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EXHIBIT 1.1
CAPSTEAD MORTGAGE CORPORATION
DOCS(R) FINANCING PROGRAM
875,000 SHARES OF COMMON STOCK,
$0.01 PAR VALUE
1,000,000 SHARES OF SERIES B $1.26 CUMULATIVE
CONVERTIBLE PREFERRED STOCK, $0.10 PAR VALUE
SALES AGREEMENT
AUGUST 20, 2001
DOCS(R) is a registered service xxxx of Xxxxxxx Xxxxxxx Securities Corporation
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THIS SALES AGREEMENT (the "Agreement") dated as of August 20, 2001
between RCG Equity Finance, a division of Ramius Securities, LLC, having its
principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Sales
Manager") and Capstead Mortgage Corporation, a corporation organized and
existing under the laws of the State of Maryland (the "Company").
WHEREAS, the Company desires to issue and sell through the Sales
Manager up to 875,000 shares (the "Maximum Common Stock Amount") of its common
stock, par value $0.01 per share (the "Common Stock"), and up to 1,000,000
shares (the "Maximum Preferred Stock Amount") of its $1.26 Cumulative
Convertible Preferred Stock, Series B $0.10 par value (the "Preferred Stock"),
on the terms set forth in Article II hereof. The Maximum Common and Preferred
Stock Amounts shall be appropriately adjusted for stock splits and reverse
splits. The Common Stock and Preferred Stock are sometimes referred to
collectively as "the Stock."
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Sales Manager agree as follows:
ARTICLE I.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
1.1 For purposes of this Agreement, unless the context requires to the
contrary, the term "Company" shall also include all significant subsidiaries (as
defined by Section 1-02 of Regulation S-X) of the Company. The Company
represents and warrants to, and agrees with, the Sales Manager that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
thereunder ("Rules and Regulations"). The Company agrees to file a registration
statement on Form S-3 (the "Registration Statement") to register 875,000 shares
of Common Stock and 1,000,000 shares of Preferred Stock and to use its best
efforts to have such Registration Statement declared effective. The Registration
Statement including a form of prospectus, have been prepared by the Company in
conformity with the requirements of the Act and the Rules and Regulations.
Copies of the Registration Statement and Prospectus, and all documents
incorporated by reference in each of the foregoing that were filed with the
Commission have been delivered to the Sales Manager. The Registration Statement,
as amended from time to time, is referred to herein as the "Registration
Statement," and the final form of prospectus included in the Registration
Statement, as amended or supplemented from time to time, is referred to herein
as the "Prospectus." Any reference herein to the Registration Statement, the
Prospectus, or any amendment or supplement thereto shall be deemed to refer to
and include the documents incorporated (or deemed to be incorporated) by
reference therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement or Prospectus shall be
deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein.
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(b) Each part of the Registration Statement, when such part became or
becomes effective, and the Prospectus and any amendment or supplement thereto,
on the date of filing thereof with the Commission and at each Settlement Date
(as hereinafter defined), conformed or will conform in all material respects
with the requirements of the Act and the Rules and Regulations; each part of the
Registration Statement, when such part became or becomes effective, did not or
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at each
Settlement Date, did not or will not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
not misleading; except that the foregoing shall not apply to statements in or
omissions from any such document in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of the Sales
Manager, specifically for use in the Registration Statement, the Prospectus or
any amendment or supplement thereto.
(c) The documents incorporated by reference in the Registration
Statement or the Prospectus, or any amendment or supplement thereto, when they
became or become effective under the Act or were or are filed with the
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the case may be, conformed or will conform in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder.
(d) The financial statements of the Company, together with the related
schedules and notes thereto, set forth or included or incorporated by reference
in the Registration Statement and Prospectus, fairly present the financial
condition of the Company as of the dates indicated and the results of
operations, changes in financial position, stockholders' equity, and cash flows
for the periods therein specified, in conformity with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise stated therein). The summary and selected financial and
statistical data included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the information shown therein and,
to the extent based upon or derived from the financial statements, have been
compiled on a basis consistent with the financial statements presented therein.
(e) The accountants who certified the financial statements and the
supporting schedules included in the Registration Statement are and, during the
periods covered by their reports, were independent public accountants as
required by the Act and the Rules and Regulations.
(f) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Maryland. Other than
as disclosed in the Registration Statement, the Company has no subsidiaries and
does not control, directly or indirectly, any corporation, partnership, limited
liability company, joint venture, association or other business organization.
