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EXHIBIT 10.35
SUPPLEMENTAL AGREEMENT
TO
THE STOCK PURCHASE AGREEMENT
THIS SUPPLEMENTAL AGREEMENT TO THE STOCK PURCHASE AGREEMENT (this
"Agreement"), dated as of December 9, 1999, is by and among FORTRESS INVESTMENT
CORP., a Maryland corporation ("Fortress"), and CAPSTEAD MORTGAGE CORPORATION, a
Maryland corporation ("Capstead").
WHEREAS, Fortress and Capstead are entering into a Series C and Series
D Convertible Preferred Stock Purchase Agreement, dated as of the date hereof
(the "Purchase Agreement"), pursuant to which Fortress is purchasing from
Capstead 5,378,000 shares of a series of Capstead's preferred stock to be
designated as Series C Convertible Preferred Stock, $0.10 par value per share
(the "Series C Preferred Stock"), and 5,378,000 shares of a series of Capstead's
preferred stock to be designated as Series D Convertible Preferred Stock, $0.10
par value per share (the "Series D Preferred Stock," and, together with the
Series C Preferred Stock, the "Preferred Stock") for total consideration of
$51,200,000 (the "Purchase Price");
WHEREAS, the execution and delivery of this Agreement by Capstead and
Fortress is a condition to closing under the Preferred Stock Purchase Agreement;
WHEREAS, the board of directors of Capstead (the "Board") has
determined to hold a special meeting (the "Special Meeting") of the holders of
Capstead's common stock, par value $0.01 per share (the "Common Stock"), at
which such holders will vote upon certain matters that may require their
approval (collectively, the "Proposal") and a reverse stock split of the Common
Stock; and
WHEREAS, Fortress and Capstead deem it in their best interests to enter
into this Agreement in order to set forth certain rights and obligations in
connection with the ongoing management of Capstead;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, representations, warranties, covenants and conditions herein set
forth, and other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
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1. Conduct of Capstead's Business. From the date hereof until the
earlier to occur of (i) the approval of the Proposal at the Special Meeting and
the consummation of the actions contemplated thereby and (ii) Fortress' receipt
of the Put/Call Payment (defined below) or the termination of the rights and
obligations of Capstead and Fortress under Section 2 hereof as set forth in
subsection 2(c) (the "Transition Period"), except as otherwise expressly set
forth in this Agreement, and except for costs and expenses reasonably incurred
in connection with the transactions contemplated by this Agreement, Capstead
shall conduct the business, operations, activities and practices of Capstead and
its Subsidiaries only in the ordinary course, in accordance with prudent
practice and consistent with past practice established in 1999; provided that
(a) Capstead shall not enter into any new agreements or arrangements with
Persons that are Affiliates (other than its consolidated subsidiaries) or, as of
the date hereof, are executive officers or directors of Capstead or its
Subsidiaries and (b) Capstead may, in conjunction with Fortress, design and
implement certain policies with respect to mitigating interest rate risk and
repositioning Capstead's current portfolio.
2. Fortress Put/Capstead Call.
a. Fortress Put. In the event that one or more of the
following shall not have occurred as of the respective dates set forth
below:
i. Prior to or concurrently with the execution of this
Agreement, the Board shall have passed resolutions
pursuant to which the Board shall have (a) increased
the number of directors comprising the Board from six
to eight and appointed Xxxxxx Xxxxx and Xxxxxx
Xxxxxxxx to fill the vacancies created thereby to
serve on the Board until the next annual meeting of
stockholders and until their successors are elected
and qualified and (b) exempted Fortress' purchase of
the Preferred Stock and subsequent acquisition of
Common Stock pursuant to Section 6 hereof from (i)
the application of Article VIII of Capstead's
Articles of Incorporation, (ii) Section 3-602 of the
Maryland General Corporation Law ("MGCL") prohibiting
business combinations with Interested Stockholders
(as such term is defined in Section 3-601 of the
MGCL) and (iii) Section 3-701 et. seq. of the MGCL;
and
ii. The Proposal shall have been approved by Capstead's
stockholders at the Special Meeting, which Special
Meeting
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shall be held as soon as practicable, but in no event
later than April 30, 2000;
iii. Effective as of the date of the Special Meeting,
Xxxxx Xxxxxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx,
and Xxxx X. Xxxxxxxx shall have resigned their
positions as directors on the Board and the Board
shall have adopted resolutions to (a) reduce the
number of Board members from eight to seven, (b)
appoint Xxxxxx Xxxxx Chairman of the Board and Chief
