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As filed with the Securities and Exchange Commission on May 14, 1999
REGISTRATION NO. 333-72985
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________
ANNALY MORTGAGE MANAGEMENT, INC.
(Exact name of Registrant as Specified in its Charter)
MARYLAND 22-3479661
(State or other (IRS Employer
__________________________
Jurisdiction of Identification
Incorporation or Number)
Organization)
12 East 41st Street, Suite 700
New York, New York 10017
(212) 696-0100
(Address, including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)
_____________
MICHAEL A.J. FARRELL
Chairman of the Board and Chief Executive Officer
Annaly Mortgage Management, Inc.
12 East 41st Street, Suite 700
New York, New York 10017
(212) 696-0100
(Name, Address, including Zip Code, and Telephone Number,
including Area Code, of Agent for Service)
_____________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for any offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 per share.......... 2,000,000 $10.563 $21,126,000 $5,874(2)
=================================================================================================================
</TABLE>
(1) Computed pursuant to Rule 457(c) of the Securities Act of 1933, as amended,
solely for the purpose of calculating the amount of the registration fee, on
the basis of the average of the high and low sales prices of the Common
Stock reported in the consolidated reporting system on May 7, 1999.
(2) $5,352 of this fee was previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE HAVE
FILED A REGISTRATION STATEMENT RELATING TO THESE SECURITIES WITH THE SECURITIES
AND EXCHANGE COMMISSION. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 14, 1999
PROSPECTUS
ANNALY MORTGAGE MANAGEMENT, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
________________________
1999 DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
Annaly Mortgage Management, Inc. ("Annaly" or the "Company") has
established the 1999 Dividend Reinvestment and Share Purchase Plan (the "Plan").
The Plan is designed to provide current holders of the Company's common stock,
par value $.01 per share ("Common Stock"), and other interested investors with a
convenient and economical method to invest funds and reinvest dividends in
shares of Annaly Common Stock. The Plan will be administered by The Chase
Manhattan Bank, or any successor bank or trust company as may from time to time
be designated by the Company (the "Agent"). Certain of the administrative
support to the Agent may be performed by ChaseMellon Shareholder Services, LLC,
a registered transfer agent.
The Plan provides holders of record of Annaly Common Stock an opportunity
to automatically reinvest all or a portion of their cash distributions received
on Common Stock in additional shares of Annaly Common Stock as well as to make
optional cash payments to purchase shares of Annaly Common Stock. Persons who
are not already stockholders of the Company may also purchase Annaly Common
Stock under the Plan through optional cash payments.
The Agent will buy, at the Company's option, newly issued Common Stock
directly from the Company or Common Stock in the open market or in negotiated
transactions with third parties. Annaly Common Stock purchased directly from
the Company under the Plan may be priced at a discount from market prices at the
time of the investment (determined in accordance with the Plan) ranging from 0%
to 3%, in the case of shares purchased through reinvestment of dividends, and
ranging from 0% to 5%, in connection with optional cash purchases. Any discount
established by the Company for any investment date may be adjusted or suspended
for any subsequent investment date. See "Questions and Answers Describing Terms
and Conditions, Questions 5 and 6."
Annaly Common Stock is listed on the New York Stock Exchange (the "NYSE")
under the symbol "NLY." To ensure that the Company maintains its qualification
as a real estate investment trust ("REIT"), ownership by any person is limited
to 9.8% of the outstanding Common Stock, with certain exceptions.
________________________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
________________________
The date of this Prospectus is ________________ __, 1999
<PAGE>
ANNALY MORTGAGE MANAGEMENT, INC.
Annaly Mortgage Management, Inc., a Maryland corporation ("Annaly" or the
"Company"), owns and manages a portfolio of mortgage-backed securities.
Mortgage-backed securities represent interests in a pool of mortgage loans. The
Company's principal business objective is to generate net income for
distribution to stockholders from the spread between the interest income on the
mortgage-backed securities owned by the Company and the costs of borrowing to
finance the Company's acquisition of mortgage-backed securities. To date, all
of the mortgage-backed securities acquired by the Company have been "Agency
Certificates" which, although not rated, carry an implied "AAA" rating. Agency
Certificates consist of mortgage participation certificates issued by the
Federal Home Loan Mortgage Corporation and Pass-Through Certificates issued by
the Federal National Mortgage Association and Government National Mortgage
Association. Although it has not done so to date, the Company may, in
accordance with its capital investment policy, invest in lower-rated assets.
The Company invests primarily in adjustable-rate mortgage-backed securities
which adjust over time in conjunction with changes in short-term interest rates.
The Company attempts to structure its borrowings to have interest rate
adjustment indices and periods that, on an aggregate basis, correspond generally
to the interest rate adjustment indices and periods of the adjustable-rate
mortgage-backed securities owned by the Company.
The Company was organized on November 25, 1996 and commenced operations on
February 18, 1997. Its principal executive offices are located at 12 East 41st
Street, Suite 700, New York, New York 10017, and its telephone number is (212)
696-0100.
DESCRIPTION OF THE PLAN
DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN OVERVIEW
The Annaly Mortgage Management, Inc. 1999 Dividend Reinvestment and Share
Purchase Plan (the "Plan") offers you a variety of convenient, low-cost
services to make it easier for you to invest in the common stock, par value $.01
per share ("Common Stock"), of Annaly. The Plan has various features and you
can choose the Plan features that meet your investment needs.
The Plan is designed for long-term investors who wish to invest and build
their share ownership over time. The Plan offers a convenient and economical
means to own shares. Unlike an individual stock brokerage account, the timing of
purchases and sales is subject to the provisions of the Plan, as discussed
below.
In addition, the Plan will provide Annaly with a means of raising
additional capital for general corporate purposes through sale of Common Stock
under the Plan. Whether significant additional capital is raised may be
affected, in part, by Annaly's decision to waive the dollar limitations
applicable to optional cash purchases and, in part, by Annaly's decision to sell
newly-issued shares of Common Stock to fulfill the requirements of the Plan.
Please see Question 10 regarding Annaly's criteria for granting a Request for
Waiver.
You can participate in the Plan if you are a registered holder of Annaly
Common Stock. If you do not own Annaly Common Stock, you can become a
participant by making your initial purchase directly through the Plan. The Plan
offers you the opportunity to reinvest dividends and provides an alternative to
traditional methods of buying, holding and selling Annaly Common Stock.
The Chase Manhattan Bank (the "Administrator") administers the Plan.
ChaseMellon Shareholder Services, L.L.C., a registered transfer agent, will
provide certain administrative support to the Administrator.
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Read on for a more detailed description of the features of the Plan as
offered by Annaly. If you would like to participate in the Plan, complete the
enclosed Enrollment Form and mail it to the Administrator in the reply envelope
provided for your convenience.
KEY FEATURES OF PLAN
ANYONE CAN PARTICIPATE
If you currently own Annaly Common Stock registered in your name you may
participate in the Plan. If you do not own any Annaly Common Stock, you can
participate in the Plan by making your initial investment in Common Stock
through the Plan with an initial investment of at least $1,000 and not more than
$10,000. Annaly may change these minimum and maximum amounts at any time in its
sole discretion. To participate in the dividend reinvestment feature you must
reinvest the dividends on a minimum of 25 shares.
AUTOMATIC DIVIDEND REINVESTMENT
You can reinvest your dividends in additional shares of Annaly Common
Stock. Your dividends will be used to buy additional shares of Annaly Common
Stock at the prevailing market price on the dividend reinvestment date
(determined by taking the average of the daily high and low sales prices for
that day as reported on the New York Stock Exchange) or, if determined by the
Company for any dividend reinvestment date, at a discount of up to 3% from the
prevailing market price on the dividend reinvestment date. To participate in the
dividend reinvestment feature you must reinvest the dividends on a minimum of 25
shares.
OPTIONAL CASH PURCHASES
You can buy Annaly Common Stock without paying fees or commissions if you
are a participant in the Plan. You can make monthly investments of as little as
$250 (or $1,000 in the case of your initial investment), or as much as $10,000,
and you can pay either by check or have your payment automatically deducted from
your bank account. Annaly may change these minimum and maximum amounts at any
time in its sole discretion or suspend the right to make optional cash
investments for any monthly period or periods. In addition, in certain
instances, Annaly may permit greater optional cash purchases which may exceed
the maximum amount. Please see Question 10 regarding Annaly's criteria for
granting a Request for Waiver.
CONVENIENT SHARE SALES
You can sell Annaly Common Stock acquired through the Plan on the open
market and pay fees that may be lower than those typically charged by
stockbrokers for small transactions.
FULL INVESTMENT
Full investment of your funds is possible because you will be credited with
both whole shares and fractional shares. Dividends will be paid not only on
whole shares but also proportionately on fractional shares.
SHARE SAFEKEEPING
You can deposit your Annaly Common Stock certificates with the
Administrator for safekeeping, at no cost to you. You can request withdrawal of
any or all of your whole shares of Annaly Common Stock. A certificate for those
shares will be sent to you, free of charge.
GIFTS AND OTHER SHARE TRANSFERS
You can make gifts to others of Annaly Common Stock in your Plan account.
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TRANSACTION REPORTING
You will receive a notice after each transaction showing the details and
the share balance in your Plan account.
QUESTIONS AND ANSWERS DESCRIBING TERMS AND CONDITIONS
1. CAN I PARTICIPATE IN THE PLAN?
If you already own Annaly Common Stock and the shares are registered in
your name, you may participate immediately. If your shares are held for you in a
brokerage account, you may make arrangements with your stockbroker to have some
or all of the shares of Annaly Common Stock registered directly in your name.
If you do not currently own any Annaly Common Stock, you can participate by
making an initial investment in Annaly Common Stock through the Plan. Please
see Question 7 for details regarding an initial investment.