The Company is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its business makes such
qualification necessary (including every jurisdiction in which it owns or leases
property), except for such jurisdictions where the failure to so qualify would
not have a Material Adverse Effect on the Company. For
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purposes of this Agreement, "Material Adverse Effect" means any adverse effect
on the business, operations, properties or financial condition of the Company
which is (either alone or together with all other adverse effects) material to
the Company, and any material adverse effect on the transactions contemplated
under this Agreement or any other agreement or document contemplated hereby or
thereby. Each of the Company's subsidiaries is validly existing as a
corporation, limited liability company or partnership, as applicable, in its
respective jurisdiction of formation. Schedule 1.1(f) hereto identifies each of
the Company's subsidiaries that is a significant subsidiary (as defined in
Section 1-02 of Regulation S-X) of the Company. All of the issued and
outstanding capital stock, limited liability company interests or partnership
interests, as applicable, of each subsidiary has been duly authorized and
validly issued, is fully paid and nonassessable and (except as otherwise
disclosed or incorporated by reference in the Registration Statement and the
Prospectus) is owned by the Company, directly, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity. Except as
disclosed or incorporated by reference in the Registration Statement and the
Prospectus, the Company does not own, lease or license any asset or property or
conduct any business outside the United States of America. The Company has all
requisite corporate or limited liability company power and authority, as
applicable, and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental orders or
regulatory bodies or any other person or entity, to own, lease, license and
operate its assets and properties and conduct its business as now being
conducted and as described or incorporated by reference in the Registration
Statement and the Prospectus; except for such authorizations, approvals,
consents, orders, licenses, certificates and permits the absence of which would
not have a Material Adverse Effect; and no such authorization, approval,
consent, order, license, certificate or permit contains a materially burdensome
restriction other than as disclosed or incorporated by reference in the
Registration Statement and the Prospectus.
(g) The Company has good title to each of the items of personal
property which are reflected in the financial statements referred to in Section
1.1(d) or are referred to in the Registration Statement and the Prospectus or
any document incorporated by reference therein as being owned by the Company and
valid and enforceable leasehold interests in each of the items of real and
personal property which are referred to in the Registration Statement and the
Prospectus or any document incorporated by reference therein as being leased by
the Company, in each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those described in the Registration
Statement and the Prospectus and those which do not and will not have a Material
Adverse Effect.
(h) The Company has good and marketable title to, or leasehold
interests in, all properties and assets (including, without limitation,
mortgaged assets) as described in the Registration Statement and the Prospectus
or any document incorporated by reference therein, owned by the Company, free
and clear of all liens, charges, encumbrances or restrictions, except such as
are described in the Registration Statement and the Prospectus or any document
incorporated by reference therein.
(i) The debt financing employed by the Company to acquire its portfolio
of mortgage assets is not convertible into shares of common stock of the Company
or other equity interests in the Company.
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(j) There is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board pending
or, to the knowledge of the Company, threatened (and the Company does not know
of any basis therefor) against, or involving the assets, properties or
businesses of the Company which would materially adversely affect the value or
the operation of any such assets or otherwise have a Material Adverse Effect on
the Company except as described or incorporated by reference in the Registration
Statement.
(k) The Company maintains insurance (issued by insurers of recognized
financial responsibility) of the types and in the amounts generally deemed
adequate for its businesses and, to the knowledge of the Company, consistent
with insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect.
(l) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as described therein,
(i) there has not been any material adverse change in the assets or properties,
business, results of operations, prospects or condition (financial or otherwise)
of the Company, whether or not arising from transactions in the ordinary course
of business; (ii) the Company has not sustained any material loss or
interference with its assets, businesses or properties (whether owned or leased)
from fire, explosion, earthquake, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree; (iii) since the date of the latest
balance sheet, included or incorporated by reference in the Registration
Statement and the Prospectus, except as reflected therein, the Company has not
undertaken any liability or obligation, direct or contingent, except such
liabilities or obligations undertaken in the ordinary course of business; and
(iv) there has not been any transaction that is material to the Company, except
transactions in the ordinary course of business or as otherwise disclosed in the
Registration Statement and the Prospectus.
(m) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. Each document, instrument, contract and agreement of the Company
described in the Registration Statement or the Prospectus or incorporated by
reference therein or listed as exhibits to the Registration Statement is in full
force and effect and is valid and enforceable by and against the Company in
accordance with their terms, assuming the due authorization, execution and
delivery thereof by each of the other parties thereto except as otherwise
disclosed in the Registration Statement or Prospectus. The Company is not, nor
to the knowledge of the Company is any other party, in default in the observance
or performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred which with notice or lapse of time or both
would constitute such a default, which default or event would have a Material
Adverse Effect. No default exists, and no event has occurred which with notice
or lapse of time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company of any other
agreement or instrument to which the Company is a party or by which it or its
properties or business may be bound or affected, which default or event would
have a Material Adverse Effect.
