CAPSTEAD MORTGAGE CORPORATION 40,000 Capital Securities Fixed/Floating Rate Capital Securities (Liquidation Amount $1,000.00 per Capital Security) PLACEMENT AGREEMENT
EXHIBIT 10.1
CAPSTEAD MORTGAGE CORPORATION
40,000 Capital Securities
Fixed/Floating Rate Capital Securities
(Liquidation Amount $1,000.00 per Capital Security)
(Liquidation Amount $1,000.00 per Capital Security)
December 6, 2005
FTN Financial Capital Markets
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Capstead Mortgage Corporation, a Maryland corporation (the “Company”), and its financing
subsidiary, Capstead Mortgage Trust II, a Delaware statutory trust (the “Trust,” and hereinafter
together with the Company, the “Offerors”), hereby confirm their agreement (this “Agreement”) with
you as placement agents (the “Placement Agents”), as follows:
Section 1. Issuance and Sale of Securities.
1.1. Introduction. The Offerors propose to issue and sell at the Closing (as defined
in Section 2.3.1 hereof) 40,000 of the Trust’s Fixed/Floating Rate Capital Securities, with a
liquidation amount of $1,000.00 per capital security (the “Capital Securities”), to First Tennessee
Bank National Association, a national banking association organized under the laws of the United
States of America and Preferred Term Securities XX, Ltd., a company with limited liability
established under the laws of the Cayman Islands (the “Purchasers”) pursuant to the terms of
Subscription Agreements entered into, or to be entered into on or prior to the Closing Date (as
defined in Section 2.3.1 hereof), between the Offerors and the Purchasers (the “Subscription
Agreements”), the forms of which are attached hereto as Exhibit A-1 and Exhibit A-2
and incorporated herein by this reference.
1.2. Operative Agreements. The entire proceeds from the sale by the Trust to the holders of the Capital Securities shall
be combined with the entire proceeds from the sale by the Trust to the Company of its common
securities (the “Common Securities”), and shall be used by the Trust to purchase $41,238,000.00 in
principal amount of the Fixed/Floating Rate Junior Subordinated Debentures (the “Debentures”) of
the Company. The Capital Securities and the Common Securities for the Trust shall be issued
pursuant to an Amended and Restated Declaration of Trust among WTC, as Delaware trustee (the
“Delaware Trustee”), WTC, as institutional trustee (the “Institutional Trustee”), the
Administrators named
therein, and the Company, to be dated as of the Closing Date and in
substantially the form heretofore delivered to the Placement Agents (the “Trust Agreement”). The
Debentures shall be issued pursuant to an Indenture (the “Indenture”), to be dated as of the
Closing Date, between the Company and WTC, as indenture trustee (the “Indenture Trustee”). The
documents identified in this Section 1.2 and in Section 1.1 are referred to herein as the
“Operative Documents.”
1.3. Rights of Purchasers. The Capital Securities shall be offered and sold by the
Trust directly to the Purchasers without registration of any of the Capital Securities, the
Debentures under the Securities Act of 1933, as amended (the “Securities Act”), or any other
applicable securities laws in reliance upon exemptions from the registration requirements of the
Securities Act and other applicable securities laws. The Offerors agree that this Agreement shall
be incorporated by reference into the Subscription Agreements and the Purchasers shall be entitled
to each of the benefits of the Placement Agents and the Purchasers under this Agreement and shall
be entitled to enforce obligations of the Offerors under this Agreement as fully as if the
Purchasers were parties to this Agreement. The Offerors and the Placement Agents have entered into
this Agreement to set forth their understanding as to their relationship and their respective
rights, duties and obligations.
1.4. Legends. Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act, the Capital Securities and
Debentures certificates shall each contain a legend as required pursuant to any of the Operative
Documents.
Section 2. Purchase of Capital Securities.
2.1. Exclusive Rights; Purchase Price. From the date hereof until the Closing Date
(which date may be extended by mutual agreement of the Offerors and the Placement Agents), the
Offerors hereby grant to the Placement Agents the exclusive right to arrange for the sale of the
Capital Securities to the Purchasers at a purchase price of $1,000.00 per Capital Security.
2.2. Subscription Agreements. The Offerors hereby agree to evidence their acceptance
of the subscription by countersigning a copy of each of the Subscription Agreements and returning
the same to the Placement Agents.
2.3. Closing and Delivery of Payment.
2.3.1. Closing; Closing Date. The sale and purchase of the Capital Securities by the
Offerors to the Purchasers shall take place at a closing (the “Closing”) at the offices of Xxxxx,
Xxxx & Xxxxxxxx, X.X., at 10:00 a.m. (St. Louis time)
on December 15, 2005, or such other business day as may be agreed upon by the Offerors and the
Placement Agents (the “Closing Date”); provided, however, that in no event shall
the Closing Date occur later than December 30, 2005 unless consented to by the Purchasers. Payment
by the Purchasers shall be payable in the manner set forth in the Subscription Agreements and shall
be made prior to or on the Closing Date.
2.3.2. Delivery. The certificates for the Capital Securities shall be in definitive
form, each registered in the name of the applicable Purchaser, or Purchaser designee, and in the
aggregate amount of the Capital Securities purchased by the Purchaser.
2.3.3. Transfer Agent. The Offerors shall deposit the certificates representing the
Capital Securities with the Institutional Trustee or other appropriate party prior to the Closing
Date.
2.4. Placement Agents’ Fees and Expenses.
2.4.1. Placement Agents’ Compensation. Because the proceeds from the sale of the
Capital Securities shall be used to purchase the Debentures from the Company, the Company shall pay
an aggregate of $27.50 for each $1,000.00 of principal amount of Debentures sold to the Trust
(excluding the Debentures related to the Common Securities purchased by the Company). Of this
amount, $13.75 for each $1,000.00 of principal amount of Debentures shall be payable to FTN
Financial Capital Markets and $13.75 for each $1,000.00 of principal amount of Debentures shall be
payable to Xxxxx, Xxxxxxxx & Xxxxx, Inc. Such amount shall be delivered to WTC or such other
person designated by the Placement Agents on the Closing Date and shall be allocated between and
paid to the respective Placement Agents as directed by the Placement Agents.
2.4.2. Costs and Expenses. Whether or not this Agreement is terminated or the sale of
the Capital Securities is consummated, the Company hereby covenants and agrees that it shall pay or
cause to be paid (directly or by reimbursement) all reasonable costs and expenses incident to the
performance of the obligations of the Offerors under this Agreement, including all fees, expenses
and disbursements of counsel and accountants for the Offerors; all reasonable expenses incurred by
the Offerors incident to the preparation, execution and delivery of the Trust Agreement and the
Indenture; and all other reasonable costs and expenses incurred by the Offerors incident to the
performance of the obligations of the Company hereunder and under the Trust Agreement. The
Placement Agents shall pay or cause to be paid all costs and expenses incident to the performance
of its obligations under this Agreement, including all fees, expenses and disbursements of its
counsel and all other costs and expenses incurred by the Placement Agents incident to the
performance of its obligations hereunder.
2.5. Failure to Close. If any of the conditions to the Closing specified in this
Agreement shall not have been fulfilled to the satisfaction of the Placement Agents or if the
Closing shall not have occurred on or before 10:00 a.m. (St. Louis time) on December 30, 2005, then
each party hereto, notwithstanding anything to the contrary in this Agreement, shall be relieved of
all further obligations under this Agreement without thereby waiving any rights it may have by
reason of such nonfulfillment or failure; provided, however, that the
obligations of the parties under Sections 2.4.2, 7.5 and 9 shall not be so relieved and shall
continue in full force and effect.
Section 3. Closing Conditions. The obligations of the Purchasers and the Placement
Agents on the Closing Date shall be subject to the accuracy, at and as of the Closing Date, of the
representations and warranties of the Offerors contained in this Agreement, to the accuracy, at and
as of the Closing Date, of the statements of the Offerors made in any certificates pursuant to this
Agreement, to the performance by the Offerors of their respective obligations under this Agreement,
to compliance, at and as of the Closing Date, by the Offerors with their respective agreements
herein contained, and to the following further conditions:
3.1. Opinions of Counsel. On the Closing Date, the Placement Agents shall have
received the following favorable opinions, each dated as of the Closing Date: (a) from Xxxxxxx
Xxxxx LLP, counsel for the Company and addressed to the Purchasers, the Placement Agents, the
Offerors and WTC in substantially the form set forth on Exhibit B-1 attached hereto and
incorporated herein by this reference, (b) from Xxxxx & Xxxxxxx L.L.P., Maryland counsel for the
Company and addressed to the Purchasers, the Placement Agents, the Offerors and WTC in
substantially the form set forth on Exhibit B-2 attached hereto and incorporated herein by
this reference, (c) from Xxxxxxxx, Xxxxxx & Finger, P.A., special Delaware counsel to the Trust and
addressed to the Purchasers, the Placement Agents and the Offerors, in substantially the form set
forth on Exhibit B-3 attached hereto and incorporated herein by this reference and (d) from
Xxxxx, Xxxx & Xxxxxxxx, X.X., special tax counsel to the Offerors, and addressed to the Placement
Agents and the Offerors, addressing the items set forth on
Exhibit B-4 attached hereto and
incorporated herein by this reference, subject to the receipt by Xxxxx, Rice & Xxxxxxxx, X.X. of a
representation letter from the Company in the form set forth in Exhibit B-4 completed in a
manner reasonably satisfactory to Xxxxx, Rice & Xxxxxxxx, X.X. (collectively, the “Offerors’
Counsel Opinions”). In rendering the Offerors’ Counsel Opinions, counsel to the Offerors may rely
as to factual matters upon certificates or other documents furnished by officers, directors and
trustees of the Offerors (copies of which shall be delivered to the Placement Agents and the
Purchasers) and by government officials, and upon such other documents as counsel to the Offerors
may, in their reasonable opinion, deem appropriate as a basis for the Offerors’ Counsel Opinions.