If you live outside the U.S., you should first determine if there are any
laws or governmental regulations that would prohibit your participation in the
Plan. Annaly reserves the right to terminate participation of any stockholder
if it deems it advisable under any foreign laws or regulations.
2. HOW DO I GET STARTED?
You can get started in the Plan by completing the enclosed Enrollment Form
along with the items required and mailing them to the Administrator in the reply
envelope. Your participation will begin after the Enrollment Form is received.
Once you have enrolled, your participation continues automatically, as long as
you wish.
3. HOW DO I REINVEST DIVIDENDS?
You must have at least 25 shares registered in your name in order to
participate in the dividend reinvestment feature of the Plan. You can choose to
reinvest all or a portion of the cash dividends paid on shares of Annaly Common
Stock you own in additional shares of Annaly Common Stock. However, to
participate in the dividend reinvestment feature, you must reinvest the
dividends on a minimum of 25 shares. If the number of shares registered in your
name for which you have requested reinvestment of dividends falls below 25
shares, you will receive a check for the full amount of any dividend. To be
effective with respect to a particular dividend, notice of your election must be
received on or before the first business day prior to the record date for that
dividend. A record date for a dividend normally precedes the payment of the
dividend by approximately two weeks. A schedule of the anticipated record dates
for the 1999, 2000 and 2001 dividend payments is set forth on Appendix I,
subject to change at Annaly's discretion.
You may change your election at any time by writing to the Administrator.
To be effective with respect to a particular dividend, any such change must be
received by the Administrator on or before the business day preceding the record
date for that dividend.
If you elect to reinvest your dividends, you must choose one of the
following when completing the Dividend Reinvestment section of the Enrollment
Form.
. FULL DIVIDEND REINVESTMENT: You may purchase additional shares of Annaly
Common Stock by reinvesting all of your cash dividends if you have at least
25 shares registered in your name.
. PARTIAL DIVIDEND REINVESTMENT: You may purchase additional shares of
Annaly Common Stock by reinvesting some of your dividends and receive the
balance of your dividends in cash. If you choose to reinvest less than all
of your dividends, you must specify the percentage of shares on which
dividends will be
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reinvested. Any partial dividend reinvestment that you request must result
in the reinvestment of dividends on at least 25 shares in order to be
effective.
You may, of course, choose not to reinvest your dividends, in which case
the Administrator will remit any dividends to you by check.
4. WHEN ARE DIVIDENDS REINVESTED?
If you have chosen the dividend reinvestment feature and notice of such
change has been received by the Administrator on or before the first business
day preceding the record date for that dividend, the Administrator will invest
dividends in additional shares of Annaly Common Stock purchased on the open
market or directly from Annaly as promptly as practicable, on or after the
dividend payment date. Additional shares purchased with dividends will be
purchased at the prevailing market price on the dividend reinvestment date or,
if determined by the Company for any dividend reinvestment date, at a discount
of up to 3% from the prevailing market price on the dividend reinvestment date.
The prevailing market price for any dividend reinvestment date will be
determined by taking the average of the daily high and low sales prices for that
date as reported on the New York Stock Exchange (the "NYSE"). For any dividend
reinvestment date Annaly will determine not less than three business days prior
to the immediately preceding record date whether to provide a discount and, if
applicable, the amount of such discount. In the unlikely event that, due to
unusual market conditions, the Administrator is unable to invest the funds
within 30 days, the Administrator will remit the funds to you by check. No
interest will be paid on funds held by the Administrator pending investment.
5. WHAT IS THE SOURCE OF SHARES TO BE PURCHASED UNDER THE PLAN?
All dividends reinvested through the Plan and all optional cash purchases
will be used to purchase either newly-issued shares directly from Annaly or
shares on the open market or a combination thereof. Shares purchased directly
from Annaly will consist of treasury shares or authorized but unissued shares of
Common Stock.
6. AT WHAT PRICE WILL SHARES BE PURCHASED?
Dividend reinvestment purchases by the Administrator:
. If the shares are purchased in the open market, the purchase price
will be 97% to 100% (as determined by Annaly from time to time) of the
average price per share of shares purchased. Annaly will pay all
discount amounts and trading fees in connection with open market
purchases.
. If the shares are purchased from Annaly, the purchase price will be
97% to 100% (as determined by Annaly from time to time) of the average
of the daily high and low sales price quoted on the NYSE on the date
the shares are purchased.
Optional cash purchases, including initial investment purchases, of less
than $10,000 (or other applicable maximum amount) by the Administrator:
. If the shares are purchased in the open market, the purchase price
will be 95% to 100% (as determined by Annaly from time to time) of the
average per share price of shares purchased. Annaly will pay all
discount amounts and trading fees in connection with open market
purchases.
. If the shares are purchased from Annaly, the purchase price will be
95% to 100% (as determined by Annaly from time to time) of the average
of the daily high and low sales price quoted on the NYSE on the date
the shares are purchased.
5
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Optional cash purchases in excess of the maximum monthly amount established
by Annaly from time to time made pursuant to a Request for Waiver:
. If the shares are purchased in the open market, the purchase price
will be the average per share price of shares purchased, subject to
such discount as shall be determined by Annaly. However, the purchase
price per share, in all cases, will be at least 95% of the average of
such daily high and low sales prices on the applicable Investment
Date (see Appendix I for a schedule of Investment Dates). Annaly will
pay all discount amounts and trading fees in connection with open
market purchases. Please see Question 10 regarding Annaly's criteria
for granting a Request for Waiver.
. If shares are purchased from Annaly, the purchase price will be the
average of the daily high and low sales price quoted on the NYSE
Composite Transactions listing on each day during the applicable
Pricing Period (other than a day on which the Threshold Price is not
met), subject to such discount as shall be determined by Annaly.
Please see Question 10 regarding Annaly's criteria for granting a
Request for Waiver. Please see Question 11 for a description of the
Pricing Periods and the determination of Threshold Prices.
DIVIDEND REINVESTMENT DISCOUNT. At least three business days prior to any
record date, Annaly will determine the discount from the market price applicable
to shares to be purchased pursuant to the dividend reinvestment feature of the
Plan on the immediately succeeding dividend reinvestment date (the "Dividend
Reinvestment Discount"). A schedule of the anticipated record and dividend
reinvestment dates during 1999, 2000 and 2001 is set forth on Appendix I,
subject to change at Annaly's discretion.
The Dividend Reinvestment Discount may be between 0% and 3% of the purchase
price and may vary each quarter. The Dividend Reinvestment Discount will be
established at Annaly's sole discretion after a review of current market
conditions, the level of participation in the Plan, the attractiveness of
obtaining additional funds through the sale of Common Stock as compared to other
sources of funds and current and projected capital needs. You may obtain the
Dividend Reinvestment Discount applicable to the next dividend reinvestment date
by telephoning Annaly at (212) 696-0100. Setting a Dividend Reinvestment
Discount shall not affect the setting of a Dividend Reinvestment Discount for
any subsequent quarter.
MONTHLY PURCHASE DISCOUNT. Each month, at least three business days prior
to the first day of the applicable Pricing Period (as described in Question 11),
Annaly will determine a discount from the market price applicable to optional
cash purchases for the immediately following Investment Date (the "Monthly
Purchase Discount"). A schedule of the anticipated commencement dates for each
Pricing Period and anticipated Investment Dates during 1999, 2000 and 2001 is
set forth on Appendix I, subject to change at Annaly's discretion.
The Monthly Purchase Discount may be between 0% and 5% of the purchase
price and may vary each month. The Monthly Purchase Discount will be established
at Annaly's sole discretion after a review of current market conditions, the
level of participation in the Plan, the attractiveness of obtaining such
additional funds through the sale of Common Stock as compared to other sources
of funds and current and projected capital needs. You may obtain the Monthly
Purchase Discount applicable to the next month by telephoning Annaly at (212)
696-0100. Setting a Monthly Purchase Discount shall not affect the setting of a
Monthly Purchase Discount for any subsequent month. The Monthly Purchase
Discount will apply to purchases subject to the maximum monthly purchase amount.
Purchases in excess of the maximum monthly purchase amount will be subject to
any applicable Waiver Discount established by Annaly in connection with
purchases made pursuant to a Request for Waiver. Please see Question 10
regarding Annaly's criteria for granting a Request for Waiver.
7. HOW DO I MAKE AN INITIAL INVESTMENT?
If you do not own Annaly Common Stock in a Plan account, you can make an
initial cash investment for as little as $1,000, but your initial cash
investment cannot exceed $10,000. Annaly may change these minimum and maximum
amounts at any time in its sole discretion or suspend the right to make optional
cash payment or payments
6
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for any monthly period. In addition, in certain instances, Annaly may permit
optional cash purchases in excess of the maximum amount established by Annaly.
Please see Question 10 regarding Annaly's criteria for granting a Request for
Waiver. Simply complete the Enrollment Form and submit it with your check. Only
checks made payable to the Chase Manhattan Bank will be accepted. No third party
checks will be accepted.
Annaly will establish an Investment Date for each month. A schedule of the
anticipated Investment Dates for 1999, 2000 and 2001 is set forth on Appendix I,
subject to change at Annaly's discretion. Optional cash purchases will be
applied to the purchase of shares of Common Stock as soon as practicable on or
after an Investment Date, provided that your Enrollment Form and check are
received by the Administrator at least two business days prior to the applicable
Investment Date.
8. HOW DO I MAKE OPTIONAL CASH PURCHASES?
If you already own Annaly Common Stock and are enrolled in the Plan and
want to make additional purchases, you can send a check to the Administrator for
each purchase. Attach your check to the contribution form on your statement and
mail it to the address specified on the statement. Or, if you wish to make
regular monthly purchases, you may authorize automatic monthly deductions from
your bank account. This feature enables you to make ongoing investments in an
amount that is comfortable for you, without having to write a check. Additional
cash purchases are subject to a monthly minimum purchase requirement of $250 and
a maximum purchase requirement limit of $10,000. Annaly may change these minimum
and maximum amounts at any time in its sole discretion or suspend the right to
make optional cash payments for any monthly period or periods. In addition, in
certain instances, Annaly may permit optional cash purchases in excess of the
maximum amount established by Annaly.
