changes and transactions described in the Registration Statement,
the General Disclosure Package and the Prospectus and (E) there has not been any
obligation, direct or contingent, which is material to the Company taken as a
whole, incurred by the Company, except obligations incurred in the ordinary
course of business
(xxxiii) Investment Company Act. The Company
is not and, after giving effect to the offering and sale of the Offered
Securities and the application of the proceeds thereof as described in the
General Disclosure Package, will not be an “investment company” as defined in
the Investment Company Act of 1940, as amended (the “Investment Company Act”) or an
entity controlled by an investment company.
(xxxiv) Insurance. The Company
and each of its subsidiaries is insured by insurers with appropriately rated
claims paying abilities against such losses and risks and in such amounts as are
prudent and customary for the businesses in which they are engaged; all policies
of insurance and fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect; none of the Company or any of its
subsidiaries has been refused any insurance coverage sought or applied for; and
the Company has obtained directors’ and officer’s insurance in such amounts as
is customary for companies engaged in the type of business conducted by the
Company.
(xxxv) Tax Law Compliance. The Company and its
subsidiaries have filed all necessary federal, state, local and foreign income
and franchise tax returns in a timely manner, and all such tax returns are
correct and complete in all material respects, and have paid all taxes required
to be paid by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against any of them, except for any taxes,
assessments, fines or penalties as may be being contested in good faith and by
appropriate proceedings.
(xxxvi) Real Estate Investment Trust.
The Company has made a timely election to be subject to tax as a real
estate investment trust (“REIT”) pursuant to Sections
856 through 860 of the United States Internal Revenue Code of 1986, as amended
(the “Code”) for its
taxable year ending December 31, 2009. Commencing with its taxable year ended
December 31, 2009, the Company has been organized and operating in conformity
with the requirements for qualification and taxation as a REIT under the Code,
and the Company’s actual and proposed method of operation as set forth in each
Registration Statement, the General Disclosure Package and each Statutory
Prospectus does and will enable it to meet the requirements for qualification
and taxation as a REIT under the Code. All statements regarding the Company’s
qualification and taxation as a REIT and descriptions of the Company’s
organization and proposed method of operation set forth in the General
Disclosure Package and each Statutory Prospectus are true, complete and correct
in all material respects.
(xxxvii) Description of Organization and
Method of Operation. The description of the
Company’s organization and actual and proposed method of operation and its
qualification and taxation as a REIT set forth in each Registration Statement,
the General Disclosure Package and each Statutory Prospectus is accurate and
presents fairly the matters referred to therein in all material respects; the
Company’s operating policies and investment guidelines described in each
Registration Statement, the General Disclosure Package and each Statutory
Prospectus accurately reflect in all material respects the current intentions of
the Company with respect to the operation of its business, and no material
deviation from such guidelines or policies is currently
contemplated.
(xxxviii) Anti-Bribery Laws. None
of the Company or its subsidiaries (collectively and individually, an “Entity”), and to the knowledge
of the Entity, any director of the Company, any Company-Focused Professional,
any other employee of the Manager providing services to the Company as described
in the General Disclosure Package, or to the Company’s knowledge any other agent
or representative of the Company or its subsidiaries, or any affiliate of the
Company, has taken or will take any action in furtherance of an offer, payment,
promise to pay, or authorization or approval of the payment or giving of money,
property, gifts or anything else of value, directly or indirectly, to any
“government official” (including any officer or employee of a government or
government-owned or controlled entity or of a public international organization,
or any person acting in an official capacity for or on behalf of any of the
foregoing, or any political party or party official or candidate for political
office) to influence official action or secure an improper advantage; and the
Company and its subsidiaries have conducted their businesses in compliance with
applicable anti-corruption laws and have instituted and maintain and will
continue to maintain policies and procedures designed to promote and achieve
compliance with such laws.
(xxxix) Anti-Money Laundering
Laws. The operations of the Company and its subsidiaries are and
have been conducted at all times in material compliance with all applicable
financial recordkeeping and reporting requirements, including those of the Bank
Secrecy Act, as amended by Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of
jurisdictions where the Company or any of its subsidiaries conduct business, the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Anti-Money
Laundering Laws”), and no action, suit or proceeding (including any
inquiries or investigations by any court or governmental agency or body,
domestic or foreign) with respect to the Anti-Money Laundering Laws is pending
or to the best knowledge of the Company threatened or contemplated.