Counsel to the Offerors may specify the jurisdictions in which they are admitted to practice and
that they are not admitted to practice in any other jurisdiction and are not experts in the law of
any other jurisdiction. If the Offerors’ counsel is not admitted to practice in the State of New
York, the opinion of Offerors’ counsel may assume, for purposes of the opinion, that the laws of
the State of New York are substantively identical, in all respects material to the opinion, to the
internal laws of the state in which such counsel is admitted to practice. Such Offerors’ Counsel
Opinions shall not state that they are to be governed or qualified by, or that they are otherwise
subject to, any treatise, written policy or other document relating to legal opinions, including,
without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
3.2. Officer’s Certificate. At the Closing Date, the Purchasers and the Placement
Agents shall have received certificates from an authorized officer of the Company, dated as of the
Closing Date, stating that (i) the representations and warranties of the Offerors set forth in
Section 5 hereof are true and correct as of the Closing Date and that the Offerors have complied
with all agreements and satisfied all conditions on their part to be performed or satisfied at or
prior to the Closing Date, (ii) since the date of this Agreement the Offerors have not incurred any
liability or obligation, direct or contingent, or entered into any material transactions, other
than in the ordinary course of business, which is material to the Offerors, and (iii) covering such
other matters as the Placement Agents may reasonably request.
3.3. Administrator’s Certificate. At the Closing Date, the Purchasers and the
Placement Agents shall have received a certificate of one or more Administrators of the Trust,
dated as of the Closing Date, stating that the representations and warranties of the Trust set
forth in Section 5 are true and correct as of the Closing Date and that the Trust has complied with
all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Date.
3.4. Purchase Permitted by Applicable Laws; Legal Investment. The purchase of and
payment for the Capital Securities as described in this Agreement and pursuant to the Subscription
Agreements shall (a) not be prohibited by any applicable law or governmental regulation, (b) not
subject the Purchasers or the Placement Agents to any penalty or, in the reasonable judgment of the
Purchasers and the Placement Agents, other onerous conditions under or pursuant to any applicable
law or governmental regulation, and (c) be permitted by the laws and regulations of the
jurisdictions to which the Purchasers and the Placement Agents are subject.
3.5. Consents and Permits. The Company and the Trust shall have received all
consents, permits and other authorizations, and made all such filings and declarations, as may be
required from any person or entity pursuant to any law, statute, regulation or rule (federal,
state, local and foreign), or pursuant to any agreement, order or decree to which the Company or
the Trust is a party or to which either is subject, in connection with the transactions
contemplated by this Agreement.
3.6. Sale of Purchaser Securities. Preferred Term Securities XX, Ltd. shall have sold
securities issued by it in an amount such that the net proceeds of such sale shall be (i) available
on the Closing Date and (ii) in an amount sufficient to purchase that portion of the Capital
Securities Preferred Term Securities XX, Ltd. agrees to purchase pursuant to the Subscription
Agreement to be entered into by
it and all other capital or similar securities contemplated to be
purchased by Preferred Term Securities XX, Ltd. in agreements similar to this Agreement and the
Subscription Agreement to be entered into by it.
3.7. Information. Prior to or on the Closing Date, the Offerors shall have furnished
to the Placement Agents such further information, certificates, opinions and documents addressed to
the Purchasers and the Placement Agents, which the Placement Agents may reasonably request,
including, without limitation, a complete set of the Operative Documents or any other documents or
certificates required by this Section 3; and all proceedings taken by the Offerors in connection
with the issuance, offer and sale of the Capital Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Placement Agents.
If any condition specified in this Section 3 shall not have been fulfilled when and as
required in this Agreement, or if any of the opinions or certificates mentioned above or elsewhere
in this Agreement shall not be reasonably satisfactory in form and substance to the Placement
Agents, this Agreement may be terminated by the Placement Agents by notice to the Offerors at any
time at or prior to the Closing Date. Notice of such termination shall be given to the Offerors in
writing or by telephone or facsimile confirmed in writing.
Section 4. Conditions to the Offerors’ Obligations. The obligations of the Offerors to sell the Capital Securities to the Purchasers and
consummate the transactions contemplated by this Agreement shall be subject to the accuracy, at and
as of the Closing Date, of the representations and warranties of the Placement Agents contained in
this Agreement and to the following further conditions:
4.1. Executed Agreement. The Offerors shall have received from the Placement Agents
an executed copy of this Agreement.
4.2. Fulfillment of Other Obligations. The Placement Agents shall have fulfilled all
of their other obligations and duties required to be fulfilled under this Agreement prior to or at
the Closing.
Section 5. Representations and Warranties of the Offerors. Except as set forth on the
Disclosure Schedule (as defined in Section 11.1) attached hereto, if any, the Offerors jointly and
severally represent and warrant to the Placement Agents and the Purchasers as of the date hereof
and as of the Closing Date as follows:
5.1. Securities Law Matters.
(a) Neither the Company nor the Trust, nor any of their “Affiliates” (as defined in Rule
501(b) of Regulation D under the Securities Act (“Regulation D”)), nor any person acting on any of
their behalf has, directly or indirectly, made offers or sales of any security, or solicited offers
to buy any security, under circumstances that would require the registration under the Securities
Act of any of the Capital Securities or the Debentures (collectively, the “Securities”) or any
other securities to be issued, or which may be issued, by Preferred Term Securities XX, Ltd.
(b) Neither the Company nor the Trust, nor any of their Affiliates, nor any person acting on
its or their behalf has (i) other than the Placement Agents, offered for sale or solicited offers
to purchase the Securities, (ii) engaged in any form of offering, general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the
Securities, or (iii) engaged or will engage in any “directed selling efforts” within the meaning of
Regulation S of the Securities Act (“Regulation S”) with respect to the Securities.
(c) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the
Securities Act.
(d) Neither the Company nor the Trust is or, after giving effect to the offering and sale of
the Capital Securities and the consummation of the transactions described in this Agreement, will
be an “investment company” or an entity “controlled” by an “investment company,” in each case
within the meaning of Section 3(a) of the Investment Company Act of 1940, as amended (the
“Investment Company Act”).
(e) Neither the Company nor the Trust has paid or agreed to pay to any person or entity (other
than the Placement Agents) any compensation for soliciting another to purchase any of the
Securities.
(f) The Company is a “qualified purchaser” within the meaning of section 2(a)(51) of the
Investment Company Act and will purchase the Common Securities for its own account.
5.2. Organization, Standing and Qualification of the Trust. The Trust has been duly
created and is validly existing in good standing as a statutory trust under the Delaware Statutory
Trust Act (the “Statutory Trust Act”) with the power and authority to own property and to conduct
the business it transacts and proposes to transact and to enter into and perform its obligations
under the Operative Documents. The Trust is duly qualified to transact business as a foreign
entity and is in good standing in each jurisdiction in which such qualification is necessary,
except where the failure to so qualify or be in good standing would not have a material adverse
effect on the Trust. The Trust is not a party to or otherwise bound by any agreement other than
the Operative Documents. The Trust is and will, under current law, be classified for federal
income tax purposes as a grantor trust and not as an association taxable as a corporation.
5.3. Trust Agreement. The Trust Agreement has been duly authorized by the Company
and, on the Closing Date, will have been duly executed and delivered by the Company and the
Administrators of the Trust, and, assuming due authorization, execution and delivery by the
Delaware Trustee and the Institutional Trustee, will be a valid and binding obligation of the
Company and such Administrators, enforceable against them in accordance with its terms, subject to
(a) applicable bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation and
other laws relating to or affecting creditors’ rights generally, and (b) general principles of
equity (regardless of whether considered and applied in a proceeding in equity or at law)
(“Bankruptcy and Equity”). Each of the Administrators of the Trust is an employee or a director of
the Company and has been duly authorized by the Company to execute and deliver the Trust Agreement.
5.4. Indenture. The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Indenture Trustee, will be a valid and binding
obligation of the Company enforceable against it in accordance with its terms, subject to
Bankruptcy and Equity.
5.5. Capital Securities and Common Securities. The Capital Securities and the Common
Securities have been duly authorized by the Trust Agreement and, when issued and delivered against
payment therefor on the Closing Date to the Purchasers, in the case of the Capital Securities, and
to the Company, in the case of the Common Securities, will be validly issued and represent
undivided beneficial interests in the assets of the Trust. None of the Capital Securities or the
Common Securities is subject to preemptive or other similar rights. On the Closing Date, all of
the issued and outstanding Common Securities will be directly owned by the Company free and clear
of any pledge, security interest, claim, lien or other encumbrance.
5.6. Debentures.
The Debentures have been duly authorized by the Company and, at the Closing Date, will have
been duly executed and delivered to the Indenture Trustee for authentication in accordance with the
Indenture, and, when authenticated in the manner provided for in the Indenture and delivered
against payment therefor by the Trust, will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture enforceable against the Company in accordance with their
terms, subject to Bankruptcy and Equity.
5.7. Power and Authority. This Agreement has been duly authorized, executed and
delivered by the Company and the Trust and constitutes the valid and binding obligation of the
Company and the Trust, enforceable against the Company and the Trust in accordance with its terms,
subject to Bankruptcy and Equity.
5.8. No Defaults. The Trust is not in violation of the Trust Agreement or, to the
knowledge of the Administrators, any provision of the Statutory Trust Act. The execution, delivery
and performance by the Company or the Trust of this Agreement or the Operative Documents to which
it is a party, and the consummation of the transactions contemplated herein or therein and the use
of the proceeds therefrom, will not conflict with or constitute a breach of, or a default under, or
result in the creation or imposition of any lien, charge or other encumbrance upon any property or
assets of the Trust, the Company or any of the Company’s Subsidiaries (as defined in Section 5.11
hereof) pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Trust, the Company or any of its Subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of any of them is subject,
except for a conflict, breach, default, lien, charge or encumbrance which could not, singly or in
the aggregate, reasonably be expected to have a Material Adverse Effect nor will such action result
in any violation of the Trust Agreement or the Statutory Trust Act or require the consent,
approval, authorization or order of any court or governmental agency or body. As used herein, the
term “Material Adverse Effect” means any one or more effects that individually or in the aggregate
(i) are material and adverse to the Offerors’ ability to consummate the transactions contemplated
herein or in the Operative Documents, (ii) could cause the Company to fail to be organized or
operated in conformity with the requirements for qualification and taxation as a real estate
investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the “Code”), or (iii) are material and adverse to the financial condition, earnings,
business, liabilities and assets of the Company and its Subsidiaries taken as whole, whether or not
arising from transactions occurring in the ordinary course of business.