Optional cash purchases will be applied to the purchase of shares of Common
Stock as soon as practicable on or after an Investment Date, provided that your
check has been received by the Administrator at least two business days prior to
the applicable Investment Date.
All Plan accounts that Annaly believes to be under common control or
management or to have common ultimate beneficial ownership may be aggregated for
purposes of determining compliance with the maximum purchase requirement limit.
Unless Annaly has determined that reinvestment of dividends and optional cash
investments for each such account would be consistent with the purposes of the
Plan, Annaly will have the right to aggregate all such accounts and to return,
without interest, within thirty days of receipt, any amounts in excess of the
investment limitations applicable to a single account received in respect of all
such accounts.
9. WHEN WILL SHARES BE PURCHASED?
To be effective with respect to a particular dividend, notice of your
election must be received on or before the first business day prior to the
record date for that dividend. A record date for a dividend normally precedes
the payment of the dividend by approximately two weeks. A schedule of the
anticipated record dates for the 1999, 2000 and 2001 dividend payments is set
forth on Appendix I, subject to change at Annaly's discretion. The
Administrator will invest your initial and additional cash investments up to the
maximum monthly amount in whole and fractional shares purchased on the open
market or directly from Annaly as promptly as practicable on or after such
Investment Date. In the unlikely event that, due to unusual market conditions,
the Administrator is unable to invest the funds within 30 days, the
Administrator will return the funds to you by check. No interest will be paid
on funds held by the Administrator pending investment. Please read Question 10
for optional cash purchases of more than $10,000 (or other maximum amount
established by Annaly). A schedule of the anticipated Investment Dates for
1999, 2000 and 2001 is set forth on Appendix I, subject to change at Annaly's
discretion.
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10. HOW DO I MAKE OPTIONAL CASH PURCHASES OVER THE MAXIMUM MONTHLY AMOUNT?
Optional cash purchases in excess of $10,000 per month (or other maximum
amount established by Annaly) may be made only pursuant to a Request for Waiver
accepted by Annaly. If you wish to make an optional cash purchase in excess of
$10,000 (or other maximum amount established by Annaly) for any month you must
obtain the prior written approval of Annaly and a copy of such written approval
must accompany any such optional cash purchase. A Request for Waiver should be
directed to Annaly via facsimile at (212) 696-9809. Annaly has sole discretion
to grant any approval for optional cash purchases in excess of the allowable
maximum amount. In deciding whether to approve a Request for Waiver, Annaly
will consider relevant factors including, but not limited to, (a) whether the
Plan is then acquiring newly-issued shares directly from Annaly or acquiring
shares in the open market or in privately negotiated transactions from third
parties, (b) Annaly's need for additional funds, (c) the attractiveness of
obtaining such additional funds through the sale of Common Stock as compared to
other sources of funds, (d) the purchase price likely to apply to any sale of
Common Stock, (e) the stockholder submitting the request, (f) the extent and
nature of such stockholder's prior participation in the Plan, (g) the number of
shares of Common Stock held of record by such stockholder and (h) the aggregate
number of optional cash purchases in excess of $10,000 (or other maximum amount
established by Annaly) for which Requests for Waiver have been submitted by all
stockholders. If Requests for Waiver are submitted for any month for an
aggregate amount in excess of the amount Annaly is then willing to accept,
Annaly may honor such requests in order of receipt, pro rata or by any other
method that Annaly determines to be appropriate. With regard to optional cash
purchases made pursuant to a Request for Waiver, the Plan does not provide for a
predetermined maximum limit on the amount that a stockholder may invest or on
the number of shares that may be purchased.
11. WHAT ADDITIONAL PROVISIONS APPLY TO OPTIONAL CASH PURCHASES MADE PURSUANT
TO A REQUEST FOR WAIVER?
Annaly will establish an Investment Date for each month. Optional cash
purchases made pursuant to a Request for Waiver will be applied to the purchase
of shares of Common Stock as soon as practicable on or after the Investment
Date. A schedule of the anticipated Investment Dates for 1999, 2000 and 2001 is
set forth on Appendix I, subject to change at Annaly's discretion.
Optional cash purchases made pursuant to a Request for Waiver will be
acquired at a price equal to the average of the daily high and low sales prices
(computed up to seven decimal places, if necessary) of the Common Stock as
reported on the NYSE for the ten Trading Days immediately preceding the
applicable Investment Date. However, the purchase price per share, in all cases,
will be at least 95% of the average of such daily high and low sales prices on
the Investment Date. A "Trading Day" means a day on which trades in Annaly
Common Stock are reported on the NYSE. The period encompassing the first ten
Trading Days immediately preceding the next following Investment Date
constitutes the relevant "Pricing Period." The Company may elect not to permit
an optional purchase pursuant to a Request for Waiver if such purchase might
result in a non-deductible constructive distribution for the Company. See
"Federal Income Tax Considerations Relating to the Plan--Tax Consequences to the
Company of the Plan." The Administrator will apply all optional cash investments
made pursuant to a Request for Waiver for which good funds are received on or
before the first business day before the Pricing Period to the purchase of
shares of Annaly Common Stock as soon as practicable on or after the next
following Investment Date.
A schedule of the anticipated commencement dates for each Pricing Period
during 1999, 2000 and 2001 is set forth on Appendix I, subject to change at
Annaly's discretion.
THRESHOLD PRICE. Annaly may establish for a Pricing Period a minimum price
(the "Threshold Price") applicable to optional cash purchases made pursuant to a
Request for Waiver. At least three business days prior to the first day of the
applicable Pricing Period, Annaly will determine whether to establish a
Threshold Price, and if the Threshold Price is established, its amount, and will
so notify the Administrator. This determination will be made by Annaly in its
discretion after a review of current market conditions, the level of
participation in the Plan, and current and projected capital needs.
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If established for any Pricing Period, the Threshold Price will be stated
as a dollar amount that the average of the high and low sale prices of the
Common Stock on the NYSE for each Trading Day of the relevant Pricing Period
must equal or exceed. In the event that the Threshold Price is not satisfied
for a Trading Day in the Pricing Period, then that Trading Day will be excluded
from the Pricing Period and, with respect to shares purchased from Annaly, all
trading prices for that day will be excluded from the determination of the
Purchase Price. A day will also be excluded if no trades of Annaly Common Stock
are made on the NYSE for that day. For example, if the Threshold Price is not
satisfied for one of the ten Trading Days in a Pricing Period, then the purchase
price will be based upon the remaining nine Trading Days in which the Threshold
Price was satisfied.
In addition, a portion of each optional cash purchase will be returned for
each Trading Day of a Pricing Period in which the Threshold Price is not
satisfied or for each day in which no trades of Annaly Common Stock are reported
on the NYSE, and the number of shares purchased will be reduced accordingly.
The returned amount will equal to one-tenth of the total amount of such optional
cash purchase (not just the amount exceeding the applicable maximum monthly
amount) for each Trading Day that the Threshold Price is not satisfied. For
example, if the Threshold Price is not satisfied or no such sales are reported
for one of the ten Trading Days in a Pricing Period, 1/10 (or 10%) of such
optional cash purchase will be returned to you without interest.
The establishment of the Threshold Price and the possible return of a
portion of the investment apply only to optional cash purchases made pursuant to
a Request for Waiver. Setting a Threshold Price for a Pricing Period shall not
effect the setting of a Threshold Price for any subsequent Pricing Period. For
any particular month, Annaly may waive its right to set a Threshold Price.
Neither Annaly nor the Administrator shall be required to provide any written
notice to you as to the Threshold Price for any Pricing Period. You may,
however, ascertain whether a Threshold Price has been set or waived for any
given Pricing Period by telephoning Annaly at (212) 696-0100.
WAIVER DISCOUNT. Each month, at least three business days prior to the
first day of the applicable Pricing Period, the same time the Threshold Price is
determined, Annaly may establish a discount from the market price applicable to
optional cash purchases made pursuant to a Request for Waiver. Such discount
(the "Waiver Discount") may be between 0% and 5% of the purchase price and may
vary each month. However, in no event will the purchase price per share be less
than 95% of the average of the daily high and low sales prices as reported on
the NYSE Composite Transactions listings on the Investment Date. This means that
if the average of the daily high and low sales prices during the Trading Days of
a Pricing Period (for which the Threshold Price has been satisfied) are less
than 95% of such average on the Investment Date, your purchase price per share
on the Investment Date will be increased to 95% of such average price on the
Investment Date.
The Waiver Discount will be established at Annaly's sole discretion after a
review of current market conditions, the level of participation in the Plan, the
attractiveness of obtaining such additional funds through the sale of Common
Stock as compared to other sources of funds and current and projected capital
needs. You may obtain the Waiver Discount applicable to the next month by
telephoning Annaly at (212) 696-0100. Setting a Waiver Discount for a particular
month shall not affect the setting of a Waiver Discount for any subsequent
month. The Waiver Discount will apply only to optional cash purchases of more
than $10,000 (or other applicable maximum monthly amount). The Waiver Discount
will apply to the entire optional cash purchase and not just the portion of the
optional cash purchase that exceeds the maximum monthly amount.
Please see Appendix I for actual dates.
12. WILL I RECEIVE CERTIFICATES FOR SHARES PURCHASED?
No, because the Plan provides for share safekeeping. For your convenience,
the Administrator will maintain shares purchased under the Plan in your name in
non-certificated form. You may, however, request a stock certificate from the
Administrator at any time, free of charge.
13. WHAT IS SAFEKEEPING?
Shares of Annaly Common Stock that you buy under the Plan will be
maintained in your Plan account for safekeeping.