(xl) OFAC Sanctions. None of
the Company or any of its subsidiaries (collectively, the “Entity”) or any director,
officer, employee, agent, affiliate or representative of the Entity, is an
individual or entity (“Person”) that is, or is owned
or controlled by a Person that is (A) the subject of any sanctions administered
or enforced by the U.S. Department of Treasury’s Office of Foreign Assets
Control (“Sanctions”),
nor (B) located, organized or resident in a country or territory that is the
subject of Sanctions; the Entity will not, directly or indirectly, use the
proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other Person: (A) to fund
or facilitate any activities or business of or with any Person or in any country
or territory that, at the time of such funding or facilitation, is the subject
of Sanctions; or (B) in any other manner that will result in a violation of
Sanctions by any Person (including any Person participating in the offering,
whether as underwriter, advisor, investor or otherwise); and the Entity has not
engaged in, is not now engaged in, and will not engage in, any dealings or
transactions with any Person, or in any country or territory, that at the time
of the dealing or transaction is or was the subject of Sanctions.
(xli) Prior Sales of
Shares. Except as disclosed in the General Disclosure Package, the
Company has not sold, issued or distributed any shares of Shares during the
six-month period preceding the date hereof.
(b) The
Manager represents and warrants to, and agrees with, the Underwriters
that:
(i) Manager-Related
Disclosure. Any information regarding the Manager and/or its
subsidiaries that is included in a Registration Statement, a Statutory
Prospectus or the General Disclosure Package is derived from the Manager’s
accounting or other applicable records and is accurate in all material
respects.
(ii) Good Standing of the
Manager. The Manager has been duly organized and is existing and in
good standing under the laws of the State of Delaware, with the limited
liability company power and authority to own its properties and conduct its
business as described in the General Disclosure Package; and the Manager is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification except where the failure to be so qualified
would not have a Material Adverse Effect.
(iii) Absence of Defaults and Conflicts
Resulting from Transaction. The execution, delivery and performance
of this Agreement and the transactions contemplated thereby, including the
issuance and sale of the Offered Securities will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the imposition of any lien, charge or encumbrance upon any property
or assets of the Manager or any of its subsidiaries pursuant to, the
Organizational Documents of the Manager or any of its subsidiaries, any statute,
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Manager or any of its
subsidiaries or any of their properties, or any agreement or instrument to which
the Manager or any of its subsidiaries is a party or by which the Manager or any
of its subsidiaries is bound or to which any of the properties of the Manager or
any of its subsidiaries is subject.
(iv) Authorization of
Agreement. This Agreement has been duly authorized, executed and
delivered by the Manager.
(v) Authorization and Enforceability of
Management
Agreement. The Management Agreement has been duly authorized,
executed and delivered by the Manager and constitutes valid and binding
agreement of the Manager enforceable against the Manager in accordance with its
terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization or other laws affecting enforcement of
creditors’ rights or by general equitable principles.
(vi) Absence of Further
Requirements. No consent, approval, authorization, or order of, or filing
or registration with, any person (including any governmental agency or body or
any court) is required for the consummation of the transactions contemplated by
this Agreement in connection with the offering, issuance and sale of the Offered
Securities, except such as have been obtained, or made and such as may be
required under state securities laws.
(vii) Possession of Licenses and
Permits. The Manager and its subsidiaries possess, and are in
compliance with the terms of, all adequate Licenses necessary or material to the
conduct of the business of the Manager with respect to the Company now conducted
or proposed in the General Disclosure Package to be conducted by them and have
not received any notice of proceedings relating to the revocation or
modification of any Licenses that, if determined adversely to the Manager
or any of its subsidiaries, would, individually or in the aggregate, have a
Material Adverse Effect.
(viii) No Material Adverse Change in
Business. Except as disclosed in the General Disclosure Package, there
has been no change, nor any development or event involving a prospective change,
in the condition (financial or otherwise), results of operations, business,
properties or prospects of the Manager and its subsidiaries, taken as a whole,
that is material and adverse to the Company or that would prevent the Manager
from carrying out its obligations under this Agreement or the Management
Agreement.
(ix) Employment; Noncompetition;
Nondisclosure. To the knowledge of the Manager no officers or other key
persons of the Manager and its affiliates named in the General Disclosure
Package, or a significant number of members of the Manager’s fixed income
investment team plans to terminate his or her employment with the Manager or its
affiliates. Neither the Manager nor, to the best of the Manager’s knowledge, any
officers or other key persons of the Manager named in the General Disclosure
Package is subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement that would be violated by the
present or proposed business activities of the Company or the Manager as
described in the General Disclosure Package.
(x) Absence of
Manipulation. The Manager has not taken, directly or indirectly, any
action that is designed to or that has constituted or that would reasonably be
expected to cause or result in the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Offered
Securities.
(xi) Litigation. There are no
pending actions, suits or proceedings (including any inquiries or investigations
by any court or governmental agency or body, domestic or foreign) against or
affecting the Manager or any of its subsidiaries or any of their respective
properties that, if determined adversely to the Manager 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 Manager to
perform its obligations under this Agreement or the Management Agreement; and,
to the Manager’s knowledge, no such actions, suits or proceedings
(including any inquiries or investigations by any court or governmental agency
or body, domestic or foreign) are threatened or contemplated.