5.9. Organization, Standing and Qualification of the Company. The Company has been
duly incorporated and is validly existing as a corporation in good standing under the laws of
Maryland, with all requisite corporate power and authority to own its properties and conduct the
business it transacts and proposes to transact, and is duly qualified to transact business and is
in good standing as a foreign corporation in each jurisdiction where the nature of its activities
requires such qualification, except where the failure of the Company to be so qualified would not,
singly or in the aggregate, have a Material Adverse Effect.
5.10. Capital Stock of the Company. All of the issued and outstanding shares of
capital stock of the Company are validly issued, fully paid and non-assessable; and none of the
issued and outstanding capital stock of the Company was issued in violation of any preemptive or
similar rights arising by operation of law, under the charter or by-laws of such entity or under
any agreement to which the Company is a party.
5.11. Subsidiaries of the Company. The Company has no “significant subsidiaries” (as
defined in Section 1-02(w) of Regulation S-X to the Securities Act.
5.12. Permits. The Company and each of its subsidiaries (as defined in Section
1-02(x) of Regulation S-X to the Securities Act) (the “Subsidiaries”) have all requisite power and
authority, and all necessary authorizations, approvals, orders, licenses, certificates and permits
of and from regulatory or governmental officials, bodies and tribunals, to own or lease their
respective properties and to conduct their respective businesses as now being conducted, except
such authorizations, approvals, orders, licenses, certificates and permits which, if not obtained
and maintained, would not, singly or in the aggregate, have a Material Adverse Effect, and neither
the Company nor any of its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such authorizations, approvals, orders, licenses, certificates or
permits which, singly or in the aggregate, if the failure to be so licensed or approved is the
subject of an unfavorable decision, ruling or finding, would, singly or in the aggregate, have a
Material Adverse Effect; and the Company and its Subsidiaries are in compliance with all applicable
laws, rules, regulations and orders and consents, the violation of which would, singly or in the
aggregate, have a Material Adverse Effect.
5.13. Conflicts, Authorizations and Approvals. Neither the Company nor any of its
Subsidiaries is in violation of its respective articles or certificate of incorporation, charter or
by-laws or similar organizational documents or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which either the Company or any of its
Subsidiaries is a party, or by which it or any of them may be bound or to which any of the property
or assets of the Company or any of its Subsidiaries is subject, the effect of which violation or
default in performance or observance would have, singly or in the aggregate, a Material Adverse
Effect.
5.14. Financial Statements.
(a) The consolidated balance sheets of the Company and all of its Subsidiaries as of December
31, 2004 and December 31, 2003 and related consolidated income statements and statements of changes
in shareholders’ equity for the three years ended December 31, 2004 together with the notes
thereto, and the consolidated balance sheets of the Company and all of its Subsidiaries as of
September 30, 2005 and the related consolidated income statements and statements of changes in
shareholders’ equity for the nine months then ended, copies of each of which have been provided to
the Placement Agents (together, the “Financial Statements”), have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be
disclosed therein) and fairly present in all material respects the financial position and the
results of operations and changes in shareholders’ equity of the Company and all of its
Subsidiaries as of the dates and for the periods indicated (subject, in the case of interim
financial statements, to normal recurring year-end adjustments, none of which shall be material).
(b) Since the respective dates of the Financial Statements, there has been (i) no material adverse
change or development with respect to the financial condition or earnings of the Company and all of
its Subsidiaries, taken as a whole, or (ii) any dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock other than regular quarterly dividends on
the Company’s common stock, regular quarterly dividends on the Company’s Series A preferred stock
and regular monthly dividends on the Company’s Series B preferred stock.
(c) The accountants of the Company who certified the Financial Statements are independent
public accountants of the Company and its Subsidiaries within the meaning of the Securities Act and
the rules and regulations thereunder.
(d) The books, records and accounts of the Company accurately and fairly reflect, in
reasonable detail, the transactions in, and dispositions of, the assets of, and the results of
operations of, the Company. The Company maintains a system of internal accounting controls
sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.
5.15. Exchange Act Reporting. The reports filed with the Securities and Exchange
Commission (the “Commission”) by the Company under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and the regulations thereunder at the time they were filed with the Commission
complied as to form in all material respects with the requirements of the Exchange Act and such
reports did not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. Other than such instruments, agreements,
contracts and other documents as are filed as exhibits to the Company’s Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments,
agreements, contracts or documents of a character described in Item 601 of Regulation S-K
promulgated by the Commission to which the Company is a party, other than the Operative Documents.
5.16. Governmental Matters. Neither the Company nor any of its Subsidiaries is
subject or is party to, or has received any notice or advice that any of them may become subject or
party to, any investigation with respect to, any cease-and-desist order, agreement, consent
agreement, memorandum of understanding or other regulatory enforcement action, proceeding or order
with or by, or is a party to any commitment letter or similar undertaking to, has adopted any board
resolutions at the request of, any government, governmental authority, agency or instrumentality or
court, domestic or foreign, having jurisdiction over the Company or its Subsidiaries or their
respective property or assets (collectively, the “Governmental Entities”) that currently restricts
in any material respect the conduct of their business or that in any material manner relates to
their capital adequacy, their ability or authority to pay dividends or make distributions to their
shareholders or make payments of principal or interest on their debt obligations, their management
or their business. No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Governmental Entity, other than those that have been made or
obtained, is necessary or required for the performance by the Trust or the Company of their
respective obligations under the Operative Documents, as applicable, or the consummation by the
Trust and the Company of the transactions contemplated by the Operative Documents. Neither the
Company nor any of the Subsidiaries is currently unable to pay dividends or make distributions to
its shareholders with respect to any class of its equity securities, or prohibited from paying
principal or interest on its debt obligations, due to a restriction or limitation, whether by
statute, contract or otherwise, and, in the reasonable judgment of the Company’s management,
neither the Company nor any of the Subsidiaries will be unable in the foreseeable future to pay
dividends or make distributions with respect to any class of equity securities, or be prohibited
from paying principal or interest on its debt obligations, due to a restriction or limitation,
whether by statute, contract or otherwise.
5.17. No Undisclosed Liabilities. Neither the Company nor any of its Subsidiaries has
any material liability, whether known or unknown, whether asserted or unasserted, whether absolute
or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or
to become due, including any liability for taxes (and there is no past or present fact, situation,
circumstance, condition or other basis for any present or future action, suit, proceeding, hearing,
charge, complaint, claim or demand against the Company or its Subsidiaries giving rise to any such
liability) that, individually or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, except (i) for liabilities set forth in the Financial Statements and (ii) normal
fluctuation in the amount of the
liabilities referred to in clause (i) above occurring in the
ordinary course of business of the Company and all of its Subsidiaries since the date of the most
recent balance sheet included in the Financial Statements.
5.18. Litigation. No charge, investigation, action, suit or proceeding is pending or,
to the knowledge of the Offerors, threatened, against or affecting the Company or its Subsidiaries
or any of their respective properties before or by any courts or any regulatory, administrative or
governmental official, commission, board, agency or other authority or body, or any arbitrator,
wherein an unfavorable decision, ruling or finding could have, singly or in the aggregate, a
Material Adverse Effect.
5.19. Labor Matters. No labor dispute with the employees of the Trust or the Company
exists or, to the knowledge of the executive officers of the Trust or the Company, is imminent,
except those which would not, singly or in the aggregate, have a Material Adverse Effect.
5.20. Property. Except as disclosed in the Company’s Exchange Act reports and for
liens for (i) taxes and other governmental charges and assessments which are not yet delinquent or
the amount of which is being contested in good faith by appropriate proceedings; (ii) encumbrances
in the nature of zoning restrictions, easements, rights or restrictions of record on the use of
real property; (iii) statutory or common law liens to secure landlords, lessors or renters under
leases or rental agreements confined to the premises rented; (iv) liens created under or in
connection with asset securitizations, repurchase agreements, warehouse credit facilities or other
loan facilities; and (v) other liens incurred in the ordinary course of business not material in
amount, the Company and each Subsidiary has good and marketable title to all of its respective real
and personal properties, in each case free and clear of all liens and defects, except for those
that would not, singly or in the aggregate, have a Material Adverse Effect; and all of the leases
and subleases under which the Trust or any Subsidiary holds properties are in full force and
effect, except
where the failure of such leases and subleases to be in full force and effect would not,
singly or in the aggregate, have a Material Adverse Effect; and neither the Company nor any
Subsidiary has any notice of any claim of any sort that has been asserted by anyone adverse to the
rights of a Subsidiary or the Company under any such leases or subleases, or affecting or
questioning the rights of such entity to the continued possession of the leased or subleased
premises under any such lease or sublease, except for such claims that would not, singly or in the
aggregate, have a Material Adverse Effect.
5.21. Tax Matters.
(a) Commencing with its taxable year ended December 31, 1985 the Company has been, and upon
the completion of the transactions contemplated hereby, the Company will continue to be, organized
and operated in conformity with the requirements for qualification and taxation as a REIT under
Sections 856 through 860 of the Code, and the Company’s proposed method of operation will enable it
to continue to meet the requirements for qualification and taxation as a REIT under the Code, and
no actions have been taken (or not taken which are required to be taken) which would reasonably be
expected to cause such qualification to be lost. The Company expects to continue to be organized
and to operate in a manner so as to qualify as a REIT in the taxable year ending December 31, 2005
and succeeding taxable years.
(b) The Company and each Subsidiary has timely and duly filed all Tax Returns (as defined
below) required to be filed by them, and all such Tax Returns are true, correct and complete,
except for such failures to timely file or inaccuracies that would not, singly or in the aggregate,
have a Material Adverse Effect. The Company and each Subsidiary has timely and duly paid in full
all material Taxes (as defined below) required to be paid by them (whether or not such amounts are
shown as due on any Tax Return) and has timely and duly paid all required estimated Tax payments in
accordance with applicable law. There are no federal, state, or other Tax audits or deficiency
assessments proposed or pending with respect to the Company or any Subsidiary, and, to the
knowledge of the Offerors, no such audits or assessments are threatened. As used herein, the terms
“Tax” or “Taxes” mean (i) all federal,
state, local, and foreign taxes, and other assessments of a
similar nature (whether imposed directly or through withholding), including any interest, additions
to tax, or penalties applicable thereto, imposed by any Governmental Entity, and (ii) all
liabilities in respect of such amounts arising as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group, as a successor to another person or by contract.