If you own Annaly Common Stock in certificated form, you may deposit your
certificates for those shares with the Administrator, free of charge.
Certificates forwarded to the Administrator by registered mail will
automatically be
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covered by an Administrator blanket bond up to the first $100,000 of value.
Safekeeping protects your shares against loss, theft or accidental destruction.
Safekeeping also provides a convenient way for you to keep track of your shares.
Only shares held in safekeeping may be sold through the Plan.
14. CAN I GET CERTIFICATES IF I WANT THEM?
Yes. If you should ever want a stock certificate for all or a portion of
the whole shares of Annaly Common Stock in your Plan account, the Administrator
will send one to you, upon your written request, within two days of the receipt
of your instructions. Please allow up to seven days for the certificate to reach
you.
15. HOW CAN I TRANSFER OR GIVE GIFTS OF SHARES?
You may transfer or give gifts of Annaly Common Stock to anyone you choose
by contacting the Administrator and requesting a Gift/Transfer Form. After the
transfer or purchase is completed, upon your request, the Administrator will
send you a non-negotiable gift announcement, which you can present to the
recipient. A notice indicating the deposit of Annaly Common Stock will be
forwarded to the recipient.
16. HOW DO I SELL SHARES?
You can sell shares in your Plan account, or other eligible book entry
shares, at any time by contacting the Administrator. The Administrator will
record sales orders on the date of receipt, and process them, when practicable,
but at least once each week. The Administrator will send you a check for the
proceeds of the sale less any applicable fees and any required tax withholdings.
Please see "Plan Service Fees" on the enclosed card.
17. WHAT ARE THE COSTS?
There is no fee for enrolling in the Plan. Participation is voluntary and
you may discontinue your participation at any time. However, there are fees
associated with the selling of shares. Please see "Plan Service Fees" on the
enclosed card.
18. HOW CAN I VOTE MY SHARES?
You will receive proxy material for all shares, full and fractional, in
your Plan account. The proxy will be voted in accordance with your direction.
If you do not return the proxy card or if you return it unsigned, none of your
shares will be voted.
19. IF ANNALY HAS A RIGHTS OFFERING RELATED TO THE COMMON STOCK, HOW WILL A
STOCKHOLDER'S ENTITLEMENT BE COMPUTED?
Your entitlement in a rights offering related to the Common Stock will be
based upon the number of whole shares credited to your Plan account. Rights
based on a fraction of a share credited to your Plan account will be sold for
that account and the net proceeds will be invested as an optional cash purchase
on the next Investment Date. In the event of a rights offering, transaction
processing may be curtailed or suspended by the Administrator for a short period
of time following the record date for such action to permit the Administrator to
calculate the rights allocable to each account.
20. WHAT PROVISIONS ARE MADE FOR NON-U.S. RESIDENTS?
Cash investments from non-U.S. residents must be in United States currency
and will be invested in the same manner as investments from other stockholders.
Each stockholder is responsible for reviewing the applicable laws of
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his or her country of residence prior to investing in Annaly Common Stock. All
dividends will be subject to withholding at the rate of 30%, subject to
reduction under the terms of any applicable tax treaty provisions.
21. HOW WILL I KEEP TRACK OF MY INVESTMENTS?
The Administrator will send you a transaction notice confirming the details
of each transaction you make. If you continue to participate in the Plan, but
have no transactions, the Administrator will send you an annual statement after
the end of the year detailing the status of your holdings of Annaly Common Stock
in your Plan account.
22. WHAT ABOUT TAXES?
You are responsible for any taxes which may be payable on dividends
reinvested under the Plan. Additionally, under current tax rulings, your pro-
rata portion of the trading fees paid by Annaly to purchase shares in the open
market and any purchase discounts will be considered taxable income to you. The
Administrator will send a Form 1099-DIV to you and the Internal Revenue Service
after each year-end, reporting all dividend income you received during the year
on your Annaly Common Stock, including any dividends reinvested, purchase
discounts and pro rata portion of trading fees paid by Annaly to acquire shares
in the open market. If you sell shares through the Plan, the Administrator will
send a Form 1099-B to you and the Internal Revenue Service after each year-end,
showing the total proceeds of the transactions. We recommend that you keep your
transaction statements for record keeping and tax purposes. IRS regulations are
subject to change and you should consult with your tax advisor with respect to
the tax treatment of dividends reinvested under the Plan. See the discussion
below under "Federal Income Tax Considerations" for more information regarding
taxes.
23. HOW WOULD I TERMINATE MY PARTICIPATION?
You may withdraw entirely from the Plan merely by giving written notice of
termination to the Administrator. Upon termination, you will receive a
certificate for the whole shares held for you under the Plan and a check for any
fractional shares based on the current market value less any applicable sale
fees. Thereafter, future dividends will be sent directly to you by check.
Alternatively, if you so direct, the Administrator will sell all whole and
fractional shares in your Plan account and send you a check for the proceeds
less any applicable fees. The Administrator should receive termination notices
no later than four days prior to a dividend record date to avoid the
reinvestment of the current dividend or any possible delay in receipt of your
shares and/or cash. If your Plan account balance falls below one full share, the
Administrator reserves the right to liquidate the fraction and remit the
proceeds, less any applicable fees, to you at your address of record.
24. ARE THERE ANY RISKS ASSOCIATED WITH THE PLAN?
Your investment in shares purchased under the Plan is no different from any
investment in shares you hold directly. Neither Annaly nor the Administrator
can assure a profit or protect you against a loss on shares purchased. You bear
the risk of loss and enjoy the benefits of any gain from market price changes
with respect to shares purchased under the Plan.
25. CAN THE PLAN BE AMENDED, MODIFIED, SUSPENDED OR TERMINATED?
Annaly reserves the right to amend, modify, suspend or terminate the Plan
at any time. You will receive written notice of any such amendment,
modification, suspension or termination. Annaly and the Administrator also
reserve the right to change any administrative procedures of the Plan.
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26. WHAT ARE THE RESPONSIBILITIES OF ANNALY AND THE ADMINISTRATOR?
Neither Annaly nor the Administrator will be liable for any act they do in
good faith or for any good faith omission to act including, in the case of the
Administrator, liability arising out of (i) failure to terminate a participant's
account upon such participant's death or adjudicated incompetence, prior to the
receipt of notice in writing of such death or adjudicated incompetence, (ii) the
prices at which shares are purchased for the participant's account, (iii) the
times when purchases are made, or (iv) fluctuations in the market value of
Annaly's common stock.
The payment of dividends is at the discretion of the Annaly Board of
Directors and will depend upon future earnings, the financial condition of
Annaly and other factors. The Board may change the amount and timing of
dividends at any time without notice.
27. WHAT IF I HAVE QUESTIONS ABOUT THE PLAN?
Any questions you have about buying or selling shares or any other services
offered by the Plan, should be made directly to the Administrator at its toll-
free number:
1-800-301-5234
A customer service representative will assist you. Once enrolled, you may
also use the Administrator's automated voice response system, which will furnish
information regarding your account - for example, the number of shares held in
the Plan, amount of last dividend check or the closing stock price. Employees of
the Administrator are not permitted to give any opinions on the merits of any
security or class of securities. You may also write to the Administrator at the
following address:
Chase Manhattan Bank
c/o ChaseMellon Shareholder Services, L.L.C.
P. O. Box 3338
South Hackensack, New Jersey 07606 -1938
Be sure to include your name, address, account key and daytime phone number
on all correspondence.
This Plan is designed for the long-term investor and does not afford the
same flexibility as a stockbroker's account.
Annaly has appointed Chase Manhattan Bank as Administrator for the Plan.
Securities held by the Administrator in your Plan account are not subject to
protection under the Securities Investor Protection Act of 1970. Commissions may
be paid to a broker-dealer that is affiliated with the Administrator. Investors
must make independent investment decisions based upon their own judgment and
research.
Annaly is listed on the New York Stock Exchange and trades under the ticker
symbol "NLY".
PLAN SERVICE FEES
(EFFECTIVE FEBRUARY 1999)
Enrollment Fee for New Investors No Charge
Initial Purchase of Shares No Charge
Sales of Shares (partial or full)
Transaction Fee $15.00 per sale transaction
Trading Fee $0.12 per share
Reinvestment of Dividends No Charge
Optional cash purchases via check or automatic
investment No Charge
Gift or Transfer of Shares No Charge
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Safekeeping of Stock Certificates No Charge
Certificate Issuance No Charge
Returned Checks for Insufficient Funds or Rejected
Automatic Withdrawals $25.00 per item
Duplicate Statements
Current year No Charge
Prior year(s) $20.00 per year requested
The Administrator will deduct the applicable fees from the proceeds from a
sale.
Annaly reserves the right to amend or modify this Plan Service Fee schedule
at any time and from time to time.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations (i) that apply to a participant in the Plan and (ii) that relate
to the Company's treatment as a REIT. No assurance can be given that the
conclusions set out below would be sustained by a court if challenged by the
Internal Revenue Service (the "Service"). This summary deals only with shares of
Common Stock that are held as "capital assets" (generally, property held for
investment) by stockholders and does not address tax considerations applicable
to stockholders that may be subject to special tax rules, such as dealers or
traders in securities, financial institutions, insurance companies, stockholders
that hold Common Stock as a hedge, part of a straddle, conversion transaction or
other arrangement involving more than one position or stockholders whose
functional currency is not the United States dollar and, except to the extent
discussed below, tax-exempt and foreign taxpayers.
The discussion below is based upon the provisions of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings
and judicial decisions thereunder as of the date hereof; any such authority may
be repealed, revoked or modified, perhaps with retroactive effect, so as to
result in federal income tax consequences different from those discussed below.