(xii) Investment Advisers Act. The
Manager is not prohibited by the Investment Advisers Act of 1940, as amended
(“Advisers Act”), or the
rules and regulations thereunder, from performing its obligations under the
Management Agreement as described in the Registration Statement, the General
Disclosure Package and the Final Prospectus.
(xiii) Insurance. The Manager and
each of its subsidiaries is insured by insurers with appropriately rated claims
paying abilities against such losses and risks and in such amounts as are
prudent and customary for the businesses in which they are engaged; all policies
of insurance and fidelity or surety bonds insuring the Manager or any of its
subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect; none of the Manager or any of its
subsidiaries has been refused any insurance coverage sought or applied for; and
the Manager has obtained directors’ and officer’s insurance in such amounts as
is customary for companies engaged in the type of business conducted by the
Manager.
(xiv) Internal Controls. The Manager
maintains a system of internal controls in place sufficient to provide
reasonable assurance that (A) the transactions that may be effectuated by the
Manager under the Management Agreement are executed in accordance with its
management’s general or specific authorization and (B) access to the Company’s
assets is permitted only in accordance with the internal polices, controls and
procedures of the Manager.
(xv) Compliance. The Manager is in
compliance with all applicable federal, state, local and foreign laws, rules,
regulations, orders, decrees and judgments, including those relating to
transactions with affiliates, except where the failure to so comply could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(xvi) Investment Strategy. The Company’s investment
strategy described in the Registration Statement, the General Disclosure Package
and each Statutory Prospectus accurately reflect in all material respects the
current intentions of the Manager with respect to the operation of the Company’s
business, and no material deviation from such investment strategy is currently
contemplated.
3. Purchase, Sale and Delivery of
Offered Securities. On the basis of the representations, warranties and
agreements and subject to the terms and conditions set forth herein, the Company
agrees to sell to the several Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
per share of $8.952625, the respective number of shares of Firm Securities set
forth opposite the names of the Underwriters in Schedule A
hereto.
The
Company will deliver the Firm Securities through the facilities of The
Depositary Trust Company (“DTC”) to or as instructed by
the Representative for the accounts of the several Underwriters in a form
reasonably acceptable to the Representative against payment of the purchase
price by the Underwriters in Federal (same day) funds by wire transfer to an
account at a bank acceptable to the Representative drawn to the order of the
Company at the office of Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), at 10 A.M., New
York time, on December 22, 2010, or at such other time not later than seven (7)
full business days thereafter as the Representative and the Company determine,
such time being herein referred to as the “First Closing Date”. For
purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the First
Closing Date (if later than the otherwise applicable settlement date) shall be
the settlement date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the offering. The Firm Securities so to be
delivered or evidence of their issuance will be made available for checking at
the above office of Skadden at least 24 hours prior to the First Closing
Date.
In
addition, upon written notice from the Representative given to the Company from
time to time not more than 30 days subsequent to the date of the Final
Prospectus, the Underwriters may purchase all or less than all of the Optional
Securities at the purchase price per Security to be paid for the Firm
Securities. The Company agrees to sell to the Underwriters the number of shares
of Optional Securities specified in such notice and the Underwriters agree,
severally and not jointly, to purchase such Optional Securities. Such Optional
Securities shall be purchased for the account of each Underwriter in the same
proportion as the number of shares of Firm Securities set forth opposite such
Underwriter’s name bears to the total number of shares of Firm Securities
(subject to adjustment to eliminate fractions) and may be purchased by the
Underwriters only for the purpose of covering over-allotments made in connection
with the sale of the Firm Securities. No Optional Securities shall be sold or
delivered unless the Firm Securities previously have been, or simultaneously
are, sold and delivered. The right to purchase the Optional Securities or any
portion thereof may be exercised from time to time and to the extent not
previously exercised may be surrendered and terminated at any time upon notice
by the Representative to the Company.
Each time
for the delivery of and payment for the Optional Securities, being herein
referred to as an “Optional
Closing Date”, which may be the First Closing Date (the First Closing
Date and each Optional Closing Date, if any, being sometimes referred to as a
“Closing Date”), shall
be determined by the Representative but shall be not later than five full
business days after written notice of election to purchase Optional Securities
is given. The Company will deliver the Optional Securities being purchased on
each Optional Closing Date through the facilities of DTC to or as instructed by
the Representative for the accounts of the several Underwriters in a form
reasonably acceptable to the Representative against payment of the purchase
price therefor in Federal (same day) funds by wire transfer to an account at a
bank acceptable to the Representative drawn to the order of the Company at the
above office of Skadden. The Optional Securities being purchased on each
Optional Closing Date or evidence of their issuance will be made available for
checking at the above office of Skadden at a reasonable time in advance of such
Optional Closing Date.
