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Section 1: 8-K (8-K)

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 8-K
______________
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) May 5, 2020 (May 4, 2020)

ARMOUR Residential REIT, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Maryland
001-34766
26-1908763
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
3001 Ocean Drive, Suite 201
 
 
Vero Beach,
Florida
 
32963
(Address of Principal Executive Offices)
 
(Zip Code)

(772) 617-4340
(Registrant’s Telephone Number, Including Area Code)

n/a
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading symbols
 
Name of Exchange on which registered
Preferred Stock, 7.00% Series C Cumulative Redeemable
 
ARR-PRC
 
New York Stock Exchange
Common Stock, $0.001 par value
 
ARR
 
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).        

Emerging growth company

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act






Item 1.01.     Entry into a Material Definitive Agreement.
 
On May 4, 2020, ARMOUR Residential REIT, Inc. (“ARMOUR” or the “Company”) entered into Amendment No. 2 (the “Sales Agreement Amendment”) to the Equity Sales Agreement, dated February 15, 2019 (the “Original Sales Agreement”) and, as amended by Amendment No. 1, dated April 3, 2020, the “Sales Agreement” and, as further amended by the Sales Agreement Amendment, the “Amended Sales Agreement”), by and among the Company and the Company’s external manager, ARMOUR Capital Management LP, and BUCKLER Securities LLC, an affiliate of the Company and member of the Financial Industry Regulatory Authority, JMP Securities LLC, Ladenburg Thalmann & Co. Inc. and B. Riley FBR, Inc. (together with BUCKLER Securities LLC, JMP Securities LLC and Ladenburg Thalmann & Co. Inc., the “Agents”), as sales agents. The purpose of the Sales Agreement Amendment was to, among other things, increase the number of shares available for sale pursuant to the terms of the Sales Agreement. In accordance with the terms of the Amended Sales Agreement, the Company may, from time to time, propose to the Agents to the Amended Sales Agreement, to issue and sell up to 17,000,000 shares (“Shares”) of the Company’s common stock through or to such designated Agents.

The Amended Sales Agreement relates to an “at the market offering” of shares of the Company’s common stock (the “Offering”). The Shares are being offered pursuant to a prospectus supplement (the “ATM Prospectus Supplement”) filed with the Securities and Exchange Commission on May 5, 2020, in connection with the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-224469). ARMOUR originally established the Offering on February 15, 2019 when it entered into the Original Sales Agreement and filed a related prospectus supplement relating to an offering of up to 7,000,000 shares of common stock. ARMOUR subsequently amended the Original Sales Agreement when it entered into Amendment No. 1 on April 3, 2020 to add an additional sales agent as a party, and filed a related prospectus supplement. The ATM Prospectus Supplement amends and restates in its entirety such related prospectus supplement. The Shares to which the ATM Prospectus Supplement relates are being offered pursuant to the terms of the Amended Sales Agreement. As of the date hereof, the Company has sold 5,704,331 shares of common stock under the Sales Agreement.

The Sales Agreement Amendment is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Sales Agreement Amendment and the transactions contemplated thereby is qualified in its entirety by reference to Exhibit 1.1.

The Company is also filing this Current Report on Form 8-K to provide legal opinions regarding the validity of the Shares to be issued and sold in the Offering and regarding certain tax matters with respect to the Company and the Shares to be issued in the Offering, which opinions are attached hereto as Exhibits 5.1 and 8.1, respectively, and are incorporated herein by reference.

This Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

Item 9.01.      Financial Statements and Exhibits.  
 
(d) Exhibits
 
Exhibit No.
Description
1.1
5.1
8.1
23.1
23.2
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 5, 2020

 
ARMOUR RESIDENTIAL REIT, INC.
 