As used herein, the term “Tax Returns” means all federal, state, local, and foreign Tax returns,
declarations, statements, reports, schedules, forms, and information returns and any amendments
thereto filed or required to be filed with any Governmental Entity.
(c) To the knowledge of the Offerors, there are no rulemaking or similar proceedings before
the United States Internal Revenue Service or comparable federal, state, local or foreign
government bodies which involve or affect the Company or any Subsidiary, which, if the subject of
an action unfavorable to the Company or any Subsidiary, could result in a Material Adverse Effect.
5.22. Insurance. The Company and each Subsidiary and their respective assets and
businesses are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts in all material respects as are customary in the businesses in which they
are engaged or propose to engage after giving effect to the transactions contemplated hereby. All
policies of insurance and fidelity or surety
bonds insuring the Company and each Subsidiary or their respective business, assets,
employees, officers and directors are in full force and effect. The Company and each Subsidiary
are in compliance with the terms of such policies and instruments in all material respects. The
Company does not have reason to believe that it or any Subsidiary will not be able to renew such
existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue their respective business at a cost that would not
have a Material Adverse Effect. Within the past twelve months, neither the Company nor any
Subsidiary has been denied any insurance coverage which it has sought or for which it has applied.
5.23. Corporate Funds. The Company or, to the knowledge of the Offerors, any person
acting on behalf of the Company, including, without limitation, any director, officer, agent or
employee of the Company, has not, directly or indirectly, while acting on behalf of the Company (i)
used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any other unlawful payment.
5.24. Environmental Compliance.
(a) Except as would not, individually or in the aggregate, have a Material Adverse Effect, (i)
the Company and each Subsidiary have been and are in compliance with applicable Environmental Laws
(as defined below), (ii) neither the Company nor any Subsidiary nor, to the knowledge of the
Offerors, any other owners of any of the real properties currently or previously owned, leased or
operated by the Company or any Subsidiary (the “Properties”) at any time or any other party, has at
any time released (as such term is defined in CERCLA (as defined below)) or otherwise disposed of
Hazardous Materials (as defined below) on, to, in, under or from the Properties, (iii) neither the
Company nor any Subsidiary intends to use or will use the Properties or any subsequently acquired
properties, other than in compliance with applicable Environmental Laws, (iv) neither the Company
nor any Subsidiary has received any notice of, or has any knowledge of any occurrence or
circumstance which, with notice or passage of time or both, would give rise to a claim under or
pursuant to any Environmental Law with respect to the Properties, or their respective assets or
arising out of the conduct of the Company or any Subsidiary, (v) none of the Properties are
included or, to the knowledge of the Offerors, proposed for inclusion, on the National Priorities
List issued pursuant to CERCLA by the United States Environmental Protection Agency or, to the
knowledge of the Offerors, proposed for
inclusion on any similar list or inventory issued pursuant
to any other Environmental Law or issued by any other Governmental Entity, (vi) none of the
Company, any Subsidiary, any of their respective agents or, to the knowledge of the Offerors, any
other person or entity for whose conduct any of them is or may be held responsible, has generated,
manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced or
processed any Hazardous Material at any of the Properties, except in compliance with all applicable
Environmental Laws, and has not transported or arranged for the transport of any Hazardous Material
from the Properties to another property, except in compliance with all applicable Environmental
Laws, (vii) no lien has been imposed on the Properties by any Governmental Entity in connection
with the presence on or off such Property of any Hazardous Material, and (vii) neither the Company
nor any Subsidiary nor, to the knowledge of the Offerors, any other person or entity for whose
conduct the Company or any Subsidiary is or may be held responsible, has entered into or been
subject to any consent decree, compliance order, or administrative order with respect to the
Properties or any facilities or improvements or any operations or activities thereon.
(b) As used herein, “Hazardous Materials” shall include, without limitation, any flammable
materials, explosives, radioactive materials, hazardous materials, hazardous substances, hazardous
wastes, toxic substances or related materials, asbestos, petroleum, petroleum products and any
hazardous material as defined by any federal, state or local environmental law, statute, ordinance,
rule or regulation, including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§9601-9675 (“CERCLA”), the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§5101-5127, the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. §§6901-6992k, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. §§11001-11050, the Toxic Substances Control Act, 15
U.S.C. §§2602-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§136-136y,
the Clean Air Act, 42 U.S.C. §§7401-7642, the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. §§1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§300f-300j-26, and the
Occupational Safety and Health Act, 29 U.S.C. §§651-678, and any analogous state laws, as any of
the above may be amended from time to time and in the regulations promulgated pursuant to each of
the foregoing (including environmental statutes and laws not specifically defined herein)
(individually, an “Environmental Law” and collective, the “Environmental Laws”) or by any
Governmental Entity.
(c) In the ordinary course of their respective businesses, the Company and each Subsidiary
periodically review the effect of Environmental Laws on their respective businesses, operations and
properties, and periodically identify and evaluate associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third parties). On the basis
of such reviews and the amount of their respective established reserves, the Company has reasonably
concluded that such associated costs and liabilities would not, individually or in the aggregate,
have a Material Adverse Effect.
5.25. OSHA Compliance. Neither the Company nor any of its Subsidiaries is in
violation of any federal or state law or regulation relating to occupational safety and health, and
the Company and its Subsidiaries have received all permits, licenses or other approvals required of
them under applicable federal and state occupational safety and health and environmental laws and
regulations to conduct their respective businesses, and the Company and each of its Subsidiaries
are in compliance with all terms and conditions of any such permit, license or approval, except any
such violation of law or regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits, licenses or approvals
which would not, singly or in the aggregate, result in a Material Adverse Effect.
Section 6. Representations and Warranties of the Placement Agents. Each Placement
Agent represents and warrants to the Offerors as to itself (but not as to the other Placement
Agent) as follows:
6.1. Organization, Standing and Qualification.
(a) FTN Financial Capital Markets is a division of First Tennessee Bank National Association, a
national banking association duly organized, validly existing and in good standing under the laws
of the United States, with full power and authority to own, lease and operate its properties and
conduct its business as currently being conducted. FTN Financial Capital Markets is duly qualified
to transact business as a foreign corporation and is in good standing in each other jurisdiction in
which it owns or leases property or conducts its business so as to require such qualification and
in which the failure to so qualify would, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, business, prospects or results of
operations of FTN Financial Capital Markets.
(b) Xxxxx, Xxxxxxxx & Xxxxx, Inc. is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York, with full power and authority to own, lease
and operate its properties and conduct its business as currently being conducted. Xxxxx, Xxxxxxxx &
Xxxxx, Inc. is duly qualified to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property or conducts its business so as to
require such qualification and in which the failure to so qualify would, individually or in the
aggregate, have a material adverse effect on the condition (financial or otherwise), earnings,
business, prospects or results of operations of Xxxxx, Xxxxxxxx & Xxxxx, Inc.
6.2. Power and Authority. The Placement Agent has all requisite power and authority
to enter into this Agreement, and this Agreement has been duly and validly authorized, executed and
delivered by the Placement Agent and constitutes the legal, valid and binding agreement of the
Placement Agent, enforceable against the Placement Agent in accordance with its terms, subject to
Bankruptcy and Equity and except as any indemnification or contribution provisions thereof may be
limited under applicable securities laws. No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any Governmental Entity, other than those
that have been made or obtained, is necessary or required for the performance by the Placement
Agent of its obligations under this Agreement or the consummation by the Placement Agent of the
transactions contemplated by this Agreement.
6.3. General Solicitation. In the case of the offer and sale of the Capital
Securities, no form of general solicitation or general advertising was used by the Placement Agent
or its representatives including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or broadcast over television
or radio or any seminar or meeting whose attendees have been invited by any general solicitation or
general advertising. Neither the Placement Agent nor its representatives have engaged or will
engage in any “directed selling efforts” within the meaning of Regulation S with respect to the
Capital Securities.
6.4. Purchasers. The Placement Agent has made such reasonable inquiry as is necessary
to determine that each Purchaser is acquiring the Capital Securities for its own account, except as
contemplated in Section 7.8 hereto, that the Purchasers do not intend to distribute the Capital
Securities in contravention of the Securities Act or any other applicable securities laws and that
Preferred Term Securities XX, Ltd. is not a “U.S. person” as that term is defined under Rule 902 of
the Securities Act.
6.5. Qualified Purchasers. The Placement Agent has not offered or sold and will not arrange for the offer or sale of the
Capital Securities except (a) to those the Placement Agent reasonably believes are “qualified
purchasers” within the meaning of Section 2(a)(51) of the Investment Company Act and (b)(i) to
those the Placement Agent reasonably believes are institutional “accredited investors” (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D), (ii) in an offshore transaction complying with
Rule 903 of Regulation S, or (iii) in any other manner that does not require registration of the
Capital Securities under the Securities Act. In connection with each such sale, the Placement
Agent has taken or will take reasonable steps to ensure that the respective purchaser is aware that
(y) such sale is being made in reliance on an exemption under the Securities Act and (z) future
transfers of the Capital Securities will not be made except in compliance with applicable
securities laws.
6.6. Offering Circulars. Neither the Placement Agent nor its representatives will
include any non-public information about the Company, the Trust or any of their Affiliates in any
registration statement, prospectus, offering circular or private placement memorandum used in
connection with any purchase of Capital Securities without the prior written consent of the Trust
and the Company.
Section 7. Covenants of the Offerors. The Offerors covenant and agree with the
Placement Agents and the Purchasers as follows:
7.1. Compliance with Representations and Warranties. During the period from the date
of this Agreement to the Closing Date, the Offerors shall use their best efforts and take all
action necessary or appropriate to cause their representations and warranties contained in Section
5 hereof to be true as of the Closing Date, after giving effect to the transactions contemplated by
this Agreement, as if made on and as of the Closing Date.