4. Offering by Underwriters. It
is understood that the several Underwriters propose to offer the Offered
Securities for sale to the public as set forth in the Final
Prospectus.
5. Certain Agreements of the Company
and the Manager.
(a) The
Company agrees with the several Underwriters that:
(i) Filing of Prospectuses. The
Company has filed or will file each Statutory Prospectus (including the Final
Prospectus, in a form approved by the Representative), pursuant to and in
accordance with Rule 424(b)(2) (or, if applicable and consented to by the
Representative, subparagraph (5)) not later than the second business day
following the earlier of the date it is first used or the execution and delivery
of this Agreement.
(ii) Filing of Amendments; Response to
Commission Requests. The Company will promptly advise the
Representative of any proposal to amend or supplement the Registration Statement
or any Statutory Prospectus at any time and will not effect such amendment or
supplementation without the Representative’s consent, which shall not be
unreasonably withheld or delayed; and the Company will also advise the
Representative promptly of (A) the filing or effectiveness of any such
amendment or supplement, (B) any request by the Commission or its staff for
any amendment to any Registration Statement, for any supplement to any Statutory
Prospectus or for any additional information, (C) the institution by the
Commission of any stop order proceedings in respect of a Registration Statement
or the threatening of any proceeding for that purpose, and (D) the receipt
by the Company of any notification with respect to the suspension of the
qualification of the Offered Securities in any jurisdiction or the institution
or threatening of any proceedings for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof.
(iii) Continued Compliance with Securities
Laws. If, at any time when a prospectus relating to the Offered
Securities is (or but for the exemption in Rule 172 would be) required to
be delivered under the Act by any Underwriter or dealer, any event occurs as a
result of which the Final Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend the Registration Statement or supplement the Final
Prospectus to comply with the Act, the Company will promptly notify the
Representative of such event and will promptly prepare and file with the
Commission and furnish, at its own expense, to the Underwriters and the dealers
and any other dealers upon request of the Representative, an amendment or
supplement which will correct such statement or omission or an amendment which
will effect such compliance. Neither the Representative’s consent to, nor
the Underwriters’ delivery of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 7
hereof.
(iv) Rule 158. As soon
as practicable, but not later than 16 months, after the date of this Agreement,
the Company will make generally available to its securityholders an earnings
statement covering a period of at least 12 months beginning after the date of
this Agreement and satisfying the provisions of Section 11(a) of the Act
and Rule 158.
(v) Furnishing of
Prospectuses. The Company will furnish to the
Representative conformed copies of the Registration Statement (which
will include all exhibits), any Statutory Prospectus, the Final Prospectus and
all amendments and supplements to such documents, in each case in such
quantities as the Representative requests. The Final Prospectus shall be so
furnished on or prior to 3:00 P.M., New York time, on the business day following
the execution and delivery of this Agreement. All other documents shall be so
furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(vi) Blue Sky
Qualifications. The Company will arrange for the qualification of
the Offered Securities for sale under the laws of such jurisdictions as the
Representative designate and will continue such qualifications in effect so long
as required for the distribution; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject.
(vii) Reporting
Requirements. During the period of five (5) years hereafter,
the Company will furnish to the Representative and, upon request, to each of the
other Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to shareholders for such year; and the Company will
furnish to the Representative (A) as soon as available, a copy of each report
and any definitive proxy statement of the Company filed with the Commission
under the Exchange Act or mailed to shareholders, and (B) from time to time,
such other information concerning the Company as the Representative may
reasonably request. However, so long as the Company is subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange Act
and is timely filing reports with the Commission on its Electronic Data
Gathering, Analysis and Retrieval system (“EDGAR”), it is not required to
furnish such reports or statements to the Underwriters.
(viii) Payment of Expenses. The
Company will pay all expenses incident to the performance of its obligations
under this Agreement, including but not limited to (A) any filing fees and other
expenses (other than fees and disbursements of counsel to the Underwriters)
incurred in connection with qualification of the Offered Securities for sale
under the laws of such jurisdictions as the Representative designates and the
preparation and printing of memoranda relating thereto, (B) costs and expenses
related to the review by the Financial Industry Regulatory Authority (“FINRA”) of the Offered
Securities (including filing fees and the fees and expenses of counsel for the
Underwriters relating to such review), subject to a maximum of $5,000 for
any such FINRA review-related costs and expenses, (C) costs and expenses
relating to investor presentations or any “road show” in connection with the
offering and sale of the Offered Securities including, without limitation, (1)
any travel expenses of the Company’s officers and employees, and (2) any other
expenses of the Company, (D) the fees and expenses incident to listing the
Offered Securities on the NYSE Amex, (E) the fees and expenses in
connection with the registration of the Offered Securities under the Act and the
Exchange Act, (F) expenses incurred in distributing preliminary prospectuses and
the Final Prospectus (including any amendments and supplements thereto) to the
Underwriters, and (G) expenses incurred for preparing, printing and distributing
any Issuer Free Writing Prospectuses to investors or prospective
investors.