THE DISCUSSION SET OUT BELOW IS INTENDED ONLY AS A SUMMARY OF CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN AND
THE COMPANY'S TREATMENT AS A REIT. PROSPECTIVE PARTICIPANTS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN
AND OF THE PURCHASE, HOLDING AND DISPOSITION OF COMMON STOCK, INCLUDING THE
APPLICATION TO THEIR PARTICULAR SITUATION OF THE TAX CONSIDERATIONS DISCUSSED
BELOW, AS WELL AS THE APPLICATION OF STATE, LOCAL OR FOREIGN TAX LAWS. THE
STATEMENTS OF UNITED STATES TAX LAW SET OUT BELOW ARE BASED ON THE LAWS IN FORCE
AND INTERPRETATIONS THEREOF AS OF THE DATE OF THIS AMENDMENT NO. 1 TO FORM
S-3, AND ARE SUBJECT TO ANY CHANGES OCCURRING AFTER THAT DATE.
FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE PLAN
The following is a summary of certain United States federal income tax
considerations that apply to a participant in the Plan. Considerations relating
to the Company's treatment as a REIT, including considerations relating to the
acquisition, ownership and disposition of Common Stock, are described below in
"Federal Income Tax Considerations Relating to the Company's Treatment as a REIT
- -- Taxation of Stockholders, "--Taxation of Tax-Exempt Entities, and "--Certain
United States Federal Income Tax Considerations Applicable to Foreign Holders."
TAX CONSEQUENCES OF DIVIDEND REINVESTMENT
A participant whose dividend distributions are reinvested in Common Stock
will be treated for Federal income tax purposes as having received a
distribution notwithstanding that the distribution is used to purchase
additional shares
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of Common Stock. The amount of the distribution will equal the fair market
value, as of the Investment Date, of the shares of Annaly Common Stock purchased
with reinvested dividends, including the 0% to 3% discount. In addition, with
respect to Common Stock purchased by the Agent in open market transactions or in
negotiated transactions with third parties, the Service has indicated in private
letter rulings that the amount of distribution received by a participant would
include a pro rata share of any brokerage commissions or other related charges
paid by the Company in connection with the Agent's purchase of the Common Stock
on behalf of the participant. In such private letter rulings, the Service has
also held that the payment by a company of a dividend reinvestment plan's
administrative expenses does not constitute a distribution to stockholders. The
Company intends to take the position that administrative expenses of the Plan
paid by the Company do not constitute constructive distributions; however,
private letter rulings are not considered precedent and therefore no assurance
can be given that the Service would agree with the Company's position. The
constructive distributions described above otherwise will be treated in the same
manner as non-reinvested cash distributions as described below in "Federal
Income Tax Considerations Relating to the Company's Treatment as a REIT--
Taxation of Stockholders."
A participant's tax basis in each share of Common Stock acquired under the
Plan will generally equal the amount of the distribution a participant is
treated as receiving with respect to such share (as described above). A
participant's holding period in his Common Stock generally begins on the day
following the date on which the shares of Annaly Common Stock are credited to
the participant's Plan account.
TAX CONSEQUENCES OF OPTIONAL CASH PAYMENTS
The Service has indicated in somewhat similar situations that a participant
who both makes an optional cash purchase of common stock and reinvests all or a
part of his dividends under a dividend reinvestment plan will be treated as
having received a distribution equal to the excess (if any) of the fair market
value on the Investment Date of the Common Stock over the amount of the optional
cash payment made by the participant. Also, if the shares of Common Stock are
acquired by the Agent in an open market transaction or in a negotiated
transaction with third parties, then the Service may assert that a participant
will be treated as receiving a distribution equal to a pro rata share of any
brokerage commission or other related charges paid by the Company on behalf of
the participant. As with constructive distributions under the dividend
reinvestment aspect of the Plan, such distributions would otherwise also will be
treated in the same manner as non-reinvested cash distributions (see "Federal
Income Tax Considerations Relating to the Company's Treatment as a REIT--
Taxation of Stockholders").
The Service has held in a recent private letter ruling that a participant
who only makes optional cash purchases of common stock in a dividend
reinvestment plan (and does not participate in the dividend reinvestment aspect)
will not be treated as having received a distribution reflecting either the
excess (if any) of the fair market value on the Investment Date of the Common
Stock over the amount of the optional cash payment made by the participant or a
pro rata share of any brokerage commission or other related charges paid by the
Company on behalf of the participant. The Service, however, did not explain in
the private letter ruling its rationale for making such a distinction, nor is
one readily apparent (particularly if the participant is already a stockholder
in the Company). Furthermore, private letter rulings are not considered
precedent by the Service and therefore no assurance can be given that the
Service would take this position with respect to other transactions, including
those under the Plan.
A participant's tax basis in each share of Common Stock acquired through an
optional cash purchase under the Plan will generally equal the amount of
distributions a participant is treated as receiving with respect to such share
(as described above), plus the amount of the optional cash payment. A
participant's holding period for Common Stock purchased under the Plan generally
will begin on the day following the date on which the shares of Common Stock are
credited to the participant's Plan account.
In addition, all cash distributions paid with respect to all Common Stock
credited to a participant's Plan account will be reinvested automatically. In
that regard, see "Tax Consequences of Dividend Reinvestment" above.
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TAX CONSEQUENCES TO THE COMPANY OF THE PLAN
The Service has ruled in connection with similar plans that a dividend
reinvestment and optional cash purchase plan will not compromise the Company's
qualification as a REIT. In addition, the Company should be able to receive a
dividends-paid deduction for constructive distributions resulting from discounts
under the Plan (see "Federal Income Tax Considerations Relating to the Company's
Treatment as a REIT--Taxation of the Company"). The dividends-paid deduction is
generally not available for the payment of preferential dividends; the Service
has held in a published ruling, however, that constructive dividends arising
from a discount under a dividend reinvestment or optional purchase plan are not
preferential and will therefore qualify for a dividends-paid deduction as long
as the discount does not exceed 5% of the fair market value of the shares
acquired under such plan. The Service has indicated in private letter rulings
that the amount of brokerage fees and other charges paid by a company as part of
such a plan are included in calculating the discount for the purposes of
applying this 5% limit. As a result, the Company should be able to deduct the
constructive distributions resulting from discounts under the Plan with respect
to shares that have been purchased directly from the Company because the
discount on such shares will not exceed 5% and no brokerage fees will be
incurred. With respect to shares purchased on the open market, however, the
discount offered to participants and the brokerage fees allocated to such shares
may exceed the 5% limit. In such event, the amount of the entire distribution
(including actual and constructive distributions) would not be deductible by the
Company, not merely the excess and, as a result, the Company might not satisfy
the annual distribution requirements for continued qualification as a REIT. (See
"Federal Income Tax Considerations Relating to the Company's Treatment as a
REIT--REIT Qualification Requirements--Distribution Requirement" below.)
BACKUP WITHHOLDING AND ADMINISTRATIVE EXPENSES
In general, any distribution reinvested under the Plan is not subject to
federal income tax withholding. The Company or the Agent may be required,
however, to deduct as "backup withholding" thirty-one percent (31%) of all
distributions paid to any stockholder, regardless of whether those distributions
are reinvested pursuant to the Plan. Similarly, the Agent may be required to
deduct backup withholding from all proceeds of sales of shares of Common Stock
held in a Plan account. (See "Federal Income Tax Considerations Relating to the
Company's Treatment as a REIT--Information Reporting and Backup Withholding"
below for a discussion of whether a participant may be subject to backup
withholding.) Backup withholding amounts will be withheld from distributions
before those distributions are reinvested under the Plan. Therefore,
distributions to be reinvested under the Plan by participants who are subject to
backup withholding will be reduced by the backup withholding amount. The
withholding amounts constitute a credit on the participant's income tax return.
TAX CONSEQUENCES OF DISPOSITIONS
A participant may recognize a gain or loss upon receipt of a cash payment
for a fractional Common Share credited to a Plan account or when the Common
Stock held in an account are sold at the request of the participant. A gain or
loss may also be recognized upon a participant's disposition of Common Stock
received from the Plan. The amount of any such gain or loss will be the
difference between the amount realized (generally the amount of cash received)
for the whole or fractional Common Stock and the tax basis of those Common
Stock. Generally, gain or loss recognized on the disposition of Common Stock
acquired under the Plan will be treated for Federal income tax purposes as a
capital gain or loss (see "Federal Income Tax Considerations Relating to the
Company's Treatment as a REIT--Taxation of Stockholders" below).
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FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE COMPANY'S TREATMENT AS A REIT
GENERAL
The Company has elected to become subject to tax as a REIT for federal
income tax purposes. The Company has operated, and the Board of Directors of
the Company currently expects that the Company will continue to operate, in a
manner that will permit the Company to maintain its qualification as a REIT for
the taxable year ending December 31, 1998, and in each taxable year thereafter.
This treatment will permit the Company to deduct dividend distributions to its
stockholders for federal income tax purposes, thus effectively eliminating the
"double taxation" that generally results when a corporation earns income and
distributes that income to its stockholders in the form of dividends.
There can be no assurance, however, that the Company will qualify as a REIT
in any particular taxable year, given the highly complex nature of the rules
governing REITs, the ongoing importance of factual determinations and the
possibility of future changes in the circumstances of the Company. If the
Company were not to qualify as a REIT in any particular year, it would be
subject to Federal income tax as a regular, domestic corporation, and its
stockholders would be subject to tax in the same manner as stockholders of such
corporation. In this event, the Company could be subject to potentially
substantial income tax liability in respect of each taxable year that it fails
to qualify as a REIT, and the amount of earnings and cash available for
distribution to its stockholders could be significantly reduced or eliminated.
REIT QUALIFICATION REQUIREMENTS
The following is a brief summary of certain technical requirements that the
Company must meet on an ongoing basis in order to qualify, and remain qualified,
as a REIT under the Code.