 
 
  
 
 
By:
/s/ James R. Mountain
 
 
Name:
James R. Mountain
 
 
Title:
Chief Financial Officer
 



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Section 2: EX-1.1 (EXHIBIT 1.1)

Exhibit



Exhibit 1.1


AMENDMENT NO. 2 TO EQUITY SALES AGREEMENT

May 4, 2020

BUCKLER Securities LLC
5 Greenwich Office Park, Suite 450
Greenwich, CT 06831

JMP Securities LLC
600 Montgomery Street, Suite 1100
San Francisco, California 94111

Ladenburg Thalmann & Co. Inc.
277 Park Avenue, 26th Floor
New York, NY 10172

B. Riley FBR, Inc.
299 Park Avenue, 21st Floor
New York, NY 10171

Ladies and Gentlemen:

ARMOUR Residential REIT, Inc., a Maryland corporation (the “Company”), together with ARMOUR Capital Management LP, a Delaware limited partnership (the “Manager”), and BUCKLER Securities LLC, JMP Securities LLC, and Ladenburg Thalmann & Co. Inc. (each, an “Initial Agent,” and collectively, the “Initial Agents”), are parties to that certain Equity Sales Agreement, dated February 15, 2019 (the “Original Agreement”), as amended by Amendment No. 1 thereto, dated April 3, 2020 (as amended, the “Sales Agreement”), among the Company, the Manager, the Initial Agents, and B. Riley FBR, Inc. (“B. Riley” and together with the Initial Agents, each an “Agent” and collectively, the “Agents”). All capitalized terms not defined herein shall have the meanings ascribed to them in the Sales Agreement. The Company, Manager and Agents desire to amend the Sales Agreement as set forth in this Amendment No. 2 thereto (this “Amendment”) as follows:

1.
The first page of the Sales Agreement is amended to reflect that the Company
proposes, subject to the terms and conditions stated in the Sales Agreement, as amended by the Amendment, to issue and sell from time to time to or through one or more of BUCKLER Securities LLC, JMP Securities LLC, Ladenburg Thalmann & Co. Inc., and/or B. Riley, shares of the Company’s common stock, $0.001 par value, in an aggregate amount up to 17,000,000 shares.

2.Except as specifically set forth herein, all other provisions of the Sales Agreement shall remain in full force and effect.

3.
This Amendment together with the Sales Agreement (including all exhibits
attached hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof. Neither this Amendment nor any term hereof may be amended except pursuant to a written instrument executed by the Company, Manager and the Agents. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Amendment. All references in the Sales Agreement to the “Agreement” shall mean the Sales Agreement as amended by this Amendment;

1


provided, however, that all references to “date of this Agreement” in the Original Agreement shall continue to refer to the date of the Original Agreement.

4.EACH OF THE COMPANY (ON ITS BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS AND AFFILIATES), THE MANAGER AND THE AGENTS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

5.THIS AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS.

6.Each of the Company, the Manager and the Agents agrees that any legal suit, action or proceeding arising out of or based upon this Amendment or the transactions contemplated hereby (“Related Proceedings”) shall be instituted in (i) the federal courts of the United States of America located in the City and County of New York, Borough of Manhattan or (ii) the courts of the State of New York located in the City and County of New York, Borough of Manhattan (collectively, the “Specified Courts”), and irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any Specified Court, as to which such jurisdiction is non-exclusive) of the Specified Courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to a party’s address set forth in Section 10 of the Sales Agreement, as amended by this Amendment, shall be effective service of process upon such party for any suit, action or proceeding brought in any Specified Court. Each of the Company, the Manager and the Agents irrevocably and unconditionally waives any objection to the laying of venue of any suit, action or proceeding in the Specified Courts and irrevocably and unconditionally waives and agrees not to plead or claim in any Specified Court that any such suit, action or proceeding brought in any Specified Court has been brought in an inconvenient forum.

7.This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed amendment by one party to the other may be made by facsimile transmission or electronic transmission (e.g., PDF).