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(n) The Company is not in violation of any term or provision of its
charter, by-laws or operating agreement, as applicable. The Company is not in
violation of any franchise, license, permit, judgment, decree, order, statute,
rule or regulation, where the consequences of such violation would have a
Material Adverse Effect.
(o) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company of
the Stock) will give rise to a right to terminate or accelerate the due date of
any payment due under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge,
encumbrance, claim, security interest, restriction or defect upon any properties
or assets of the Company pursuant to the terms of, any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company is a party or by
which either is bound, or any of its properties or businesses are bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or violate any provision of the charter or by-laws of
the Company, except for such consents or waivers which have already been
obtained and are in full force and effect.
(p) All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable and
none of the shares were issued in violation of any preemptive or other similar
right. The Stock, when issued and sold pursuant to this Agreement, will be duly
authorized and validly issued, fully paid and nonassessable and will not be
issued in violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any capital stock of the
Company or any security convertible into or exercisable or exchangeable for such
capital stock, except for standard dividend reinvestment plans. The Common Stock
and the Preferred Stock conform in all material respects to all statements
relating thereto contained in the Registration Statement and the Prospectus.
(q) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as (x) described or
referred to therein, or (y) are not material (as to clauses (i) and (ii) only),
are consistent with past practice (as to clauses (i) and (ii) only), and are
publicly disclosed, the Company has not (i) issued any securities or incurred
any liability or obligation, direct or contingent, except such liabilities or
obligations incurred in the ordinary course of business including, without
limitation, debt financing to acquire and develop properties, (ii) entered into
any transaction not in the ordinary course of business or (iii) declared or paid
any dividend or made any distribution on any shares of its capital stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its capital stock.
(r) Except as disclosed in the Registration Statement and Prospectus,
no holder of any security of the Company has the right, which has not been
waived, to have any security owned by such holder included in the Registration
Statement or any right to demand registration of any security owned by such
holder.
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(s) All necessary corporate or limited liability company action, as
applicable, has been duly and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement and the issuance and sale
of the Stock by the Company. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes and will
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. Each approval, consent, order,
authorization, designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this Agreement and the consummation of
the transactions contemplated hereby and the issuance and sale of the Stock by
the Company has been obtained or made and is in full force and effect. The Stock
is listed for trading on the Trading Market. For purposes of this Agreement, the
"Trading Market" is (i) the New York Stock Exchange, Inc., and (ii) each other
securities exchange on which the common stock of the Company is admitted for
trading.
(t) The Company has not incurred any liability for a fee, commission or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than as
contemplated hereby or as described in the Registration Statement.
(u) The Company is conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, except where the failure to be so in compliance would not
have a Material Adverse Effect.
(v) No transaction has occurred between or among the Company and any of
its officers or directors or any affiliate or affiliates of any such officer or
director that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(w) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
common stock or series B preferred stock of the Company to facilitate the sale
or resale of any of the Stock.
(x) The Company has filed all federal, state, local and foreign tax
returns which are required to be filed through the date hereof (and will file
all such tax returns when and as required to be filed after the date hereof), or
has received extensions thereof, and has paid all taxes shown on such returns to
be due on or prior to the date hereof (and will pay all taxes shown on such
returns to be due after the date hereof) and all assessments received by it to
the extent that the same are material and have become due.
(y) The Company has met the qualification requirements for a "real
estate investment trust" during its taxable years ending on or after December
31, 1999 and its proposed method of operations will enable it to continue to
meet the requirements for qualification and taxation as a "real estate
investment trust" under the Internal Revenue Code of 1986, as amended (the
"Code"), assuming no change in the applicable underlying law. The Company does
not know of any event which would cause or is likely to cause the Company to
fail to qualify as a "real estate investment trust" at any time.
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(z) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(aa) The Company's systems of internal accounting controls taken as a
whole are sufficient to meet the broad objectives of internal accounting control
insofar as those objectives pertain to the prevention or detection of errors or
irregularities in amounts that would be material in relation to the Company's
financial statements; and, to the best of the Company's knowledge, neither the
Company nor any employee or agent thereof has made any payment of funds of the
Company or received or retained any funds, and no funds of the Company have been
set aside to be used for any payment, in each case in violation of any law, rule
or regulation.