(ix) Use of Proceeds. The
Company will use the net proceeds received in connection with this offering in
the manner described in the “Use of Proceeds” section of the General Disclosure
Package and, except as disclosed in the General Disclosure Package, the Company
does not intend to use any of the proceeds from the sale of the Offered
Securities hereunder to repay any outstanding debt owed to any affiliate of any
Underwriter.
(x) Absence of
Manipulation. The Company will not take, directly or indirectly, any
action designed to or that would constitute or that might reasonably be expected
to cause or result in, stabilization or manipulation of the price of any
securities of the Company to facilitate the sale or resale of the Offered
Securities.
(xi) Restriction on Sale of
Securities. For the period
specified below (the “Lock-Up
Period”), the Company will not, directly or indirectly, take any of the
following actions with respect to its Securities or any securities convertible
into or exchangeable or exercisable for any of its Securities (“Lock-Up Securities”):
(A) offer, sell, issue, contract to sell, pledge or otherwise dispose of
Lock-Up Securities, (B) offer, sell, issue, contract to sell, contract to
purchase or grant any option, right or warrant to purchase Lock-Up Securities,
(C) enter into any swap, hedge or any other agreement that transfers, in
whole or in part, the economic consequences of ownership of Lock-Up Securities,
(D) establish or increase a put equivalent position or liquidate or
decrease a call equivalent position in Lock-Up Securities within the meaning of
Section 16 of the Exchange Act or (E) file with the Commission a
registration statement under the Act relating to Lock-Up Securities, or publicly
disclose the intention to take any such action, without the prior written
consent of the Representative; provided, however, that the Company
may (1) file a registration statement on Form S-8 with respect to the Company’s
2009 Equity Incentive Plan (as described in the General Disclosure Package and
the Prospectus) and grant Common Stock-based awards to the Company’s directors
under such Plan, (2) issue shares of Common Stock upon the exercise of currently
outstanding redeemable warrants to purchase an aggregate of 33,249,000 shares of
Common Stock (as described in the General Disclosure Package and the Prospectus)
and (3) file a registration statement on Form S-3 with respect to the issuance
of shares of Common Stock pursuant to a Dividend Reinvestment and Share Purchase
Plan, and issue shares of Common Stock under such Plan. The initial Lock-Up
Period will commence on the date hereof and continue for 90 days after the date
hereof or such earlier date that the Representative consents to in writing;
provided, however, that if (1) during the last 17 days of the initial Lock-Up
Period, the Company releases earnings results or material news or a material
event relating to the Company occurs or (2) prior to the expiration of the
initial Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the initial
Lock-Up Period, then in each case the Lock-Up Period will be extended until
the expiration of the 18-day period beginning on the date of release of the
earnings results or the occurrence of the materials news or material event, as
applicable, unless the Representative waives, in writing, such
extension. The Company will provide the Representative with notice of any
announcement described in clause (2) of the preceding sentence that gives rise
to an extension of the Lock-Up Period.
(xii) Qualification and Taxation as a
REIT. The Company will use its best efforts to meet the requirements for
qualification and taxation as a REIT under the Code for its taxable year ended
December 31, 2010, and the Company will use its best efforts to continue to
qualify for taxation as a REIT under the Code unless the Board of Directors of
the Company determines that it is no longer in the best interests of the Company
and its shareholders to be so qualified.
(b) The
Manager agrees with the several Underwriters that:
(i) Absence of
Manipulation. The Manager will not, and will cause its subsidiaries
and affiliates over which the Manger exercises control not to take, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities of the Company to facilitate the sale or resale of
the Offered Securities.
(ii) Restriction on Sale of
Securities. The Manager shall abide
by the terms of the letter set forth in Annex IV to this
Agreement.