7.2. Sale and Registration of Securities. The Offerors and their Affiliates shall not
nor shall any of them permit any person acting on their behalf (other than the Placement Agents),
to directly or indirectly (i) sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in the Securities Act) that would or could be integrated
with the sale of the Capital Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) make offers or sales of any such Security, or solicit
offers to buy any such Security, under circumstances that would require the registration of any of
such Securities under the Securities Act.
7.3. Use of Proceeds. The Trust shall use the proceeds from the sale of the Capital
Securities and the Common Securities to purchase the Debentures from the Company.
7.4. Investment Company. The Offerors shall not engage, or permit any Subsidiary to
engage, in any activity which would cause it or any Subsidiary to be an “investment company” under
the provisions of the Investment Company Act.
7.5. Reimbursement of Expenses. If the sale of the Capital Securities provided for herein is not consummated (i) because any
condition set forth in Section 3 hereof is not satisfied, or (ii) because of any refusal, inability
or failure on the part of the Company or the Trust to perform any agreement herein or comply with
any provision hereof other than by reason of a breach by the Placement Agents, the Company shall
reimburse the Placement Agents upon demand for all of their pro rata share of out-of-pocket
expenses (including reasonable fees and disbursements of counsel) in an amount not to exceed
$50,000.00 that shall have been incurred by them in connection with the proposed purchase and sale
of the Capital Securities. Notwithstanding the foregoing, the Company shall have no obligation to
reimburse the Placement Agents for their out-of-pocket expenses if the sale of the Capital
Securities fails to occur because the Placement Agents fail to fulfill a condition set forth in
Section 4.
7.6. Directed Selling Efforts, Solicitation and Advertising. In connection with any
offer or sale of any of the Securities, the Offerors shall not, nor shall either of them permit any
of their Affiliates or any person acting on their behalf, other than the Placement Agents, to (i)
engage in any “directed selling efforts” within the meaning of Regulation S, or (ii) engage in any
form of general solicitation or general advertising (as defined in Regulation D).
7.7. Compliance with Rule 144A(d)(4) under the Securities Act. So long as any of the
Securities are outstanding and are “restricted securities” within the meaning of Rule 144(a)(3)
under the Securities Act, the Offerors will, during any period in which they are not subject to and
in compliance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or the Offerors are not exempt from such reporting requirements pursuant to and in
compliance with Rule 12g3-2(b) under the Exchange Act, provide to each holder of such restricted
securities and to each prospective purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser in connection with any
proposed transfer, any information required to be provided by Rule 144A(d)(4) under the Securities
Act, if applicable. This covenant is intended to be for the benefit of the holders, and the
prospective purchasers designated by such holders, from time to time of such restricted securities.
The information provided by the Offerors pursuant to this Section 7.7 will not, at the date
thereof, contain any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading.
7.8. Transfer Notice. The Offerors acknowledge that First Tennessee Bank National
Association (“First Tennessee”) may transfer the Capital Securities that it is purchasing, in whole
or in part, at any time and from time to time following the Closing Date by delivering the notice
(the “Transfer Notice”) attached as Exhibit B to the Master Custodian Agreement, dated May
27, 2004, as amended, and attached as Exhibit A to the Subscription Agreement to which
First Tennessee is a party. In order to facilitate such transfer, the Company shall execute in
blank five additional Capital Securities certificates, to be delivered at Closing, such
certificates to be completed with the name of the transferee(s) to which the Capital Securities, in
whole or in part, will be transferred upon the receipt of a Transfer Notice and authenticated by
the Institutional Trustee at the time of each such transfer.
7.9. Quarterly Reports. Within 50 days of the end of each calendar year quarter and
within 100 days of the end of each calendar year during which the Debentures are issued and
outstanding, the Offerors shall submit to The Bank of New York a completed quarterly report in the
form attached hereto as Exhibit C, with a copy provided to First Tennessee during the
period when it holds any of the Capital Securities; provided, that
the financial statements of the Company required to be delivered pursuant to such quarterly
report shall be deemed to have been furnished in compliance with such quarterly report if such
financial statements have been duly filed with the Commission as part of the Company’s Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, as applicable.
If First Tennessee transfers the Capital Securities as contemplated by Section 7.8, in addition to
the reporting obligations of the Offerors to The Bank of New York and First Tennessee provided for
in this Section 7.9, the Offerors shall submit to the trustee designated in the Transfer Notice
such periodic reports as may be required by such trustee in the form and at such times as such
trustee may require. The Offerors acknowledge and agree that The Bank of New York and such
designated trustee and its successors and assigns are third party beneficiaries of this Section
7.9.
7.10. Continued REIT Status. Unless and until the Company’s Board of Directors
determines that it is not in the best interests of the Company’s stockholders, the Company will use
its commercially reasonable efforts to meet the requirements to qualify as a REIT under Sections
856 through 860 of the Code for the taxable year ending December 31, 2005 and succeeding taxable
years.
Section 8. Covenants of the Placement Agents. The Placement Agents covenant and agree
with the Offerors that, during the period from the date of this Agreement to the Closing Date, the
Placement Agents shall use their best efforts and take all action necessary or appropriate to cause
their representations and warranties contained in Section 6 to be true as of the Closing Date,
after giving effect to the transactions contemplated by this Agreement, as if made on and as of the
Closing Date. The
Placement Agents further covenant and agree not to engage in hedging
transactions with respect to the Capital Securities unless such transactions are conducted in
compliance with the Securities Act.
Section 9. Indemnification.
9.1. Indemnification Obligation. The Offerors shall jointly and severally indemnify
and hold harmless the Placement Agents and the Purchasers and each of their respective agents,
employees, officers and directors and each person that controls either of the Placement Agents or
the Purchasers within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and agents, employees, officers and directors or any such controlling person of either of the
Placement Agents or the Purchasers (each such person or entity, an “Indemnified Party”) from and
against any and all losses, claims, damages, judgments, liabilities or expenses, joint or several,
to which such Indemnified Party may become subject under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written consent of the
Offerors, but excluding any such losses, claims, damages, judgments, liabilities or expenses that
are caused by the gross negligence or willful misconduct of the Indemnified Party), insofar as such
losses, claims, damages, judgments, liabilities or expenses (or actions in respect thereof) arise
out of, or are based upon, or relate to, in whole or in part, (a) any untrue statement or alleged
untrue statement of a material fact contained in any information (whether written or oral) or
documents executed in favor of, furnished or made available to the Placement Agents or the
Purchasers by the Offerors, or (b) any omission or alleged omission to state in any information
(whether written or oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchasers by the Offerors a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse each Indemnified Party
for any legal and other expenses as such expenses are reasonably incurred by such Indemnified Party
in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, judgments, liability, expense or action described in
this Section 9.1. In addition to their other obligations under this Section 9, the Offerors hereby
agree that, as an interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of, or based upon, or related to the matters described above in
this Section 9.1, they shall reimburse each Indemnified Party on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction. To the extent that
any such interim reimbursement payment is so held to have been improper, each Indemnified Party
shall promptly return such amounts to the Offerors together with interest, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the highest credit standing)
announced from time to time by First Tennessee Bank National Association (the “Prime Rate”). Any
such interim reimbursement payments which are not made to an Indemnified Party within 30 days of a
request for reimbursement shall bear interest at the Prime Rate from the date of such request.
9.2. Conduct of Indemnification Proceedings. Promptly after receipt by an Indemnified
Party under this Section 9 of notice of the commencement of any action, such Indemnified Party
shall, if a claim in respect thereof is to be made against the Offerors under this Section 9,
notify the Offerors in writing of the commencement thereof; but, subject to Section 9.4, the
omission to so notify the Offerors shall not relieve them from any liability pursuant to Section
9.1 which the Offerors may have to any Indemnified Party unless and to the extent that the Offerors
did not otherwise learn of such action and such failure by the Indemnified Party results in the
forfeiture by the Offerors of substantial rights and defenses. In case any such action is brought
against any Indemnified Party and such Indemnified Party seeks or intends to seek indemnity from
the Offerors, the Offerors shall be entitled to participate in, and, to the extent that they may
wish, to assume the defense thereof with counsel reasonably satisfactory to
such Indemnified Party;
provided, however, if the defendants in any such action include both the
Indemnified Party and the Offerors and the Indemnified Party shall have reasonably concluded that
there may be a conflict between the positions of the Offerors and the Indemnified Party in
conducting the defense of any such action or that there may be legal defenses available to it
and/or other Indemnified Parties which are different from or additional to those available to the
Offerors, the Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on behalf of such
Indemnified Party. Upon receipt of notice from the Offerors to such Indemnified Party of their
election to so assume the defense of such action and approval by the Indemnified Party of counsel,
the Offerors shall not be liable to such Indemnified Party under this Section 9 for any legal or
other expenses subsequently incurred by such Indemnified Party in connection with the defense
thereof unless (i) the Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso in the preceding sentence (it being
understood, however, that the Offerors shall not be liable for the expenses of more than one
separate counsel representing the Indemnified Parties who are parties to such action), or (ii) the
Offerors shall not have employed counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel of such Indemnified Party shall be
at the expense of the Offerors.