ARTICLE II.
SALE AND DELIVERY OF SECURITIES
2.1 (a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell through the Sales Manager, as agent, and the
Sales Manager agrees to sell, as agent for the Company, on a best efforts basis,
up to the Maximum Amount of the Stock during the term of this Agreement on the
terms set forth herein. The Stock will be sold from time to time in amounts and
at prices as directed by the Company and as agreed to by the Sales Manager.
(b) The Company or the Sales Manager may, upon notice to the other
party hereto by telephone (confirmed promptly by telecopy), at any time and from
time to time suspend the offering of Stock; provided, however, that such
suspension or termination shall not affect or impair the parties' respective
obligations with respect to the Stock sold hereunder prior to the giving of such
notice.
(c) The compensation to the Sales Manager for sales of Stock shall be
at the following commission rates for the shares of Stock sold under this
Agreement: 3.5% of the gross sales price per share ("sales proceeds") for the
first $4 million of aggregate sales proceeds raised under this Agreement in each
year (commencing with the date hereof); 3.0% of sales proceeds for the second $4
million of aggregate sales proceeds raised in such year; 2.5% of sales proceeds
for the third $4 million of aggregate sales proceeds raised in such year; and
2.0% of sales proceeds for any additional aggregate sales proceeds raised in
such year. For purposes of this section 2.1(c), the first year shall begin on
August 20, 2001 and end on August 31, 2002, and each subsequent year shall end
on the next succeeding August 31st. The remaining proceeds, after further
deduction for any transaction fees imposed by any governmental or
self-regulatory organization in respect to such sale shall constitute the net
proceeds to the Company for such Stock (the "Net Proceeds").
(d) The Company shall open and maintain a trading account (the "Trading
Account") at a clearing agent designated by the Sales Manager to facilitate the
transactions contemplated by this Agreement. The Net Proceeds from the sale of
the Stock shall be available in the Trading Account on the third business day
(or such other day as is industry practice for regular-way trading) following
each sale of the Stock (each, a "Settlement Date"). The Company shall effect the
delivery of the applicable number of shares of Common Stock and/or Preferred
Stock (as the
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case may be) to an account designated by the Sales Manager at The Depository
Trust Company on or before the Settlement Date of each sale hereunder. The Sales
Manager's compensation shall be withheld from the sales proceeds on each
Settlement Date and shall be paid to the Sales Manager.
(e) At each Settlement Date, the Company shall be deemed to have
affirmed each representation, warranty, covenant and other agreement contained
in this Agreement. Any obligation of the Sales Manager under this Agreement
shall be subject to the continuing accuracy of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the continuing satisfaction of the additional
conditions specified in Article IV of this Agreement.
(f) If the Company shall default on its obligation to deliver Stock on
any Settlement Date, the Company shall (i) hold the Sales Manager harmless
against any loss, claim or damage arising from or as a result of such default by
the Company and (ii) pay the Sales Manager any commission to which it would
otherwise be entitled absent such default.
ARTICLE III.
COVENANTS OF THE COMPANY
3.1 The Company covenants and agrees with the Sales Manager that:
(a) As promptly as practicable after the date of this Agreement, the
Company will (if not previously filed) file the Registration Statement to permit
sales of the Stock under the Act. The Company will use its best efforts to cause
the Registration Statement to become effective as promptly as possible
thereafter.
(b) During the period in which a prospectus relating to the Stock is
required to be delivered under the Act, the Company will notify the Sales
Manager promptly of the time when any subsequent amendment to the Registration
Statement has become effective or any subsequent supplement to the Prospectus
has been filed and of any request by the Commission for any amendment or
supplement to the Registration Statement or the Prospectus or for additional
information; the Company will prepare and file with the Commission, promptly
upon the Sales Manager's reasonable request, any amendments or supplements to
the Registration Statement or Prospectus that, in the Sales Manager's reasonable
opinion, may be necessary or advisable in connection with the sale of the Stock
pursuant to this Agreement; the Company will not file any amendment or
supplement to the Registration Statement or Prospectus unless a copy thereof has
been submitted to the Sales Manager a reasonable period of time before the
filing and the Sales Manager has not reasonably objected thereto; and it will
notify the Sales Manager at the time of filing thereof a copy of any document
that upon filing is deemed to be incorporated by reference in the Registration
Statement or Prospectus, which will then be available on the Company's website
at xxx.xxxxxxxx.xxx (and will furnish to the Sales Manager any such document
that is not available on the Company's website). The Company will cause each
amendment or supplement to the Prospectus to be filed with the Commission as
required pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations or, in the case
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of any document to be incorporated therein by reference, to be filed with the
Commission as required pursuant to the Exchange Act, within the time period
prescribed.