STOCK OWNERSHIP TESTS
(i) The capital stock of the Company must be transferable, (ii) the
capital stock of the Company must be held by at least 100 persons during at
least 335 days of a taxable year of 12 months (or during a proportionate part of
a taxable year of less than 12 months), and (iii) no more than 50% of the value
of such capital stock may be owned, directly or indirectly, by five or fewer
individuals (as defined in the Code to include certain entities) at any time
during the last half of the taxable year. Tax-exempt entities, other than
private foundations and certain unemployment compensation trusts, are generally
not treated as individuals for these purposes. The requirements of items (ii)
and (iii) above are not applicable to the first taxable year for which an
election to be taxed as a REIT is made. However, these stock ownership
requirements must be satisfied in the Company's second taxable year and in each
subsequent taxable year. The Company's Articles of Amendment and Restatement of
Certificate of Incorporation (the "Articles of Incorporation") provide
restrictions regarding the transfer of the Company's shares in order to aid in
meeting the stock ownership requirements. In addition, the Company is required
under Treasury Department regulations to demand annual written statements from
the record holders of designated percentages of its capital stock disclosing the
actual and constructive ownership of such stock and to maintain permanent
records showing the information it has received as to the actual and
constructive ownership of such stock and a list of those persons failing or
refusing to comply with such demand.
ASSET TESTS
The Company must generally meet the following asset tests (the "REIT Asset
Tests") at the close of each quarter of each taxable year:
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(a) at least 75% of the value of the Company's total assets must consist
of Qualified REIT Real Estate Assets, government securities, cash and cash items
(the "75% Asset Test"); and
(b) the value of securities held by the Company but not taken into account
for purposes of the 75% Asset Test must not exceed (i) 5% of the value of the
Company's total assets in the case of securities of any one issuer, or (ii) 10%
of the outstanding voting securities of any such issuer.
"Qualified REIT Real Estate Assets" means pass-through certificates,
mortgage loans and other assets of the type described in Section 856(c)(6)(B) of
the Code.
The Company and one or more other entities may form and capitalize one or
more taxable subsidiaries that will engage in hedging activities, the creation
of mortgage-backed securities through securitization and/or other activities. In
order to ensure that the Company would not violate the more than 10% single
issuer voting stock limitation, the Company would own only non-voting preferred
and common stock, and the other entities would own all of the voting common
stock. The value of the Company's investment in such a subsidiary would also be
limited to less than 5% of the value of the Company's total assets at the end of
each calendar quarter so that the Company can also comply with the 5% of value,
single-issuer asset limitation. The taxable subsidiary would not elect REIT
status and would distribute only net after-tax profits to its stockholders,
including the Company. President Clinton's 1999 tax proposals include a
provision, however, that would restrict the ownership by a REIT of more than
10%, by value, of the stock of certain other corporations. Such a provision has
-----
been included in President Clinton's prior tax proposals, but has not been
enacted into law. Were such a proposal to become law, the Company's continued
qualification as a REIT might require modification of the Company's current or
future ownership of subsidiaries. Before the Company engages in any hedging or
securitization activities or forms any such taxable subsidiary corporation, the
Company will consult with its tax advisor to determine whether such activities
or the formation and contemplated method of operation of such corporation would
cause the Company to fail to satisfy the REIT Asset Tests and REIT Gross Income
Tests (as defined below).
GROSS INCOME TESTS
The Company must generally meet the following gross income tests (the "REIT
Gross Income Tests") for each taxable year:
(a) at least 75% of the Company's gross income must be derived from
certain specified real estate sources including interest income and gain from
the disposition of Qualified REIT Real Estate Assets or "qualified temporary
investment income" (i.e., income derived from "new capital" within one year of
the receipt of such capital) (the "75% Gross Income Test"); and
(b) at least 95% of the Company's gross income for each taxable year must
be derived from sources of income qualifying for the 75% Gross Income Test,
dividends, interest, and gains from the sale of stock or other financial
instruments (including certain interest rate swap and cap agreements, options,
futures contracts, forward rate agreements or similar financial instruments
entered into to hedge variable rate debt incurred to acquire Qualified REIT Real
Estate Assets) not held for sale in the ordinary course of business (the "95%
Gross Income Test").
DISTRIBUTION REQUIREMENT
The Company must generally distribute to its stockholders an amount equal
to at least 95% of the Company's REIT taxable income before deductions of
dividends paid and excluding net capital gain. However, a REIT may elect to
retain, rather than distribute, its net long-term capital gains and pay the tax
on such gains, while its stockholders include their proportionate share of the
undistributed long-term capital gains in income and receive a credit for their
share of the tax paid by the REIT.
TAXATION OF THE COMPANY
In any year in which the Company qualifies as a REIT, the Company will
generally not be subject to Federal income tax on that portion of its REIT
taxable income or capital gain which is distributed to its stockholders. The
17
<PAGE>
Company will, however, be subject to Federal income tax at normal corporate
income tax rates upon any undistributed taxable income or capital gain.
Notwithstanding its qualification as a REIT, the Company may also be
subject to tax in certain other circumstances. First, if the Company fails to
satisfy either the 75% or the 95% Gross Income Test, but nonetheless maintains
its qualification as a REIT because certain other requirements are met, it will
generally be subject to a 100% tax on the greater of the amount by which the
Company fails either the 75% or the 95% Gross Income Test multiplied by a
fraction intended to reflect the Company's profitability. Second, the Company
will also be subject to a tax of 100% on net income derived from any "prohibited
transaction." Third, if the Company has (i) net income from the sale or other
disposition of "foreclosure property" which is held primarily for sale to
customers in the ordinary course of business or (ii) other non-qualifying income
from foreclosure property, it will be subject to Federal income tax on such
income at the highest corporate income tax rate. Fourth, if the Company fails to
distribute during each calendar year at least the sum of (i) 85% of its REIT
ordinary income for such year, (ii) 95% of its REIT capital gain net income for
such year and (iii) any undistributed amount of ordinary and capital gain net
income from the preceding taxable years, the Company would be subject to a 4%
Federal excise tax on the excess of such required distribution over the amounts
actually distributed during the taxable year. Fifth, if the Company acquires any
asset from a C corporation in a transaction in which the basis of the asset is
determined by reference to the basis of the asset in the hands of a C
corporation and the Company recognizes gain upon a disposition of such asset
occurring within 10 years of its acquisition, then the Company would be subject
to tax to the extent of any built-in gain at the highest regular corporate rate.
Finally, the Company may also be subject to the corporate alternative minimum
tax, as well as other taxes in certain situations not presently contemplated.
If the Company fails to qualify as a REIT in any taxable year and certain
relief provisions of the Code do not apply, the Company would be subject to
Federal income tax (including any applicable alternative minimum tax) on its
taxable income in that taxable year and all subsequent taxable years at the
regular corporate income tax rates. Distributions to stockholders in such years
would not be deductible by the Company, nor would they generally be required to
be made under the Code. Further, unless entitled to relief under certain other
provisions of the Code, the Company also would be disqualified from re-electing
REIT status for the four taxable years following the year during which it became
disqualified.
The Company intends to monitor on an ongoing basis its compliance with the
REIT requirements described above. In order to maintain its REIT status, the
Company will be required to limit the types of assets that the Company might
otherwise acquire, or hold certain assets at times when the Company might
otherwise have determined that the sale or other disposition of such assets
would have been more prudent.
TAXATION OF STOCKHOLDERS
Distributions (including constructive distributions) made to holders of
Common Stock, other than tax-exempt entities, will generally be subject to tax
as ordinary income to the extent of the Company's current and accumulated
earnings and profits as determined for Federal income tax purposes. If the
amount distributed exceeds a stockholder's allocable share of such earnings and
profits, the excess will be treated as a return of capital to the extent of the
stockholder's adjusted basis in the Common Stock, which will reduce the
stockholder's basis in the Common Stock but not be subject to tax, and
thereafter as a gain from the sale or exchange of a capital asset.
Distributions by the Company, whether characterized as ordinary income or as
capital gain, are not eligible for the corporate dividends received deduction.
Distributions designated by the Company as capital gain dividends will
generally be subject to tax as long-term capital gain to stockholders, to the
extent that the distribution does not exceed the Company's actual net capital
gain for the taxable year. In the event that the Company realizes a loss for
the taxable year, stockholders will not be permitted to deduct any share of that
loss. Further, if the Company (or a portion of its assets) were to be treated as
a taxable mortgage pool, any "excess inclusion income" that is allocated to a
stockholder would not be allowed to be
18
<PAGE>
offset by a net operating loss of such stockholder. Future Treasury Department
regulations may require that the stockholders take into account, for purposes of
computing their individual alternative minimum tax liability, certain tax
preference items of the Company.
Dividends declared during the last quarter of the calendar year and
actually paid during January of the following taxable year are generally treated
as if paid by the Company and received by the stockholder on December 31 of such
calendar year and not on the date actually paid and received. In addition, the
Company may elect to treat certain other dividends distributed after the close
of the taxable year as having been paid during such taxable year, but
stockholders will be treated as having received such dividend in the taxable
year in which the distribution is actually made.
Upon a sale or other disposition of the Common Stock, a stockholder will
generally recognize a capital gain or loss in an amount equal to the difference
between the amount realized and the stockholder's adjusted basis in such stock,
which gain or loss will be long-term if the stock has been held for more than
one year. Any loss on the sale or exchange of a share of Common Stock held by a
stockholder for six months or less will generally be treated as a long-term
capital loss to the extent, with respect to such stock, of (i) any long-term
capital gain dividends received by such stockholder and (ii) any long-term
capital gain retained by the Company, the tax on which such stockholder received
a credit.
In any year in which the Company does not qualify as a REIT, distributions
made to its stockholders would be taxable in the same manner discussed above,
except that no distributions could be designated as capital gain dividends,
distributions would be eligible for the corporate dividends received deduction,
the excess inclusion income rules would not apply to the stockholders, and
stockholders would not receive any share of the Company's tax preference items.