9.3. Contribution. If the indemnification provided for in this Section 9 is required
by its terms, but is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an Indemnified Party under Section 9.1 in respect of any losses, claims, damages,
liabilities or expenses referred to herein or therein,
then the Offerors shall contribute to the amount paid or payable by such Indemnified Party as
a result of any losses, claims, damages, judgments, liabilities or expenses referred to herein (i)
in such proportion as is appropriate to reflect the relative benefits received by the Offerors, on
the one hand, and the Indemnified Party, on the other hand, from the offering of such Capital
Securities, or (ii) if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Offerors, on the one hand, and the Placement
Agents, on the other hand, in connection with the statements or omissions or inaccuracies in the
representations and warranties herein or other breaches which resulted in such losses, claims,
damages, judgments, liabilities or expenses, as well as any other relevant equitable
considerations. The respective relative benefits received by the Offerors, on the one hand, and
the Placement Agents, on the other hand, shall be deemed to be in the same proportion, in the case
of the Offerors, as the total price paid to the Offerors for the Capital Securities sold by the
Offerors to the Purchasers (net of the compensation paid to the Placement Agents hereunder, but
before deducting expenses), and in the case of the Placement Agents, as the compensation received
by them, bears to the total of such amounts paid to the Offerors and received by the Placement
Agents as compensation. The relative fault of the Offerors and the Placement Agents shall be
determined by reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or the omission or alleged omission of a material fact or the
inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied
by the Offerors or the Placement Agents and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The provisions set
forth in Section 9.2 with respect to notice of commencement of any action shall apply if a claim
for contribution is made under this Section 9.3; provided, however, that no
additional notice shall be required with respect to any action for which notice has been given
under Section 9.2 for purposes of indemnification. The Offerors and the Placement Agents agree
that it would not be just and equitable if contribution pursuant to this Section 9.3 were
determined by pro rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in this Section 9.3. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages, judgments, liabilities or expenses
referred to in this Section 9.3 shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. In no
event shall the liability of the
Placement Agents hereunder be greater in amount than the dollar amount of the compensation (net of
payment of all expenses) received by the Placement Agents upon the sale of the Capital Securities
giving rise to such obligation. No person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person
who was not found guilty of such fraudulent misrepresentation.
9.4. Additional Remedies. The indemnity and contribution agreements contained in this
Section 9 are in addition to any liability that the Offerors may otherwise have to any Indemnified
Party.
9.5. Additional Indemnification. The Company shall indemnify and hold harmless the
Trust against all loss, liability, claim, damage and expense whatsoever, as due from the Trust
under Sections 9.1 through 9.4 hereof.
Section 10. Rights and Responsibilities of Placement Agents.
10.1. Reliance. In performing their duties under this Agreement, the Placement Agents
shall be entitled to rely upon any notice, signature or writing which they shall in good faith
believe to be genuine and to be signed
or presented by a proper party or parties. The Placement Agents may rely upon any opinions or
certificates or other documents delivered by the Offerors or their counsel or designees to either
the Placement Agents or the Purchasers.
10.2. Rights of Placement Agents. In connection with the performance of their duties
under this Agreement, the Placement Agents shall not be liable for any error of judgment or any
action taken or omitted to be taken unless the Placement Agents were grossly negligent or engaged
in willful misconduct in connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agents to expend or risk their own funds or otherwise incur
any financial liability on behalf of the Purchasers in connection with the performance of any of
their duties hereunder. The Placement Agents shall be under no obligation to exercise any of the
rights or powers vested in them by this Agreement.
Section 11. Miscellaneous.
11.1. Disclosure Schedule. The term “Disclosure Schedule,” as used herein, means the
schedule, if any, attached to this Agreement that sets forth items the disclosure of which is
necessary or appropriate as an exception to one or more representations or warranties contained in
Section 5 hereof; provided, that any item set forth in the Disclosure Schedule as an
exception to a representation or warranty shall be deemed an admission by the Offerors that such
item represents an exception, fact, event or circumstance that is reasonably likely to result in a
Material Adverse Effect. The Disclosure Schedule shall be arranged in paragraphs corresponding to
the section numbers contained in Section 5. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the immediately preceding sentence, the mere
listing (or inclusion of a copy) of a document or other item in the Disclosure Schedule shall not
be deemed adequate to disclose an exception to a representation or warranty made herein unless the
representation or warranty has to do with the existence of the document or other item itself.
Information provided by the Company in response to any due diligence questionnaire shall not be
deemed part of the Disclosure Schedule and shall not be deemed to be an exception to one or more
representations or warranties contained in Section 5 hereof unless such information is specifically
included on the Disclosure Schedule in accordance with the provisions of this Section 11.1.
11.2. Legal Expenses. At Closing, the Placement Agents shall provide a credit for the
Offerors’ transaction-related legal expenses in the amount of $10,000.00.
11.3. Non-Disclosure. Except as required by applicable law, including without
limitation securities laws and regulations promulgated thereunder, the Offerors shall not, and will
cause their advisors and representatives not to, issue any press release or other public statement
regarding the transactions contemplated by this Agreement or the Operative Documents prior to or on
the Closing Date. Notwithstanding anything to the contrary, the Offerors may (1) consult any tax
advisor regarding U.S. federal income tax treatment or tax structure of the transaction
contemplated under this Agreement and the Operative Documents and (2) disclose to any and all
persons, without limitation of any kind, the U.S. Federal income tax structure (in each case,
within the meaning of Treasury Regulation § 1.6011-4) of the transaction contemplated under this
Agreement and the Operative Documents and all materials of any kind (including opinions or other
tax analyses) that are provided to you relating to such tax treatment and tax structure. For this
purpose, “tax structure” is limited to any facts relevant to the U.S. federal income tax treatment
of the transaction and does not include information relating to identity of the parties.
11.4. Notices. Prior to the Closing, and thereafter with respect to matters
pertaining to this Agreement only, all notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or
overnight air courier guaranteeing next day delivery:
if to the Placement Agents, to:
FTN Financial Capital Markets
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxx X. Xxxxxxx
and
Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxxxx Xxxxxxxx, General Counsel
000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxxxx Xxxxxxxx, General Counsel
with a copy to:
Xxxxx, Xxxx & Xxxxxxxx, X.X.
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxx X. Xxx, Esq.
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxx X. Xxx, Esq.
and
Sidley Xxxxxx Xxxxx & Xxxx LLP
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Attention: Xxxxxxx Xxxxxx, Esq.
if to the Offerors, to:
Capstead Mortgage Corporation
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopier: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly given (i) at the time
delivered by hand, if personally delivered, (ii) five business days after being deposited in the
mail, postage prepaid, if mailed, (iii) when answered back, if telexed, (iv) the next business day
after being telecopied, or (v) the next business day after timely delivery to a courier, if sent by
overnight air courier guaranteeing next day delivery. From and after the Closing Date, the
foregoing notice provisions shall be superseded by any notice provisions of the Operative Documents
under which notice is given. The Placement Agents, the Offerors, and their respective counsel, may
change their respective notice addresses from time to time by written notice to all of the
foregoing persons.
11.5. Parties in Interest, Successors and Assigns. Except as expressly set forth
herein, this Agreement is made solely for the benefit of the Placement Agents, the Purchasers and
the Offerors and any person controlling the Placement Agents, the Purchasers or the Offerors and
their respective successors and assigns; and no other person shall acquire or have any right under
or by virtue of this Agreement. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties.
11.6. Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
11.7. Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
11.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF LAWS) OF THE STATE OF NEW YORK.
11.9. Entire Agreement. This Agreement, together with the Operative Documents and the
other documents delivered in connection with the transactions contemplated by this Agreement, is
intended by the parties as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in respect of the
subject
matter contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This Agreement,
together with the Operative Documents and the other documents delivered
in connection with the transaction contemplated by this Agreement, supersedes all prior
agreements and understandings between the parties with respect to such subject matter.
11.10. Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any way impaired or
affected, it being intended that all of the Placement Agents’ and the Purchasers’ rights and
privileges shall be enforceable to the fullest extent permitted by law.
11.11. Survival. The Placement Agents and the Offerors, respectively, agree that the
representations, warranties and agreements made by each of them in this Agreement and in any
certificate or other instrument delivered pursuant hereto shall remain in full force and effect and
shall survive the delivery of, and payment for, the Capital Securities.
Signatures appear on the following page
If this Agreement is satisfactory to you, please so indicate by signing the acceptance of this
Agreement and deliver such counterpart to the Offerors whereupon this Agreement will become binding
between us in accordance with its terms.
| Very truly yours, | ||||||
| CAPSTEAD MORTGAGE CORPORATION | ||||||
| By: | /s/ XXXXXXX X. XXXXXXX | |||||
| Name: | Xxxxxxx X. Xxxxxxx | |||||
| Title: | Senior Vice President and CFO | |||||
| CAPSTEAD MORTGAGE TRUST II | ||||||
| By: | /s/ XXXXXXX X. XXXXXXX | |||||
| Name: | Xxxxxxx X. Xxxxxxx | |||||
| Title: | Administrator | |||||
CONFIRMED AND ACCEPTED,
as of the date first set forth above
as of the date first set forth above
FTN FINANCIAL CAPITAL MARKETS,
a division of First Tennessee Bank National Association,
as a Placement Agent
a division of First Tennessee Bank National Association,
as a Placement Agent
By:
|
/s/ XXXXX X. XXXXXXX | |||
Name:
|
Xxxxx X. Xxxxxxx | |||
Title:
|
Senior Vice President |
XXXXX, XXXXXXXX & XXXXX, INC.,
a New York corporation, as a Placement Agent
a New York corporation, as a Placement Agent
By:
|
/s/ XXXXX X. XXXXX | |||
Name:
|
Xxxxx X. Xxxxx | |||
Title:
|
Managing Director |
EXHIBIT A-1
FORM OF SUBSCRIPTION AGREEMENT
CAPSTEAD MORTGAGE TRUST II
CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION
SUBSCRIPTION AGREEMENT
December 15, 2005
THIS SUBSCRIPTION AGREEMENT (this “Agreement”) made among Capstead Mortgage Trust II (the
“Trust”), a statutory trust created under the Delaware Statutory Trust Act (Chapter 38 of Title 12
of the Delaware Code, 12 Del. C. §§ 3801, et seq.), Capstead Mortgage Corporation, a Maryland
corporation, with its principal offices located at 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000-0000 (the “Company” and, collectively with the Trust, the “Offerors”), and
First Tennessee Bank National Association (the “Purchaser”).