(c) The Company will advise the Sales Manager, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement, of
the suspension of the qualification of the Common Stock or Preferred Stock for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceeding for any such purpose; and it will promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such a
stop order should be issued.
(d) Within the time during which a prospectus relating to the Stock is
required to be delivered under the Act, the Company will comply with all
requirements imposed upon it by the Act and by the Rules and Regulations, as
from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Stock as contemplated by the provisions hereof and
the Prospectus. If during such period any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary to amend or supplement the
Registration Statement or Prospectus to comply with the Act, the Company will
promptly notify the Sales Manager to suspend the offering of Stock during such
period and the Company will amend or supplement the Registration Statement or
Prospectus (at the expense of the Company) so as to correct such statement or
omission or effect such compliance and will use its best efforts to have any
amendment or supplement to the Registration Statement or Prospectus declared
effective as soon as possible, unless the Company has reasonable business
reasons to defer public disclosure of the relevant information.
(e) The Company will use its best efforts to qualify the Stock for sale
under the securities laws of such jurisdictions as the Sales Manager designates
and to continue such qualifications in effect so long as required for the sale
of the Stock, except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction.
(f) The Company will furnish to the Sales Manager and its counsel (at
the expense of the Company) copies of the Registration Statement, the Prospectus
(including all documents incorporated by reference therein) and all amendments
and supplements to the Registration Statement or Prospectus that are filed with
the Commission during the period in which a prospectus relating to the Stock is
required to be delivered under the Act (including all documents filed with the
Commission during such period that are deemed to be incorporated by reference
therein), in each case as soon as available and in such quantities as the Sales
Manager may from time to time reasonably request and, in the case when the
Trading Market is a national securities exchange, the Company will also furnish
copies of the Prospectus to such exchange in accordance with Rule 153 of the
Rules and Regulations.
(g) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than 15 months after the end
of the Company's current
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fiscal quarter, an earnings statement (which need not be audited) covering a
12-month period that satisfies the provisions of Section 11(a) of the Act and
Rule 158 of the Rules and Regulations.
(h) The Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay all of its expenses
incident to the performance of its obligations hereunder (including, but not
limited to, any transaction fees imposed by any governmental or self-regulatory
organization with respect to transactions contemplated by this Agreement and any
blue sky fees) and will pay the expenses of printing all documents relating to
the offering. The Company will reimburse the Sales Manager for its reasonable
out-of-pocket costs and expenses incurred in connection with entering into this
Agreement, including, without limitation, reasonable travel, reproduction,
printing and similar expenses, as well as the reasonable fees and disbursements
of its legal counsel.
(i) The Company shall use its best efforts to list, subject to notice
of issuance, the Stock on the applicable Trading Market.
(j) The Company will apply the Net Proceeds from the sale of the Stock
as set forth in the Prospectus.
(k) The Company will not, directly or indirectly, offer or sell any
shares of common stock (other than the Common Stock) or securities convertible
into or exchangeable for, or any rights to purchase or acquire, common stock or
any shares of series B preferred stock (other than the Preferred Stock), during
the period from the date of this Agreement through the final Settlement Date for
the sale of Stock hereunder without (i) giving the Sales Manager at least one
business day prior written notice specifying the nature of the proposed sale and
the date of such proposed sale and (ii) suspending activity under this program
for such period of time as may reasonably be determined by agreement of the
Company and the Sales Manager; provided, however, that no such notice and
suspension shall be required in connection with the Company's issuance or sale
of (i) shares of common stock pursuant to any employee or director stock option
or benefits plan, stock ownership plan, dividend reinvestment plan, as such
plans may be amended from time to time, and (ii) common stock issuable upon
conversion of securities or the exercise of warrants, options or other rights in
effect or outstanding on the date hereof. Notwithstanding the foregoing, this
paragraph (k) shall not apply during periods that the Company is neither selling
Stock through the Sales Manager nor has requested the Sales Manager to sell
Stock.
(l) The Company will, at any time during the term of this Agreement, as
supplemented from time to time, advise the Sales Manager immediately after it
shall have received notice or obtain knowledge thereof, of any information or
fact that would alter or affect any opinion, certificate, letter and other
document provided to the Sales Manager pursuant to Article IV herein.