In such event, however, the Company could be subject to potentially substantial
Federal income tax liability, and the amount of earnings and cash available for
distribution to its stockholders could be significantly reduced or eliminated.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company will report to its domestic stockholders and to the Service the
amount of distributions paid for each calendar year, and the amount of tax
withheld, if any, with respect thereto. Under the backup withholding rules, a
stockholder may be subject to backup withholding at a rate of 31% with respect
to distributions paid unless such stockholder (i) is a corporation or comes with
certain other exempt categories and, when required, demonstrates this fact or
(ii) provides a taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. A stockholder that does not
provide the Company with its correct taxpayer identification number may also be
subject to penalties imposed by the Service.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Service.
TAXATION OF TAX-EXEMPT ENTITIES
Subject to the discussion below regarding a "pension-held REIT,"
distributions received from the Company or gain realized on the sale of the
Common Stock are not taxable as unrelated business taxable income ("UBTI") to a
tax-exempt stockholder, provided that such stockholder has not incurred
indebtedness to purchase or hold its Common Stock, that its shares are not
otherwise used in an unrelated trade or business of such stockholder, and that
the Company, consistent with its present intent, does not hold a residual
interest in a REMIC that gives rise to "excess inclusion" income as defined
under section 860E of the Code. If the Company were to be treated as a "taxable
mortgage pool," however, a substantial portion of the dividends paid to a tax-
exempt stockholder may be subject to tax as UBTI.
If a qualified pension trust (i.e., any pension or other retirement trust
that qualifies under section 401(a) of the Code) holds more than 10% by value of
the interests in a "pension-held REIT" at any time during a taxable year, a
substantial portion of the dividends paid to the qualified pension trust by such
REIT may constitute UBTI. For these
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<PAGE>
purposes, a "pension-held REIT" is any REIT (i) that would not have qualified as
a REIT but for the provisions of the Code which look through qualified pension
trust stockholders to the qualified pension trust's beneficiaries in determining
ownership of stock of the REIT and (ii) in which at least one qualified pension
trust holds more than 25% by value of the interests of such REIT or one or more
qualified pension trusts (each owning more than a 10% interest by value in the
REIT) hold in the aggregate more than 50% by value of the interests in such
REIT. Assuming compliance with certain ownership limit provisions set forth in
the Company's Articles of Incorporation, it is unlikely that pension plans will
accumulate sufficient stock to cause the Company to be treated as a pension-held
REIT.
Distributions to certain types of tax-exempt stockholders exempt from
Federal income taxation under sections 501(c)(7), (c)(9), (c)(17), and (c)(20)
of the Code may also constitute UBTI, and such prospective investors should
consult their tax advisors concerning the applicable "set aside" and reserve
requirements.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS APPLICABLE TO FOREIGN
HOLDERS
The following discussion summarizes certain United States Federal tax
consequences of the acquisition, ownership and disposition of shares of Common
Stock by a purchaser that, for United States Federal income tax purposes, is not
a "United States person" (a "Non-United States Holder"). For purposes of this
discussion, a "United States person" means: a citizen or resident of the United
States; a corporation, partnership, or other entity created or organized in the
United States or under the laws of the United States or of any political
subdivision thereof; or an estate or trust whose income is includible in gross
income for United States Federal income tax purposes regardless of its source.
The rules governing the United States federal income taxation of Non-United
States Holders are highly complex, and this discussion is only a brief summary
of such rules and does not consider any specific facts or circumstances that may
apply to a particular Non-United States Holder. Prospective investors are urged
to consult their tax advisors regarding the United States Federal tax
consequences of acquiring, holding and disposing of Common Stock, as well as any
tax consequences that may arise under the laws of any foreign, state, local or
other taxing jurisdiction.
DISTRIBUTIONS
Distributions paid by the Company to a Non-United States Holder that are
neither attributable to gain from the dispositions of real property interests
nor designated as capital gains dividends will generally be subject, to the
extent of the Company's earnings and profits, to withholding of United States
Federal income tax at the rate of 30%, unless reduced or eliminated by an
applicable tax treaty or unless such distributions are treated as effectively
connected with a United States trade or business. Distributions paid by the
Company in excess of its earnings and profits will be treated as a tax-free
return of capital to the extent of the holder's adjusted basis in the holder's
Common Stock, and thereafter as gain from the sale or exchange of Common Stock
as described below. If it cannot be determined at the time a distribution is
made whether such distribution will exceed the earnings and profits of the
Company, the distribution will be subject to withholding at the same rate as
dividends. Amounts so withheld, however, will be refundable or creditable
against the Non-United States Holder's United States Federal tax liability if it
is subsequently determined that such distribution was, in fact, in excess of the
earnings and profits of the Company. If the receipt of the dividend is treated
as being effectively connected with the conduct of a trade or business within
the United States by a Non-United States Holder, the dividend received by such
holder will be subject to the United States Federal income tax on net income
that applies to United States persons generally (and, with respect to corporate
holders and under certain circumstances, the branch profits tax).
Distributions to a Non-United States Holder that are designated as capital
gains dividends (other than those attributable to the disposition of a United
States real property interest) generally will not be subject to United States
federal income taxation, unless (i) the investment in Common Stock is
effectively connected with the conduct of a trade or business within the United
States by a Non-United States Holder or (ii) the Non-United States Holder is a
nonresident alien individual who is present in the United States for 183 days or
more in the taxable year and certain other requirements are met.
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<PAGE>
Distributions to a Non-United States Holder attributable to the disposition
of United States real property interests by the Company are subject to income
and withholding taxes pursuant to the Foreign Investment in Real Property Act of
1980 ("FIRPTA"), and may also be subject to branch profits tax in the hands of a
stockholder that is a foreign corporation if it is not entitled to treaty relief
or exemption. However, because the Company does not expect to hold assets that
would be treated as "United States real property interests" as defined by
FIRPTA, the FIRPTA provisions should not apply to non-United States Holders of
Common Stock.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale or other disposition of the
Common Stock unless (i) the gain is effectively connected with the conduct of a
trade or business within the United States by the Non-United States Holder, (ii)
in the case of a Non-United States Holder who is a nonresident alien individual
and holds the Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year and certain other
requirements are met, or (iii) the Non-United States Holder is subject to tax
under the FIRPTA rules discussed below. Gain that is effectively connected with
the conduct of a trade or business within the United States by a Non-United
States Holder will be subject to the United States Federal income tax on net
income that applies to United States persons generally (and, with respect to
corporate holders and under certain circumstances, the branch profits tax) but
will not be subject to withholding. Non-United States Holders should consult
applicable treaties, which may provide for different rules.
Under FIRPTA, a Non-United States Holder may be subject to tax on gain
recognized from the sale or other disposition of the Common Stock if the Company
were to (i) hold United States real property interests and (ii) fail to qualify
as a domestically-controlled REIT. As mentioned above, the Company does not
expect to hold any United States real property interests. Furthermore, the
Company will likely qualify as a "domestically-controlled REIT", although such
qualification can not be assured given that the shares of the Company are
publicly traded. (A REIT qualifies as a "domestically-controlled" as long as
less than 50% in value of its shares of beneficial interest are held by foreign
persons at all times during the shorter of (i) the previous five years and (ii)
the period in which the REIT is in existence.)
STATE AND LOCAL TAXES
The Company and its stockholders may be subject to state or local taxation
in various jurisdictions, including those in which it or they transact business
or reside. The state and local tax treatment of the Company and its
stockholders may not conform to the Federal income tax consequences discussed
above. Consequently, prospective stockholders should consult their own tax
advisors regarding the effect of state and local tax laws.
USE OF PROCEEDS
The Company will receive the net proceeds from the sale of Common Stock
purchased by the Agent directly from the Company. The net proceeds from the
sale of those shares of Common Stock will be used to acquire mortgage-backed
securities and for general operating expenses. The Company will not receive any
proceeds from purchases of Common Stock by the Agent in the open market or in
negotiated transactions with third parties.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy and information
statements and other information with the Commission. Those reports, proxy and
information statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661; and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies
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of that material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. In addition, that material can also be obtained from the Commission's Web
site at http://www.sec.gov. The Company's outstanding shares of Common Stock are
listed on the NYSE under the symbol "NLY", and all reports, proxy and
information statements and other information filed by the Company with the NYSE
may be inspected at the offices of the NYSE at 20 Broad Street, New York, New
York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act, with respect to the securities offered hereby. This
prospectus ("Prospectus"), which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are omitted in accordance with the rules and
regulations of the Commission. Statements made in this Prospectus as to the
content of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed or incorporated by reference as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement will be deemed qualified in its
entirety by that reference.
INCORPORATION BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-13447) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
(i) The Company's Annual Report on Form 10-K, for the fiscal year ended
December 31, 1998;
(ii) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended June 30, 1998, September 30, 1998 and March 31, 1999; and
(iii) The description of the Common Stock included in the Company's
Registration Statement on Form 8-A, as amended.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
made hereby will be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing of those documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein will be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any
subsequently filed document which is incorporated or is deemed to be
incorporated by reference herein, modifies or supersedes that statement. Any
such statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of that person, a copy of any and all of the information which has been
incorporated by reference herein (not including exhibits to that information
unless those exhibits are specifically incorporated by reference in that
information). Requests should be directed to Annaly Mortgage Management, Inc.,
12 East 41st Street, Suite 700, New York, New York 10017, Attention: Secretary,
telephone number: (212) 696-0100
EXPERTS
The financial statements of the Company as of December 31, 1998, and for
the fiscal year of the Company ending on such date and the related schedule
incorporated by reference herein, have been incorporated by reference herein and
in the Registration Statement in reliance on the reports of Deloitte and Touche
LLP, independent certified
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<PAGE>
public accountants, incorporated by reference herein and on the authority of
said firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Common Stock offered pursuant to this Prospectus will
be passed on for the Company by Morgan, Lewis & Bockius LLP, New York, New York.