RECITALS:
A. The Trust desires to issue 40,000 of its Fixed/Floating Rate Capital Securities (the
“Capital Securities”), liquidation amount $1,000.00 per Capital Security, representing an undivided
beneficial interest in the assets of the Trust (the “Offering”), to be issued pursuant to an
Amended and Restated Declaration of Trust (the “Declaration”) by and among the Company, Wilmington
Trust Company (“WTC”), the administrators named therein, and the holders (as defined therein); and
B. The proceeds from the sale of the Capital Securities will be combined with the proceeds
from the sale by the Trust to the Company of its common securities, and will be used by the Trust
to purchase an equivalent amount of Fixed/Floating Rate Junior Subordinated Debentures of the
Company (the “Debentures”) to be issued by the Company pursuant to an indenture to be executed by
the Company and WTC, as trustee (the “Indenture”); and
C. In consideration of the premises and the mutual representations and covenants hereinafter
set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF CAPITAL SECURITIES
1.1. Upon the execution of this Agreement, the Purchaser hereby agrees to purchase from the
Trust 16,000 Capital Securities at a price equal to $1,000.00 per Capital Security (the “Purchase
Price”) and the Trust agrees to sell such Capital Securities to the Purchaser for said Purchase
Price. The rights and preferences of the Capital Securities are set forth in the Declaration. The
Purchase Price is payable in immediately available funds on December 15, 2005, or such other
business day as may be designated by the Purchaser, but in no event later than December 30, 2005
(the “Closing Date”). The Offerors shall provide the Purchaser wire transfer instructions no later
than 3 days prior to the Closing Date.
1.2. As a condition to its purchase of the Capital Securities, Purchaser shall enter into the
Joinder Agreement to the Master Custodian Agreement, the form of which is attached hereto as
Exhibit A (the “Custodian Agreement”) and, in accordance therewith, the certificate for the Capital
Securities shall be delivered by the Trust on the Closing Date to the custodian in accordance with
the Custodian
Agreement. Purchaser shall not transfer the Capital Securities to any person or entity except
in accordance with the terms of the Custodian Agreement.
1.3. The Placement Agreement, dated December 6, 2005 (the “Placement Agreement”), among the
Offerors and the placement agents identified therein (the “Placement Agents”) includes certain
representations and warranties, covenants and conditions to closing and certain other matters
governing the Offering. The Placement Agreement is hereby incorporated by reference into this
Agreement and the Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce the obligations of the
Offerors under such Placement Agreement as fully as if the Purchaser were a party to such Placement
Agreement.
1.4. Anything herein or in the Placement Agreement notwithstanding, the Offerors acknowledge
and agree that, so long as Purchaser holds some or all of the Capital Securities, the Purchaser may
in its discretion from time to time transfer or sell, or sell or grant participation interests in,
some or all of such Capital Securities to one or more parties, provided that any such transaction
complies, as applicable, with the registration requirements of the Securities Act of 1933, as
amended (the “Securities Act”) and any other applicable securities laws, is pursuant to an
exemption therefrom, or is otherwise not subject thereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1. The Purchaser understands and acknowledges that neither the Capital Securities nor the
Debentures have been registered under the Securities Act or any other applicable securities law,
are being offered for sale by the Trust in transactions not requiring registration under the
Securities Act, and may not be offered, sold, pledged or otherwise transferred by the Purchaser
except in compliance with the registration requirements of the Securities Act or any other
applicable securities laws, pursuant to an exemption therefrom or in a transaction not subject
thereto.
2.2. The Purchaser represents and warrants that, except as contemplated under Section 1.4
hereof, it is purchasing the Capital Securities for its own account, for investment, and not with a
view to, or for offer or sale in connection with, any distribution thereof in violation of the
Securities Act or other applicable securities laws, subject to any requirement of law that the
disposition of its property be at all times within its control and subject to its ability to resell
such Capital Securities pursuant to an effective registration statement under the Securities Act or
under Rule 144A or any other exemption from registration available under the Securities Act or any
other applicable securities law.
2.3. The Purchaser represents and warrants that neither the Offerors nor the Placement Agents
are acting as a fiduciary or financial or investment adviser for the Purchaser.
2.4. The Purchaser represents and warrants that it is not relying (for purposes of making any
investment decision or otherwise) upon any advice, counsel or representations (whether written or
oral) of the Offerors or of the Placement Agents.
2.5. The Purchaser represents and warrants that (a) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting advisers in connection herewith to
the extent it has deemed necessary, (b) it has had a reasonable opportunity to ask questions of and
receive answers from officers and representatives of the Offerors concerning their respective
financial condition and results of operations and the purchase of the Capital Securities, and any
such questions have been answered to its satisfaction, (c) it has had the opportunity to review all
publicly available records and filings concerning the Offerors and it has carefully reviewed such
records and filings that it considers
relevant to making an investment decision, and (d) it has made its own investment decisions
based upon its own judgment, due diligence and advice from such advisers as it has deemed necessary
and not upon any view expressed by the Offerors or the Placement Agents.
2.6. The Purchaser represents and warrants that it is a “qualified institutional buyer” as
defined under Rule 144A under the Securities Act. If the Purchaser is a dealer of the type
described in paragraph (a)(1)(ii) of Rule 144A under the Securities Act, it owns and invests on a
discretionary basis not less than U.S. $25,000,000.00 in securities of issuers that are not
affiliated with it. The Purchaser is not a participant-directed employee plan, such as a 401(k)
plan, or any other type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A,
or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a
plan, unless investment decisions with respect to the plan are made solely by the fiduciary,
trustee or sponsor of such plan.
2.7. The Purchaser represents and warrants that on each day from the date on which it acquires
the Capital Securities through and including the date on which it disposes of its interests in the
Capital Securities, either (i) it is not (a) an “employee benefit plan” (as defined in Section 3(3)
of the United States Employee Retirement Income Security Act of 1974, as amended (“ERISA”))
which is subject to the provisions of Part 4 of Subtitle B of Title I of ERISA, or any entity whose
underlying assets include the assets of any such plan (an “ERISA Plan”), (b) any other
“plan” (as defined in Section 4975(e)(1) of the United States Internal Revenue Code of 1986, as
amended (the “Code”)) which is subject to the provisions of Section 4975 of the Code or any
entity whose underlying assets include the assets of any such plan (a “Plan”), (c) an
entity whose underlying assets include the assets of any such ERISA Plan or other Plan by reason of
Department of Labor regulation section 2510.3-101 or otherwise, or (d) a governmental or church
plan that is subject to any federal, state or local law which is substantially similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code (a “Similar Law”); or (ii)
the purchase, holding and disposition of the Capital Securities by it will satisfy the requirements
for exemptive relief under Prohibited Transaction Class Exemption (“PTCE”) 00-00, XXXX
00-0, XXXX 91-38, XXXX 00-00, XXXX 96-23 or a similar exemption, or, in the case of a plan subject
to a Similar Law, will not result in a non-exempt violation of such Similar Law.
2.8. The Purchaser represents and warrants that it is acquiring the Capital Securities as
principal for its own account for investment and, except as contemplated under Section 1.4 hereof,
not for sale in connection with any distribution thereof. It was not formed solely for the purpose
of investing in the Capital Securities, and additional capital or similar contributions were not
specifically solicited from any person owning a beneficial interest in it for the purpose of
enabling it to purchase any Capital Securities. The Purchaser is not a (i) partnership, (ii)
common trust fund or (iii) special trust, pension, profit sharing or other retirement trust fund or
plan in which the partners, beneficiaries or participants, as applicable, may designate the
particular investments to be made or the allocation of any investment among such partners,
beneficiaries or participants, and except as contemplated under Section 1.4 hereof, it agrees that
it shall not hold the Capital Securities for the benefit of any other person and shall be the sole
beneficial owner thereof for all purposes and that it shall not sell participation interests in the
Capital Securities or enter into any other arrangement pursuant to which any other person shall be
entitled to a beneficial interest in the distribution on the Capital Securities. The Capital
Securities purchased directly or indirectly by the Purchaser constitute an investment of no more
than 40% of its assets. The Purchaser understands and agrees that any purported transfer of the
Capital Securities to a purchaser which would cause the representations and warranties of Section
2.6 and this Section 2.8 to be inaccurate shall be null and void ab initio and the Offerors retain
the right to resell any Capital Securities sold to non-permitted transferees.
2.9. The Purchaser represents and warrants that it has full power and authority to execute and
deliver this Agreement, to make the representations and warranties specified herein, and to
consummate
the transactions contemplated herein and it has full right and power to subscribe for Capital
Securities and perform its obligations pursuant to this Agreement.
2.10. The Purchaser represents and warrants that no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any governmental body, agency or
court having jurisdiction over the Purchaser, other than those that have been made or obtained, is
necessary or required for the performance by the Purchaser of its obligations under this Agreement
or to consummate the transactions contemplated herein.
2.11. The Purchaser represents and warrants that this Agreement has been duly authorized,
executed and delivered by the Purchaser.
2.12. The Purchaser understands and acknowledges that the Company will rely upon the truth and
accuracy of the foregoing acknowledgments, representations, warranties and agreements and agrees
that, if any of the acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it shall promptly
notify the Company.
2.13. The Purchaser understands that no public market exists for any of the Capital
Securities, and that it is unlikely that a public market will ever exist for the Capital
Securities.
2.14. The Purchaser is an “accredited investor” pursuant to Regulation D promulgated under the
Securities Act.
2.15. The Purchaser is a “qualified purchaser” within the meaning of Section 2(a)(51) of the
Investment Company Act.
ARTICLE III
MISCELLANEOUS
3.1. Any notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by registered or certified mail, return receipt requested, international courier
or delivered by hand against written receipt therefor, or by facsimile transmission and confirmed
by telephone, to the following addresses, or such other address as may be furnished to the other
parties as herein provided:
| To the Offerors: | Capstead Mortgage Corporation | |||
| 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000 | ||||
| Xxxxxx, Xxxxx 00000-0000 | ||||
| Attention: Xxxxxx X. Xxxxxx | ||||
| Fax: 000-000-0000 | ||||
| To the Purchaser: | First Tennessee Bank National Association | |||
| 000 Xxxxxxxxx Xxxx, Xxxxx 000 | ||||
| Xxxxxxx, Xxxxxxxxx 00000 | ||||
| Attention: Xxxxx Xxxx | ||||
| Fax: 000-000-0000 |
Unless otherwise expressly provided herein, notices shall be deemed to have been given on the
date of mailing, except notice of change of address, which shall be deemed to have been given when
received.