If the foregoing correctly sets forth the understanding between the Company, the Manager and the Agents, please so indicate in the space provided below for that purpose, whereupon this Amendment shall constitute a binding amendment to the Sales Agreement between the Company, the Manager and the Agents.
 
Very truly yours,


BUCKLER SECURITIES LLC


By: /s/ Robert Moran
Name: Robert Moran
Title: Chief Executive Officer


JMP SECURITIES LLC


By: /s/ Tosh Chandra
Name: Tosh Chandra
Title: Managing Director


LADENBURG THALMANN & CO. INC.


By: /s/ Steve Kaplan
Name: Steve Kaplan
Title: Head of Capital Markets


B. RILEY FBR, INC.


By: /s/ Patrice McNicoll
Name: Patrice McNicoll    
Title: Co-Head of Investment Banking




[Signature Page to Amendment No. 2 to Equity Sales Agreement]




ACCEPTED as of the date
first-above written:

ARMOUR RESIDENTIAL REIT, INC.


By: /s/ Scott J. Ulm
Name: Scott J. Ulm
Title: Co-Chief Executive Officer


ARMOUR CAPITAL MANAGEMENT, LP

By: Stacumny LLC, its general partner


By: /s/ Scott J. Ulm
Name: Scott J. Ulm
Title: Member















[Signature Page to Amendment No. 2 to Equity Sales Agreement]


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Section 3: EX-5.1 (EXHIBIT 5.1)

Exhibit


Exhibit 5.1


Holland & Knight

701 Brickell Avenue, Suite 3300 | Miami, FL 33131 | T 305.374.8500 | F 305.789.7799
Holland & Knight LLP | www.hklaw.com
May 4, 2020
ARMOUR Residential REIT, Inc.
3001 Ocean Drive, Suite 201
Vero Beach, FL 32963
Re: ARMOUR Residential REIT, Inc. Registration Statement on Form S-3 (Registration No. 333-224469)
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-3 (Registration No. 333-224469) (the “Registration Statement”) filed with the Securities and Exchange Commission (the “Commission”) on April 26, 2018 by ARMOUR Residential REIT, Inc. (the “Company”) pursuant to the requirements of the Securities Act of 1933, as amended (the “Act”). We are rendering this opinion in connection with the prospectus supplement (the “Prospectus Supplement”) dated May 4, 2020. The Prospectus Supplement relates to the offering by the Company of up to 17,000,000 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”), in an “at-the-market” offering, which Shares are covered by the Registration Statement. We understand that the Shares are to be offered and sold in the manner set forth in the Registration Statement and the Prospectus Supplement.
We have acted as your counsel in connection with the preparation of the Prospectus Supplement. We are familiar with the proceedings taken by the Board of Directors of the Company and Audit Committee, independent directors and Pricing Committee of the Board of Directors in connection with the authorization, issuance and sale of the Shares. We have examined all such documents as we have considered necessary in order to enable us to render this opinion, including, but not limited to, (i) the Registration Statement, (ii) the Prospectus dated April 26, 2018 included with the Registration Statement (the “Prospectus”), (iii) the Prospectus Supplement, (iv) the Company’s Articles of Incorporation, as amended, (v) the Company’s By-Laws, as amended, (vi) certain resolutions adopted by the Board of Directors of the Company and Audit Committee, independent directors and Pricing Committee of the Board of Directors, (vii) corporate records and instruments, and (viii) such laws and regulations as we have deemed necessary for the purposes of rendering the opinions set forth herein. In our examination, we have assumed the legal capacity of all natural persons, the authenticity of and conformity to originals of such documents that have been presented to us as photostatic copies, the accuracy, completeness and authenticity of certificates of public officials, the due execution and delivery of all documents (except that no assumption is made as to the Company) where due execution and delivery are a prerequisite to the effectiveness thereof, and that the Shares will be issued against payment of valid consideration under applicable law. As to any facts material to the opinions expressed herein, which were not independently established or verified, we have relied upon statements and representations of officers of the Company.
Based upon the foregoing, we are of the opinion that the Shares have been duly authorized and, when issued and delivered by the Company against payment therefor as set forth in the Prospectus Supplement, will be validly issued, fully paid and non-assessable.
We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that may change the opinion expressed herein after the date hereof.
We hereby consent to the filing of this opinion as part of the Registration Statement and to the reference of our firm under the caption “Legal Matters” in the Prospectus Supplement. In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission.