6. Free Writing Prospectuses.
Each of the Company and the Manager represents and agrees that, unless it
obtains the prior consent of the Representative, and each Underwriter represents
and agrees that, unless it obtains the prior consent of the Company and the
Representative, it has not made and will not make any offer relating to the
Offered Securities that would constitute an Issuer Free Writing Prospectus, or
that would otherwise constitute a “free writing prospectus,” as defined in Rule
405, required to be filed with the Commission. Any such free writing prospectus
consented to by the Company and the Representative is hereinafter referred to as
a “Permitted Free Writing
Prospectus.” The Company represents that it has treated and agrees that
it will treat each Permitted Free Writing Prospectus as an “issuer free writing
prospectus,” as defined in Rule 433, and has complied and will comply with the
requirements of Rules 164 and 433 applicable to any Permitted Free Writing
Prospectus, including timely Commission filing where required, legending and
record keeping. The Company represents that it has satisfied and agrees that it
will satisfy the conditions in Rule 433 to avoid a requirement to file with the
Commission any electronic road show.
7. Conditions of the Obligations of the
Underwriters. The obligations of the several Underwriters to purchase and
pay for the Firm Securities on the First Closing Date and the Optional
Securities to be purchased on each Optional Closing Date will be subject to the
accuracy of the representations and warranties of the Company and the Manager
herein (as though made on such Closing Date), to the accuracy of the statements
of officers of the Company and the Manager made pursuant to the provisions
hereof, to the performance by the Company and the Manager of their obligations
hereunder and to the following additional conditions precedent:
(a) Accountants’ Comfort Letter. The
Representative shall have received letters, dated, respectively, the date hereof
and each Closing Date, of Ernst & Young LLP, in the form of Annex I-A hereto,
confirming that they are a registered public accounting firm and independent
public accountants within the meaning of the Securities Laws (except that, in
any letter dated a Closing Date, the specified date referred to in Annex I-A hereto
shall be a date no more than three days prior to such Closing
Date).
(b) Accountants’ Comfort Letter. The
Representative shall have received letters, dated, respectively, the date hereof
and each Closing Date, of Marcum LLP, formerly known as Marcum LLP, in the form
of Annex
I-B
hereto, confirming that they are a registered public accounting firm and
independent public accountants within the meaning of the Securities Laws (except
that, in any letter dated a Closing Date, the specified date referred to in
Annex I-B hereto shall be a
date no more than three days prior to such Closing Date).
(c) Filing of
Prospectus. The Final Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a)
hereof. No stop order suspending the effectiveness of the Registration Statement
or of any part thereof shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company or any
Underwriter, shall be contemplated by the Commission.
(d) No Material Adverse Change.
Subsequent to the execution and delivery of this Agreement, there shall not have
occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and its
subsidiaries taken as a whole which, in the judgment of the Representative, is
material and adverse and makes it impractical or inadvisable to market the
Offered Securities; (ii) any downgrading in the rating of any debt
securities or preferred stock, if any, of the Company by any “nationally
recognized statistical rating organization” (as defined for purposes of
Rule 436(g)), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities or preferred
stock of the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any change in either U.S. or international financial, political
or economic conditions or currency exchange rates or exchange controls the
effect of which is such as to make it, in the judgment of the Representative,
impractical to market or to enforce contracts for the sale of the Offered
Securities, whether in the primary market or in respect of dealings in the
secondary market; (iv) any suspension or material limitation of trading in
securities generally on the New York Stock Exchange, or any setting of minimum
or maximum prices for trading on such exchange; (v) or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market; (vi) any banking moratorium declared by any U.S.
federal or New York authorities; (vii) any major disruption of settlements
of securities, payment, or clearance services in the United States or any other
country where such securities are listed or (viii) any attack on, outbreak
or escalation of hostilities or act of terrorism involving the United States,
any declaration of war by Congress or any other national or international
calamity or emergency if, in the judgment of the Representative, the effect of
any such attack, outbreak, escalation, act, declaration, calamity or emergency
is such as to make it impractical or inadvisable to market the Offered
Securities or to enforce contracts for the sale of the Offered
Securities.
(e) Opinion of Counsel for the
Company. The Representative shall have received an opinion, dated
such Closing Date, of Leonard, Street and Deinard, PA, counsel for the Company
in the form set forth on Annex II
hereto.
(f) Opinion of Counsel for
Company. The Representative shall have received two opinions, dated
such Closing Date, of Venable LLP, counsel for the Company in the forms set
forth on Annex
III-A and Annex
III-B hereto.
(g) Opinion of Counsel for
Underwriters. The Representative shall have received from Skadden,
counsel for the Underwriters, such opinion or opinions, dated such Closing Date,
with respect to such matters as the Representative may require, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(h) Company Officers’ Certificate. The
Representative shall have received a certificate, dated such Closing Date, of
the Chief Executive Officer of the Company and the Chief Financial Officer of
the Company in which such officers shall state that: the representations and
warranties of the Company in this Agreement are true and correct; the Company
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date; no stop order
suspending the effectiveness of any Registration Statement has been issued and
no proceedings for that purpose have been instituted or, to the best of their
knowledge and after reasonable investigation, are contemplated by the
Commission; and, subsequent to the date of the most recent financial statements
in the General Disclosure Package, there has been no material adverse change,
nor any development or event involving a prospective material adverse change, in
the condition (financial or otherwise), results of operations, business,
properties or prospects of the Company and its subsidiaries taken as a whole
except as set forth in the General Disclosure Package or as described in such
certificate.