(m) Each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented or (ii) there is filed with the Commission any
document incorporated by reference into the Prospectus (other than a Current
Report on Form 8-K, unless the Sales Manager shall otherwise request), the
Company shall (unless the Company is not then selling Stock through the Sales
Manager and has not requested the Sales Manager to sell Stock) furnish
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or cause to be furnished to the Sales Manager forthwith a certificate dated the
date of filing with the Commission of such amendment, supplement or other
document, the date of effectiveness of amendment, as the case may be, in form
satisfactory to the Sales Manager to the effect that the statements contained in
the certificates referred to in Section 4.1(f) hereof that were last furnished
to the Sales Manager are true and correct at the time of such amendment,
supplement, filing, as the case may be, as though made at and as of such time
(except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such time) or, in
lieu of such certificates, certificates of the same tenor as the certificates
referred to in said Section 4.1(f), modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such certificate.
(n) Each time that (i) the Registration Statement or the Prospectus is
amended or supplemented (other than a pricing supplement filed pursuant to Rule
424(b)(2) of the Act with respect to the Registration Statement) or (ii) there
is filed with the Commission any document incorporated by reference into the
Prospectus (other than any quarterly report on Form 10-Q or any Current Report
on Form 8-K, unless the Sales Manager shall otherwise reasonably request), the
Company shall (unless the Company is not then selling Stock through the Sales
Manager and has not requested the Sales Manager to sell Stock) furnish or cause
to be furnished forthwith to the Sales Manager and to counsel to the Sales
Manager, a written opinion of Xxxxxxx & Xxxxx, LLP, counsel to the Company
("Company Counsel"), or other counsel satisfactory to the Sales Manager, dated
the date of filing with the Commission of such amendment, supplement or other
document and the date of effectiveness of such amendment, as the case may be, in
form and substance satisfactory to the Sales Manager, of the same tenor as the
opinion referred to in Section 4.1(d) hereof, but modified as necessary to
relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such opinion.
(o) Each time that the Registration Statement or the Prospectus shall
be amended or supplemented to include additional financial information or there
is filed with the Commission any document incorporated by reference into the
Prospectus which contains additional financial information, the Company shall
(unless the Company is not then selling Stock through the Sales Manager and has
not requested the Sales Manager to sell Stock) cause Ernst & Young LLP, or other
independent accountants satisfactory to the Sales Manager, forthwith to furnish
to the Sales Manager a letter, dated the date of effectiveness of such
amendment, or the date of filing of such supplement or other document with the
Commission, as the case may be, in form satisfactory to the Sales Manager, of
the same tenor as the letter referred to in Section 4.1(e) hereof but modified
to relate to the Registration Statement and the Prospectus, as amended and
supplemented to the date of such letter.
ARTICLE IV.
CONDITIONS OF THE SALES MANAGER'S OBLIGATIONS
4.1 The obligations of the Sales Manager to sell the Stock as provided
herein shall be subject to the accuracy, as of the date hereof, and as of each
Settlement Date contemplated under this Agreement, of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
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(a) The Registration Statement contemplated by Section 3.1(a) shall
have been declared effective. No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
shall have been instituted or, to the knowledge of the Company or the Sales
Manager, threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the Sales Manager's
reasonable satisfaction.
(b) The Sales Manager shall not have advised the Company that the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact that in the Sales Manager's
reasonable opinion is material, or omits to state a fact that in the Sales
Manager's reasonable opinion is material and is required to be stated therein or
is necessary to make the statements therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall not have been any material change in the capital
stock of the Company, or any material adverse change, or any development that
may reasonably be expected to cause a material adverse change, in the condition
(financial or other), business, prospects, net worth or results of operations of
the Company, or any adverse change in the rating assigned to any securities of
the Company.
(d) (1) The Sales Manager shall have received at the date of the first
sale of Stock hereunder (the "Commencement Date") and at every other date
specified in Section 3.1(n) hereof, opinions of Company Counsel, dated as of the
Commencement Date and dated as of such other date, in the form of Exhibit A
hereto.
(2) The Sales Manager shall have received a letter from Company
Counsel authorizing the Sales Manager to rely on the opinion on tax matters
delivered by Company Counsel as Exhibit 8.1 to the Registration Statement (which
opinion must be reasonably satisfactory to the Sales Manager).
(e) At the Commencement Date and at such other dates specified in
Section 3.1(o) hereof, the Sales Manager shall have received a "comfort letter"
from Ernst & Young LLP, independent public accountants for the Company, or other
independent accountants satisfactory to the Sales Manager, dated the date of
delivery thereof, in form and substance satisfactory to the Sales Manager.