Very truly yours,
/s/ Holland & Knight LLP
HOLLAND & KNIGHT LLP



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Section 4: EX-8.1 (EXHIBIT 8.1)

Exhibit


Exhibit 8.1



403886377_mayerbrownlogoa04.jpg
Mayer Brown LLP
1221 Avenue of the Americas
New York, New York 10020-1001

Main Tel (212) 506-2500
Main Fax (212) 262-1910
www.mayerbrown.com
May 4, 2020
ARMOUR Residential REIT, Inc.
3001 Ocean Drive, Suite 201
Vero Beach, Florida 32963
Ladies and Gentlemen:
This opinion is being furnished to you in connection with the offer and sale, from time to time, by ARMOUR Residential REIT, Inc., a Maryland corporation (the “Company”) through B. Riley FBR, Inc., JMP Securities LLC, Ladenburg Thalmann & Co. Inc. and BUCKLER Securities LLC (the “Agents”), pursuant to the Equity Sales Agreement (the “Sales Agreement”), dated February 15, 2019, as amended, among the Company, ARMOUR Capital Management, LP, a Delaware limited partnership and the external manager of the Company (the “Manager”), and the Agents, of up to 17,000,000 shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”), under the Securities Act of 1933, as amended, and related rules and regulations. The offering of the Common Stock is described in the prospectus, dated April 26, 2018, which forms a part of the Registration Statement of the Company on Form S-3 (the “Base Prospectus”), as supplemented by the prospectus supplement, dated May 4, 2020 (the “Prospectus Supplement”), and as supplemented by the updated material U.S. federal income tax disclosure attached to the Company’s Form 8-K filed July 13, 2018 (the “Tax Supplement,” together with the Base Prospectus and the Prospectus Supplement, the “Offering Documents”). Capitalized terms used herein and not otherwise defined have the meanings set forth in the Offering Documents. As special tax counsel to the Company, we have examined and relied upon originals or copies of such agreements, instruments, certificates, records and other documents and have made such examination of law as we have deemed necessary or appropriate for the purpose of this letter, including the following:

1.
Copy of the Articles of Amendment and Restatement of the Company, as amended, in the form filed with the Commission.

2.
Copy of the Amended and Restated Bylaws of the Company in the form filed with the Commission.

3.
A certificate containing certain factual representations and covenants of the Company (the “Officer’s Certificate”) relating to, among other things, the past, current, and proposed operations of the Company and the entities in which it holds a direct or indirect interest.

4.
A copy of the Offering Documents.

5.
Such other documentation or information provided to us by the Company or the Manager, as we have deemed necessary or appropriate as a basis for our opinion set forth herein.
Although we have made such inquiries and performed such investigations as we have deemed necessary for purposes of our opinion, we have not independently verified all of the facts, representations and covenants set forth in the Officer’s Certificate, the Offering Documents or in any other document.