(i) Manager Officers’ Certificate. The
Representative shall have received a certificate, dated such Closing Date, of
the Chief Executive Officer and Chief Financial Officer of the Manager in
which such officers shall state that: the representations and warranties of the
Manager in this Agreement are true and correct; the Manager has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date.
(j) Lock-up Agreements. On
or prior to the date hereof, the Representative shall have received a lock-up
letter in the form of Annex IV hereto from
each of the Company’s directors and executive officers and the
Manager.
The
Company will furnish the Representative with such conformed copies of such
opinions, certificates, letters and documents as the Representative reasonably
request. The Representative may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
8. Indemnification and
Contribution.
(a) Indemnification of the
Underwriters. The Company will
indemnify and hold harmless each Underwriter, its partners, members, directors,
officers, employees, agents, affiliates and each person, if any, who controls
such Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act (each, an “Indemnified Party”), against
any and all losses, claims, damages or liabilities, joint or several, to which
such Indemnified Party may become subject, under the Act, the Exchange Act,
other Federal or state statutory law or regulation or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any part of any Registration Statement at any time,
any Statutory Prospectus as of any time, the Final Prospectus or any Issuer
Free Writing Prospectus, or arise out of or are based upon the omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse each
Indemnified Party for any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending against any
loss, claim, damage, liability, action, litigation, investigation or proceeding
whatsoever (whether or not such Indemnified Party is a party thereto), whether
threatened or commenced, and in connection with the enforcement of this
provision with respect to any of the above as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below.
(b) Indemnification of
Company. Each Underwriter will severally and not jointly indemnify
and hold harmless the Company, each of its directors and each of its officers
who signs a Registration Statement, and each person, if any, who controls the
Company or within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act (each, an “Underwriter Indemnified
Party”), against any losses, claims, damages or liabilities to which such
Underwriter Indemnified Party may become subject, under the Act, the Exchange
Act, other Federal or state statutory law or regulation or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any part of any Registration
Statement at any time, any Statutory Prospectus as of any time, the Final
Prospectus, or any Issuer Free Writing Prospectus, or arise out of or are based
upon the omission or the alleged omission of a material fact required to be
stated therein or necessary to make the statements therein 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 reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representative specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by such Underwriter
Indemnified Party in connection with investigating or defending against any such
loss, claim, damage, liability, action, litigation, investigation or proceeding
whatsoever (whether or not such Underwriter Indemnified Party is a party
thereto), whether threatened or commenced, based upon any such untrue statement
or omission, or any such alleged untrue statement or omission as such expenses
are incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the Final
Prospectus furnished on behalf of each Underwriter: (i) the information relating
to concession figures contained in the fourth paragraph under the caption
“Underwriting” and (ii) the information relating to stabilizing transactions,
penalty bids and syndicate covering transactions contained in the fourteenth and
fifteenth paragraphs under the caption “Underwriting” and in the
last sentence of the sixteenth paragraph under the caption
“Underwriting.”
(c) Actions against Parties;
Notification. Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the failure to notify the indemnifying party shall not
relieve it from any liability that it may have under subsection (a) or (b) above
except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided
further that the failure to notify the indemnifying party shall not relieve it
from any liability that it may have to an indemnified party otherwise than under
subsection (a) or (b) above. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action 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 an indemnified party.
(d) Contribution. If the
indemnification provided for in this Section is unavailable or insufficient to
hold harmless an indemnified party under subsection (a) or (b) above, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (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 from the offering of the Offered
Securities 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
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters’ obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 8(d) 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 8(d).
9. Default of Underwriters. If
any Underwriter or Underwriters default in their obligations to purchase Offered
Securities hereunder on either the First or any Optional Closing Date and the
aggregate number of shares of Offered Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total number of shares of Offered Securities that the Underwriters are
obligated to purchase on such Closing Date, the Representative may make
arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of shares of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to the
Representative and the Company for the purchase of such Offered Securities by
other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter
or the Company, except as provided in Section 10 (provided that if such
default occurs with respect to Optional Securities after the First Closing Date,
this Agreement will not terminate as to the Firm Securities or any Optional
Securities purchased prior to such termination). As used in this Agreement, the
term “Underwriter” includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
10. Survival of Certain Representations
and Obligations. The respective indemnities, agreements, representations,
warranties and other statements of the Company or 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, or statement as to
the results thereof, made by or on behalf of any Underwriter, the Company or any
of their respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the Offered Securities. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 9 hereof, the Company will reimburse the Underwriters for
all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Offered
Securities, and the respective obligations of the Company and the Underwriters
pursuant to Section 8 hereof shall remain in effect. In addition, if any Offered
Securities have been purchased hereunder, the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in
effect.