(f) The Sales Manager shall have received from the Company a
certificate, or certificates, signed by the Chief Financial Officer and
Executive Vice President of the Company, dated as of the Commencement Date and
(unless the Company is not then selling Stock through the Sales Manager and has
not requested the Sales Manager to sell Stock) dated as of the first business
day of each calendar month thereafter (each, a "Certificate Date"), to the
effect that, to the best of their knowledge based upon reasonable investigation:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made at and as of the
Commencement Date or the Certificate Date (as the case may be), and the
Company has complied with all the agreements and
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satisfied all the conditions on its part to be performed or satisfied
at or prior to the Commencement Date and each such Certificate Date (as
the case may be);
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that
purpose has been instituted or, to the knowledge of such officer after
due inquiry, is threatened, by the Commission;
(iii) Since the date of this Agreement there has occurred no
event required to be set forth in an amendment or supplement to the
Registration Statement or Prospectus that has not been so set forth and
there has been no document required to be filed under the Exchange Act
and the rules and regulations of the Commission thereunder that upon
such filing would be deemed to be incorporated by reference in the
Prospectus that has not been so filed; and
(iv) Since the date of this Agreement, there has not been any
material adverse change in the assets or properties, business, results
of operations, prospects or condition (financial or otherwise) of the
Company, which has not been described in an amendment or supplement to
the Registration Statement or Prospectus (directly or by
incorporation).
(g) At the Commencement Date and on each Settlement Date, the Company
shall have furnished to the Sales Manager such appropriate further information,
certificates and documents as the Sales Manager may reasonably request.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to the Sales Manager. The Company will furnish the Sales Manager with
such conformed copies of such opinions, certificates, letters and other
documents as the Sales Manager shall reasonably request.
ARTICLE V.
INDEMNIFICATION AND CONTRIBUTION
5.1 (a) The Company agrees to indemnify and hold harmless the Sales
Manager and each person, if any, who controls the Sales Manager within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
representations in this Agreement or contained in the Registration
Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
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(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 5(c) hereof, the reasonable fees and
disbursements of counsel chosen by the Sales Manager), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Sales Manager expressly for use in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(b) The Sales Manager agrees to indemnify and hold harmless the Company
and its directors and each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in Section 5.1(a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendments thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by the Sales
Manager expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto). The total liability of the Sales Manager under this Section
5.1(b) shall not exceed the total actual sales price of Stock sold by the Sales
Manager that is the subject of the dispute.
(c) Any indemnified party that proposes to assert the right to be
indemnified under this Article V will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Article V, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from any liability that it might have to
any indemnified party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that it
elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel
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reasonably satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Article V is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Sales Manager, the
Company and the Sales Manager will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Sales Manager, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company
and the Sales Manager may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand and the
Sales Manager on the other. The relative benefits received by the Company on the
one hand and the Sales Manager on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total compensation (before
deducting expenses) received by the Sales Manager from the sale of Stock on
behalf of the Company. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault of the Company, on the one hand, and the Sales Manager, on the other, with
respect to the statements or omission which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such
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offering. Such relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Sales Manager, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Sales Manager agree that it would not be just and
equitable if contributions pursuant to this Section 5.1(d) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in this
Section 5.1(d) shall be deemed to include, for the purpose of this Section
5.1(d), any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the foregoing provisions of this Section 5.1(d), the Sales
Manager shall not be required to contribute any amount in excess of the amount
by which the total actual sales price at which Stock sold by the Sales Manager
exceeds the amount of any damages that the Sales Manager has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 5.1(d), any person who controls
a party to this Agreement within the meaning of the Act will have the same
rights to contribution as that party, and each officer and director of the
Company who signed the Registration Statement will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim for contribution
may be made under this Section 5.1(d), will notify any such party or parties
from whom contribution may be sought, but the omission so to notify will not
relieve that party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 5.1(d). No party will be
liable for contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution provided by this Article V shall not
relieve the Company and the Sales Manager from any liability the Company and the
Sales Manager may otherwise have (including, without limitation, any liability
the Sales Manager may have for a breach of its obligations under Article II
hereof).
ARTICLE VI.
REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY
6.1 All representations, warranties and agreements of the Company
herein or in certificates delivered pursuant hereto, and the agreements of the
Sales Manager contained in Article V hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Sales Manager or any controlling persons, or the Company (or any of their
officers, directors or controlling persons), and shall survive delivery of and
payment for the Stock.