We have assumed and relied on representations of the Manager, that the facts, representations and covenants contained in the Officer’s Certificate, the Offering Documents and other documents are accurate. We have assumed that such factual statements, representations and covenants are true without regard to any qualification as to knowledge or belief.
Our opinion is conditioned on, among other things, the initial and continuing accuracy of the factual information, covenants and representations set forth in the Offering Documents and the Officer’s Certificate and the representations made by representatives of the Company and the Manager, without regard to any qualifications therein. Any change or inaccuracy in the facts referred to, set forth or assumed herein or in the Officer’s Certificate may affect our conclusions set forth herein.
Our opinion is also based on the correctness of the following assumptions: (i) the Company and each of the entities in which the Company holds a direct or indirect interest have been and will continue to be operated in accordance with the laws of the jurisdictions in which they were formed and in the manner described in the relevant organizational documents,
(ii) there will be no changes in the applicable laws of the State of Maryland or of any other jurisdiction under the laws of which any such entity has been formed, and (iii) each of the written agreements to which the Company or any such entity is a party will be implemented, construed and enforced in accordance with its terms.
In rendering our opinion, we have also considered the applicable provisions of the Internal Revenue Code of 1986 (the “Code”), the Treasury Regulations promulgated thereunder, judicial decisions, administrative rulings and other applicable authorities, in each case as in effect on the date hereof. The statutory provisions, regulations, decisions, rulings and other authorities on which this opinion is based are subject to change, and such changes could apply retroactively. A material change that is made after the date hereof in any of the foregoing bases for our opinion could affect our conclusions set forth herein.
In our examination, we have assumed (i) the legal capacity of all natural persons, (ii) the genuineness of all signatures, (iii) the authenticity of all documents submitted to us as originals, (iv) the conformity to original documents of all documents submitted to us as certified, conformed, or photostatic copies, and (v) the authenticity of the originals of such copies.
This opinion shall not be construed as or deemed to be a guaranty or insuring agreement. Opinions of special tax counsel represent only special tax counsel’s best legal judgment and are not binding on the Internal Revenue Service (“IRS”) or on any court. Accordingly, no assurance can be given that the IRS will not challenge the conclusions of the opinion set forth herein or that such a challenge would not be successful.
Based on and subject to the foregoing, we are of the opinion that:

1.
Commencing with the Company’s taxable year ending on December 31, 2017, the Company has been organized and operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “REIT”) under the Code, and its current organization and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code.

2.
Although the discussion in the Tax Supplement, as supplemented by the discussion set forth in the Prospectus Supplement under the heading “Supplement to U.S. Federal Income Tax Considerations” does not purport to summarize all possible U.S. federal income tax consequences of the purchase, ownership and disposition of the Common Stock, such discussion, though general in nature, constitutes in all material respects a fair and accurate summary of the material U.S. federal income tax consequences of the purchase, ownership, and disposition of the Common Stock, subject to the qualifications set forth therein. The U.S. federal income tax consequences of the purchase, ownership and disposition of the Common Stock by an investor will depend upon that investor’s particular situation and we express no opinion as to the completeness of the discussion set forth in the Tax Supplement, as supplemented by the discussion set forth in the Prospectus Supplement under the heading “Supplement to U.S. Federal Income Tax Considerations” as applied to any particular investor.
Other than as expressly stated above, we express no opinion on any issue relating to the Company or to any investment therein or under any other law. Furthermore, the Company’s qualification as a REIT will depend upon the Company’s meeting, in its actual operations, the applicable asset composition, source of income, stockholder diversification, distribution and other requirements of the Code and Treasury Regulations necessary for a corporation to qualify as a REIT. We will not review these



operations and no assurance can be given that the actual operations of the Company and any applicable affiliates will meet these requirements or the representations made to us with respect thereto.
This opinion has been prepared for you in connection with the Offering Documents. We consent to the filing of this opinion as an exhibit to the Form 8-K to be filed by the Company in connection with the filing of the Prospectus Supplement and incorporated in to the Base Prospectus by reference and to the reference to Mayer Brown LLP under the caption “Legal Matters” in the Prospectus Supplement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission.
This opinion is expressed as of the date hereof, and we are under no obligation to supplement or revise our opinion to reflect any legal developments or factual matters arising subsequent to the date hereof, or the impact of any information, document, certificate, record, statement, representation, covenant, or assumption relied upon herein that becomes incorrect or untrue.
Very truly yours,
/s/ Mayer Brown LLP


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