3.2. This Agreement shall not be changed, modified or amended except by a writing signed by
the parties to be charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
3.3. Upon the execution and delivery of this Agreement by the Purchaser, this Agreement shall
become a binding obligation of the Purchaser with respect to the purchase of Capital Securities as
herein provided.
3.4. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES
HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
3.5. The parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or appropriate to carry out
the purposes and intent of this Agreement.
3.6. This Agreement may be executed in one or more counterparts each of which shall be deemed
an original, but all of which shall together constitute one and the same instrument.
3.7. In the event that any one or more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way impaired or affected, it being intended
that all of the Offerors’ and the Purchaser’s rights and privileges shall be enforceable to the
fullest extent permitted by law.
Signatures appear on the following page
IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the day and year first
written above.
| FIRST TENNESSEE BANK NATIONAL ASSOCIATION | ||||
By:
|
||||
Print Name: |
||||
Title: |
||||
| CAPSTEAD MORTGAGE CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| CAPSTEAD MORTGAGE TRUST II | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | Administrator | |||||
EXHIBIT A-2
FORM OF SUBSCRIPTION AGREEMENT
FORM OF SUBSCRIPTION AGREEMENT
CAPSTEAD MORTGAGE TRUST II
CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION
SUBSCRIPTION AGREEMENT
December 15, 2005
THIS SUBSCRIPTION AGREEMENT (this “Agreement”) made among Capstead Mortgage Trust II (the
“Trust”), a statutory trust created under the Delaware Statutory Trust Act (Chapter 38 of Title 12
of the Delaware Code, 12 Del. C. §§ 3801, et seq.), Capstead Mortgage Corporation, a Maryland
corporation, with its principal offices located at 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000-0000 (the “Company” and, collectively with the Trust, the “Offerors”), and
Preferred Term Securities XX, Ltd. (the “Purchaser”).
RECITALS:
A. The Trust desires to issue 40,000 of its Fixed/Floating Rate Capital Securities (the
“Capital Securities”), liquidation amount $1,000.00 per Capital Security, representing an undivided
beneficial interest in the assets of the Trust (the “Offering”), to be issued pursuant to an
Amended and Restated Declaration of Trust (the “Declaration”) by and among the Company, Wilmington
Trust Company (“WTC”), the administrators named therein, and the holders (as defined therein); and
B. The proceeds from the sale of the Capital Securities will be combined with the proceeds
from the sale by the Trust to the Company of its common securities, and will be used by the Trust
to purchase an equivalent amount of Fixed/Floating Rate Junior Subordinated Debentures of the
Company (the “Debentures”) to be issued by the Company pursuant to an indenture to be executed by
the Company and WTC, as trustee (the “Indenture”); and
C. In consideration of the premises and the mutual representations and covenants hereinafter
set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF CAPITAL SECURITIES
1.1. Upon the execution of this Agreement, the Purchaser hereby agrees to purchase from the
Trust 24,000 Capital Securities at a price equal to $1,000.00 per Capital Security (the “Purchase
Price”) and the Trust agrees to sell such Capital Securities to the Purchaser for said Purchase
Price. The rights and preferences of the Capital Securities are set forth in the Declaration. The
Purchase Price is payable in immediately available funds on December 15, 2005, or such other
business day as may be designated by the Purchaser, but in no event later than December 30, 2005
(the “Closing Date”). The Offerors shall provide the Purchaser wire transfer instructions no later
than 3 days prior to the Closing Date.
1.2. The certificate for the Capital Securities shall be delivered by the Trust on the Closing
Date to the Purchaser or its designee.
1.3. The Placement Agreement, dated December 6, 2005 (the “Placement Agreement”), among the
Offerors and the Placement Agents identified therein includes certain representations and
warranties, covenants and conditions to closing and certain other matters governing the
Offering. The Placement Agreement is hereby incorporated by reference into this Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and the Purchaser under
the Placement Agreement and shall be entitled to enforce the obligations of the Offerors under such
Placement Agreement as fully as if the Purchaser were a party to such Placement Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1. The Purchaser understands and acknowledges that neither the Capital Securities nor the
Debentures have been registered under the Securities Act of 1933, as amended (the “Securities
Act”), or any other applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not be offered, sold,
pledged or otherwise transferred by the Purchaser except in compliance with the registration
requirements of the Securities Act or any other applicable securities laws, pursuant to an
exemption therefrom or in a transaction not subject thereto.
2.2. The Purchaser represents, warrants and certifies that (i) it is not a “U.S. person” as
such term is defined in Rule 902 under the Securities Act, (ii) it is not acquiring the Capital
Securities for the account or benefit of any such U.S. person, (iii) the offer and sale of Capital
Securities to the Purchaser constitutes an “offshore transaction” under Regulation S of the
Securities Act, and (iv) it will not engage in hedging transactions with regard to the Capital
Securities unless such transactions are conducted in compliance with the Securities Act and the
Purchaser agrees to the legends and transfer restrictions set forth on the Capital Securities
certificate.
2.3. The Purchaser represents and warrants that it is purchasing the Capital Securities for
its own account, for investment, and not with a view to, or for offer or sale in connection with,
any distribution thereof in violation of the Securities Act or other applicable securities laws,
subject to any requirement of law that the disposition of its property be at all times within its
control and subject to its ability to resell such Capital Securities pursuant to an effective
registration statement under the Securities Act or under Rule 144A or any other exemption from
registration available under the Securities Act or any other applicable Securities law.
2.4. The Purchaser represents and warrants that it has full power and authority to execute and
deliver this Agreement, to make the representations and warranties specified herein, and to
consummate the transactions contemplated herein and it has full right and power to subscribe for
Capital Securities and perform its obligations pursuant to this Agreement.
2.5. The Purchaser, a Cayman Islands Company whose business includes issuance of certain notes
and acquiring the Capital Securities and other similar securities, represents and warrants that it
has such knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of purchasing the Capital Securities, has had the opportunity to
ask questions of, and receive answers and request additional information from, the Offerors and is
aware that it may be required to bear the economic risk of an investment in the Capital Securities
for an indefinite period of time.
2.6. The Purchaser represents and warrants that no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any governmental body, agency or
court having jurisdiction over the Purchaser, other than those that have been made or obtained, is
necessary or required for the performance by the Purchaser of its obligations under this Agreement
or to consummate the transactions contemplated herein.
2.7. The Purchaser represents and warrants that this Agreement has been duly authorized,
executed and delivered by the Purchaser.
2.8. The Purchaser represents and warrants that (i) the Purchaser is not in violation or
default of any term of its Memorandum of Association or Articles of Association, of any provision
of any mortgage, indenture, contract, agreement, instrument or contract to which it is a party or
by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute,
rule or regulation applicable to the Purchaser which would prevent the Purchaser from performing
any material obligation set forth in this Agreement; and (ii) the execution, delivery and
performance of and compliance with this Agreement, and the consummation of the transactions
contemplated herein, will not, with or without the passage of time or giving of notice, result in
any such material violation, or be in conflict with or constitute a default under any such term, or
the suspension, revocation, impairment, forfeiture or non-renewal of any permit, license,
authorization or approval applicable to the Purchaser, its business or operations or any of its
assets or properties which would prevent the Purchaser from performing any material obligations set
forth in this Agreement.
2.9. The Purchaser represents and warrants that the Purchaser is an exempted company with
limited liability duly incorporated, validly existing and in good standing under the laws of the
jurisdiction where it is organized, with full power and authority to perform its obligations under
this Agreement.
2.10. The Purchaser understands and acknowledges that the Company will rely upon the truth and
accuracy of the foregoing acknowledgments, representations, warranties and agreements and agrees
that, if any of the acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it shall promptly
notify the Company.
2.11. The Purchaser understands that no public market exists for any of the Capital
Securities, and that it is unlikely that a public market will ever exist for the Capital
Securities.
2.12. The Purchaser is a “qualified purchaser” within the meaning of Section 2(a)(51) of the
Investment Company Act.
ARTICLE III
MISCELLANEOUS
3.1. Any notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by registered or certified mail, return receipt requested, international courier
or delivered by hand against written receipt therefor, or by facsimile transmission and confirmed
by telephone, to the following addresses, or such other address as may be furnished to the other
parties as herein provided:
To the Offerors:
|
Capstead Mortgage Corporation | |
| 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000 | ||
| Xxxxxx, Xxxxx 00000-0000 | ||
| Attention: Xxxxxx X. Xxxxxx | ||
| Fax: 000-000-0000 | ||
To the Purchaser:
|
Preferred Term Securities XX, Ltd. | |
| x/x Xxxxxx Xxxxxxx Xxxxxxx X.X. Xxx 0000 XX | ||
| Xxxxxxxxxx House | ||
| South Church Street |
| Xxxxxx Town, Grand Cayman | ||
| Cayman Islands | ||
| Attention: The Directors | ||
| Fax: 000-000-0000 |
Unless otherwise expressly provided herein, notices shall be deemed to have been given on the
date of mailing, except notice of change of address, which shall be deemed to have been given when
received.
3.2. This Agreement shall not be changed, modified or amended except by a writing signed by
the parties to be charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
3.3. Upon the execution and delivery of this Agreement by the Purchaser, this Agreement shall
become a binding obligation of the Purchaser with respect to the purchase of Capital Securities as
herein provided.
3.4. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES
HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
3.5. The parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or appropriate to carry out
the purposes and intent of this Agreement.
3.6. This Agreement may be executed in one or more counterparts each of which shall be deemed
an original, but all of which shall together constitute one and the same instrument.
3.7. In the event that any one or more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way impaired or affected, it being intended
that all of the Offerors’ and the Purchaser’s rights and privileges shall be enforceable to the
fullest extent permitted by law.
Signatures appear on the following page
IN WITNESS WHEREOF, I have set my hand the day and year first written above.
PREFERRED TERM SECURITIES XX, LTD.
By: |
||||
Print Name: |
||||
Title: |
||||
IN WITNESS WHEREOF, this Subscription Agreement is agreed to and accepted as of the day and
year first written above.
| CAPSTEAD MORTGAGE CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| CAPSTEAD MORTGAGE TRUST II | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | Administrator | |||||