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ARTICLE VII.
TERMINATION
7.1 The Sales Manager shall have the right by giving notice as
hereinafter specified at any time at or prior to any Settlement Date, to
terminate this Agreement if (i) any material adverse change, or any development
that has actually occurred and that is reasonably expected to cause material
adverse change, in the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company has occurred
which, in the judgment of the Sales Manager, materially impairs the investment
quality of the Stock, (ii) the Company shall have failed, refused or been
unable, at or prior to any Settlement Date, to perform any agreement on its part
to be performed hereunder, (iii) any other condition of the Sales Manager's
obligations hereunder is not fulfilled, (iv) any suspension or limitation of
trading in the Stock on the Trading Market, or any setting of minimum prices for
trading of the Stock on such Trading Market, shall have occurred, (v) any
banking moratorium shall have been declared by Federal or New York authorities
or (vi) an outbreak or material escalation of major hostilities in which the
United States is involved, a declaration of war by Congress, any other
substantial national or international calamity or any other event or occurrence
of a similar character shall have occurred since the execution of this Agreement
that, in the judgment of the Sales Manager, makes it impractical or inadvisable
to proceed with the completion of the sale of and payment for the Stock to be
sold by the Sales Manager on behalf of the Company. Any such termination shall
be without liability of any party to any other party except that the provisions
of Section 3.1(h), Article V and Article VI hereof shall remain in full force
and effect notwithstanding such termination. If the Sales Manager elects to
terminate this Agreement as provided in this Article, the Sales Manager shall
provide the required notice as specified herein.
7.2 The Company shall have the right, by giving notice as hereinafter
specified, to terminate this Agreement in its sole discretion at any time. Any
such termination shall be without liability of any party to any other party
except that the provisions of Section 3.1(h), Article V and Article VI hereof
shall remain in full force and effect notwithstanding such termination.
7.3 The Sales Manager shall have the right, by giving notice as
hereinafter specified, to terminate this Agreement in its sole discretion at any
time. Any such termination shall be without liability of any party to any other
party except that the provisions of Article 3.1(h), Article V and Article VI
hereof shall remain in full force and effect notwithstanding such termination.
7.4 This Agreement shall remain in full force and effect unless
terminated pursuant to Section 7.1, 7.2 or 7.3 above or otherwise by mutual
agreement of the parties; provided that any such termination by mutual agreement
shall in all cases be deemed to provide that Section 3.1(h), Article V and
Article VI shall remain in full force and effect.
7.5 Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by the Sales Manager or the Company, as the case may be. If such
termination shall occur during a period when sales of Stock are being made
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pursuant to this Agreement, any sales of Stock made prior to the termination of
this Agreement shall settle in accordance with the provisions of this Agreement.
ARTICLE VIII.
NOTICES
8.1 All notices or communications hereunder shall be in writing and if
sent to the Sales Manager shall be mailed, delivered or telecopied and confirmed
to the Sales Manager at RCG Equity Finance, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, facsimile number (000) 000-0000, Attention: Corporate Finance, or if sent
to the Company, shall be mailed, delivered or telecopied and confirmed to the
Company at Capstead Mortgage Corporation, 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000, facsimile number (000) 000-0000, Attention: Xx. Xxxxxx X.
Xxxxxx. Each party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.
ARTICLE IX.
MISCELLANEOUS
9.1 This Agreement shall inure to the benefit of and be binding upon
the Company and the Sales Manager and their respective successors and the
controlling persons, officers and directors referred to in Article V hereof, and
no other person will have any right or obligation hereunder.
9.2 This Agreement constitutes the entire agreement and supersedes all
other prior and contemporaneous agreements and undertakings, both written and
oral, among the parties hereto with regard to the subject matter hereof.
9.3 THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
9.4 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The parties agree that this Agreement will be
considered signed when the signature of a party is delivered by facsimile
transmission. Such facsimile transmission shall be treated in all respects as
having the same effect as an original signature.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
Capstead Mortgage Corporation
By:
-----------------------------
Name:
Title:
RCG Equity Finance, a division of RAMIUS
SECURITIES, LLC
By:
-----------------------------
Name:
Title:
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SCHEDULE 1.1(f)
LIST OF SIGNIFICANT SUBSIDIARIES
PARENT COMPANY SUBSIDIARY STTE OF DOMICILE
Capstead Mortgage Corporation ("CMC")............................................... Maryland
Capstead Advisers, Inc......................................................... Nevada
Capstead Securities Corporation III............................................ Delaware