11. Notices. All communications
hereunder will be in writing and, if sent to the Underwriters, will be mailed,
delivered or telegraphed and confirmed to the Representative, c/o Credit Suisse
Securities (USA) LLC, Eleven Madison Avenue, New York, N.Y. 10010-3629,
Attention: LCD-IBD, or, if sent to the Company or the Manager will be mailed,
delivered or telegraphed and confirmed to it at 601 Carlson Parkway, Suite 330,
Minnetonka, Minnesota 55305, Attention: Tim O’Brien, with a copy to Leonard,
Street and Deinard, 150 South Fifth Street, Suite 1200, Minneapolis, MN 55402
Attention: Stephen Quinlivan; provided, however, that any notice to an
Underwriter pursuant to Section 8 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
12. Successors. This Agreement
will inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and controlling persons
referred to in Section 8, and no other person will have any right or obligation
hereunder.
13. Representation of
Underwriters. The Representative will act for the several Underwriters in
connection with this financing, and any action under this Agreement taken by the
Representative will be binding upon all the Underwriters.
14. Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same Agreement.
15. Absence of Fiduciary Relationship.
The Company and the Manager acknowledge and agree that:
(a) No Other
Relationship. The Underwriters have been retained solely to act as
underwriters in connection with the sale of Offered Securities and that no
fiduciary, advisory or agency relationship between the Company and the Manager
on the one hand, and the Underwriters on the other has been created in respect
of any of the transactions contemplated by this Agreement or the Final
Prospectus, irrespective of whether the Underwriters have advised or is advising
the Company or the Manager on other matters;
(b) Arms’ Length
Negotiations. The price of the Offered Securities set forth in this
Agreement was established by the Company following discussions and arms’ length
negotiations with the Underwriters, and the Company and the Manager are capable
of evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement;
(c) Absence of Obligation to
Disclose. The Company and the Manager have been advised that the
Underwriters and their affiliates are engaged in a broad range of transactions
which may involve interests that differ from those of the Company or the
Manager, and that the Underwriters have no obligation to disclose such interests
and transactions to the Company or the Manager by virtue of any fiduciary,
advisory or agency relationship; and
(d) Waiver. Each of the
Company and the Manager waives, to the fullest extent permitted by law, any
claims they may have against the Underwriters for breach of fiduciary duty or
alleged breach of fiduciary duty and agree that the Underwriters shall have no
liability (whether direct or indirect) to the Company or the Manager in respect
of such a fiduciary duty claim or to any person asserting a fiduciary duty claim
on behalf of or in right of the Company or the Manager, including shareholders,
employees or creditors of the Company or the Manager.
16. Applicable Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.
Each of
the Company and the Manager hereby submits to the non-exclusive jurisdiction of
the Federal and state courts in the Borough of Manhattan in The City of New York
in any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. Each of the Company and the Manager
irrevocably and unconditionally waives any objection to the laying of venue of
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby in Federal and state courts in the Borough of
Manhattan in The City of New York and irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such suit or proceeding
in any such court has been brought in an inconvenient forum.
If the
foregoing is in accordance with the Representative’s understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement among the Company and the Manager
and the several Underwriters in accordance with its terms.
Very
truly yours,
TWO
HARBORS INVESTMENT CORP.
By:
/s/ Jeff Stolt
Jeff
Stolt, Chief Financial Officer
PRCM
ADVISERS LLC
Jeff
Stolt, Chief Financial Officer
[Signature
Page to Underwriting Agreement]
The
foregoing Underwriting Agreement is hereby confirmed and accepted as of the date
first above written.
Acting on
behalf of itself and as the Representative of the several
Underwriters.
CREDIT
SUISSE SECURITIES (USA) LLC
By:
/s/ Andrew Rosenburgh
Name: Andrew
Rosenburgh
Title: Managing
Director
[Signature
Page to Underwriting Agreement]
SCHEDULE
A
|
Underwriter
|
|
Number
of
Firm Securities
|
|
|
|
|
|
|
|
Credit
Suisse Securities (USA) LLC
|
|
|
5,937,500 |
|
|
Barclays
Capital Inc.
|
|
|
2,812,500 |
|
|
JMP
Securities LLC
|
|
|
1,875,000 |
|
|
Keefe,
Bruyette & Woods, Inc.
|
|
|
937,500 |
|
|
Ladenburg
Thalmann & Co. Inc.
|
|
|
937,500 |
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|