Morgan, Lewis & Bockius LLP has in the past represented and is currently
representing the Company and certain of its affiliates.
23
<PAGE>
APPENDIX I
ANNALY PROPOSED DIVIDEND SCHEDULE
<TABLE>
<CAPTION>
YEAR DIVIDEND DECLARATION RECORD DATE DIVIDEND PAYMENT
DATE DATE
<S> <C> <C> <C>
1999 30-Mar-99 7-Apr-99 26-Apr-99
29-Jun-99 9-Jul-99 26-Jul-99
28-Sep-99 12-Oct-99 25-Oct-99
20-Dec-99 31-Dec-99 25-Jan-00
2000 30-Mar-00 7-Apr-00 27-Apr-00
29-Jun-00 10-Jul-00 27-Jul-00
28-Sep-00 11-Oct-00 26-Oct-00
20-Dec-00 29-Dec-00 26-Jan-01
2001 29-Mar-01 9-Apr-01 27-Apr-01
28-Jun-01 10-Jul-01 27-Jul-01
26-Sep-01 10-Oct-01 29-Oct-01
21-Dec-01 31-Dec-01 25-Jan-02
</TABLE>
A-1
<PAGE>
OPTIONAL CASH PURCHASES
<TABLE>
<CAPTION>
(A) (B) (C) (D)
THRESHOLD PRICE
AND WAIVER OPTIONAL CASH
DISCOUNT IF ANY, INVESTMENTS MUST PRICING PERIOD
YEAR WILL BE SET BY BE RECEIVED BY START DATE INVESTMENT DATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 6/9/99 6/11/99 6/14/99 6/28/99
7/7/99 7/9/99 7/12/99 7/26/99
8/11/99 8/13/99 8/16/99 8/30/99
9/8/99 9/10/99 9/13/99 9/27/99
10/6/99 10/8/99 10/11/99 10/25/99
11/9/99 11/11/99 11/12/99 11/29/99
12/7/99 12/9/99 12/10/99 12/27/99
2000 1/5/00 1/7/00 1/10/00 1/25/00
2/8/00 2/10/00 2/11/00 2/28/00
3/9/00 3/13/00 3/14/00 3/28/00
4/7/00 4/11/00 4/12/00 4/27/00
5/11/00 5/15/00 5/16/00 5/31/00
6/13/00 6/15/00 6/16/00 6/30/00
7/10/00 7/12/00 7/13/00 7/27/00
8/14/00 8/16/00 8/17/00 8/31/00
9/12/00 9/14/00 9/15/00 9/29/00
10/9/00 10/11/00 10/12/00 10/26/00
11/10/00 11/14/00 11/15/00 11/30/00
12/8/00 12/12/00 12/13/00 12/28/00
2001 1/8/01 1/10/01 1/11/01 1/26/01
2/8/01 2/12/01 2/13/01 2/28/01
3/9/01 3/13/01 3/14/01 3/28/01
4/9/01 4/11/01 4/12/01 4/27/01
5/10/01 5/14/01 5/15/01 5/30/01
6/12/01 6/14/01 6/15/01 6/29/01
7/10/01 7/12/01 7/13/01 7/27/01
8/14/01 8/16/01 8/17/01 8/31/01
9/6/01 9/10/01 9/11/01 9/25/01
10/10/01 10/12/01 10/15/01 10/29/01
11/12/01 11/14/01 11/15/01 11/30/01
12/6/01 12/10/01 12/11/01 12/26/01
</TABLE>
A. The Threshold Price and the Waiver Discount, if any, will be established
three business days prior to the first day of the Pricing Period.
B. Optional cash purchases made pursuant to a Request for Waiver are due by the
close of business on the last business day immediately preceding the first
day of the Pricing Period.
C. The Pricing Period will be the ten consecutive Trading Days ending on the
Trading Day immediately preceding the Investment Date.
D. Optional cash purchases not made pursuant to a Request for Waiver are due by
the second business day preceding the Investment Date.
A-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The fees and expenses to be paid in connection with the distribution of the
securities being registered hereby are estimated as follows:
Registration Fee........................... $ 5,874
Legal fees and expenses.................... 25,000
Accounting fees and expenses............... 4,000
Printing................................... 5,000
Miscellaneous.............................. 10,000
-----------
Total.................................. $49,874
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-418 of the Corporations and Associations Article of the Annotated
Code of Maryland (the "Maryland General Corporation Law") provides that a
Maryland corporation may indemnify any director of the corporation and any
person who, while a director of the corporation, is or was serving at the
request of the corporation as director, officer, partner, trustee, employee, or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, or other enterprise or employee benefit plan, is made a party to any
proceeding by reason of service in that capacity unless it is established that
the act or omission of the director was material to the matter giving rise to
the proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; or the director actually received an improper personal
benefit in money, property or services; or, in the case of any criminal
proceeding, the director had reasonable cause to believe that the act or
omission was unlawful. Indemnification may be against judgments, penalties,
fines, settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding, but if the proceeding was one by or in the right
of the corporation, indemnification may not be made in respect of any proceeding
in which the director shall have been adjudged to be liable to the corporation.
Such indemnification may not be made unless authorized for a specific proceeding
after a determination has been made, in the manner prescribed by the law, that
indemnification is permissible in the circumstances because the director has met
the applicable standard of conduct. On the other hand, the director must be
indemnified for expenses if he has been successful in the defense of the
proceeding or as otherwise ordered by a court. The law also prescribes the
circumstances under which the corporation may advance expenses to, or obtain
insurance or similar protection for, directors.
The law also provides for comparable indemnification for corporate officers
and agents.
The Registrant's Articles of Incorporation provide that its directors and
officers shall, and its agents in the discretion of the Board of Directors may,
be indemnified to the fullest extent required or permitted from time to time by
the laws of Maryland.
The Maryland General Corporation Law permits the charter of a Maryland
corporation to include a provision limiting the liability of its directors and
officers to the corporation and its stockholders for money damages except to the
extent that (i) it is proved that the person actually received an improper
benefit or profit in money, property or services for the amount of the benefit
or profit in money, property or services actually received, or (ii) a judgment
or other final adjudication is entered in a proceeding based on a finding that
the person's action, or failure to act, was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding. The
II-1
<PAGE>
Company's Articles of Incorporation contain a provision providing for
elimination of the liability of its directors and officers to the Company or its
stockholders for money damages to the maximum extent permitted by Maryland law
from time to time.
Policies of insurance may be obtained and maintained by the Company under
which its directors and officers will be insured, within the limits and subject
to the limitations of the policies, against certain expenses in connection with
the defense of, and certain liabilities which might be imposed as a result of,
actions, suits or proceedings to which they are parties by reason of being or
having been such directors of officers.
ITEM 16. EXHIBITS
See the Exhibit Index included herewith which is incorporated herein by
reference.
ITEM 17. UNDERTAKINGS
(A) The undersigned hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is
II-2
<PAGE>
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
14th day of May 1999.
ANNALY MORTGAGE MANAGEMENT, INC.
/s/ Michael A.J. Farell
By___________________________________________
Michael A.J. Farrell
Chairman of the Board and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
* Director May 14, 1999
- --------------------------
Kevin P. Brady
* Director May 14, 1999
- --------------------------
Spencer I. Browne
/s/ Katherine F. Fagan Chief Financial Officer and May 14, 1999
- --------------------------
Katherine F. Fagan Treasurer (principal financial and
accounting officer)
/s/ Michael A.J. Farrell Chairman of the Board, Chief May 14, 1999
- --------------------------
Michael A.J. Farrell Executive Officer and Director
(principal executive officer)
* Director May 14, 1999
- --------------------------
John S. Grace
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
* Director May 14, 1999
- --------------------------
Jonathan D. Green
/s/ Timothy J. Guba President, Chief Operating Officer May 14, 1999
- --------------------------
Timothy J. Guba and Director
* Director May 14, 1999
- --------------------------
John A. Lambiase
* Director May 14, 1999
- --------------------------
Donnell A. Segalas
/s/ Wellington J. St. Claire Vice Chairman of the Board and May 14, 1999
- -----------------------------
Wellington J. St. Claire Director
*By: /s/ Michael A.J. Farrell
---------------------------
Michael A.J. Farrell
(Attorney-in-Fact)
</TABLE>
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Document Page Number
- ----------- ----------------------- -----------
<S> <C> <C>
4.1 Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement
on Form S-11 (Registration No. 333-32913) filed with the
Securities and Exchange Commission on August 5, 1997).
4.2 Articles of Amendment and Restatement of the Articles of
Incorporation of the Registrant (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on Form S-11
(Registration No. 333-32913) filed with the Securities and
Exchange Commission on August 5, 1997).
4.3 Bylaws of the Registrant, as amended (incorporated by reference
to Exhibit 3.3 to the Company's Registration Statement on Form S-
11 (Registration No. 333-32913) filed with the Securities and
Exchange Commission on August 5, 1997).
4.4 Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to Amendment No. 1 to the Company's Registration
Statement on Form S-11 (Registration No. 333-32913) filed with
the Securities and Exchange Commission on September 17, 1997).
5.1 Opinion of Morgan, Lewis & Bockius LLP.*
8.1 Opinion of Morgan, Lewis & Bockius LLP, as to certain tax
matters.*
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibits 5.1
and 8.1).
23.2 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney.*
- -------------------
* Previously filed.
</TABLE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Registration Statement No. 333-72985 of Annaly Mortgage
Management, Inc. of our report dated February 5, 1999 which is incorporated by
reference, and to the reference to us under "Experts" which is included in, the
Prospectus, which is also included in such Registration Statement.
Deloitte & Touche LLP
New York, New York
May 14, 1999