Executive Officer and Xxxx Xxxxx Vice Chairman of the
Board; (c) appoint three individuals to fill the
vacancies on the Board created by such resignations,
provided, that (x) one of such individuals shall have
been nominated by Xxxx Xxxxx and Xxxx Xxx and (y) two
of such individuals shall have been nominated by
Xxxxxx Xxxxx and Xxxxxx Xxxxxxx, provided, that such
two individuals shall be "independent directors" for
purposes of the Securities Exchange Act of 1934, as
amended, Section 3-802 of the MGCL, Section 162(m) of
the Internal Revenue Code of 1986, and the rules of
the New York Stock Exchange; and
iv. During the Transition Period, Capstead shall have
conducted the business, operations, activities and
practices of Capstead and its Subsidiaries in
accordance with Section 1 hereof (except actions
taken outside such scope at the request or with the
approval of Fortress) and there shall not have been a
Material Adverse Change (other than a Material
Adverse Change directly resulting from any action
taken at the request or with the approval of
Fortress). "Material Adverse Change" means, with
respect to Capstead, any direct or indirect change,
occurrence or effect (other than as a result of
changes in general conditions, including economical
or political developments, applicable to the industry
in which Capstead operates) on the business,
operations, properties (including tangible
properties), condition (financial or otherwise),
assets, obligations or liabilities (whether absolute,
contingent or otherwise and whether due or to become
due) of Capstead and its subsidiaries taken as a
whole that reasonably could be expected to be
materially adverse to Capstead;
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then Fortress shall have the right to cause Capstead to purchase from
Fortress all, but not less than all, of the Preferred Stock (the
"Fortress Put"), for a price equal to 103% of the Purchase Price plus
any and all accrued and unpaid dividends on the Preferred Stock (the
"Put/Call Payment").
b. Capstead Call. In the event that the Proposal is not
approved at the Special Meeting, then Capstead shall have the right to
cause Fortress to sell to Capstead all, but not less than all, of the
Preferred Stock (the "Capstead Call") for the Put/Call Payment.
c. The sale or purchase of Preferred Stock pursuant to this
Section 2 (the "Put/Call Closing") shall occur on such date as the
parties hereto may agree, which date shall be within one month after
delivery by the party exercising its rights under this Section 2 of
written notice to the other party hereto to the effect that it is
exercising its rights pursuant to this Section 2. Payment of the
Put/Call Payment shall be made by wire transfer in immediately
available funds unless some other form of consideration is agreed to by
the parties hereto. On or prior to the Put/Call Closing, Fortress shall
deliver to Capstead and Capstead shall deliver to Fortress all
documents reasonably required to be executed in connection with the
sale or purchase of Preferred Stock pursuant to this Section 2.
d. The rights and obligations, if any, of Capstead and
Fortress under this Section 2 shall terminate and be of no further
force and effect upon the later to occur of (i) the expiration of the
30 day period following the date of the Special Meeting and (ii) May
31, 2000.
3. Fortress Put Upon a Change in Control of Capstead.
a. At any time after the approval of the Proposal at the Special
Meeting and prior to the 5th anniversary of the date hereof, in the
event of a Change in Control of Capstead, Fortress shall have the right
to cause Capstead to purchase from Fortress all, but not less than all,
of the Preferred Stock then outstanding (the "Change in Control Put")
for the Purchase Price multiplied by a fraction, the numerator of which
shall be the number of shares of Preferred Stock then outstanding and
the denominator of which shall be 10,756,000, plus any and all accrued
and unpaid dividends on such Preferred Stock. For purposes hereof, a
"Change in Control" of Capstead shall be deemed to have occurred upon
any of the following events:
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i. any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than Fortress and
its affiliates) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Capstead
representing 25 percent or more of the voting power
of Capstead's then outstanding securities;
ii. at any time subsequent to the date the Board is
reconstituted in accordance with the provisions of
subsection 2(a)(iii) hereof and during any period of
two consecutive years thereafter, individuals (a) who
were elected to the Board by a vote of at least
two-thirds (2/3) of the Board at the beginning of
such period or (b) whose nomination for election by
Capstead's stockholders was approved by a vote of at
least two-thirds (2/3) of the Board at the beginning
of such period or (c) whose election or nomination
for election was previously so approved, cease for
any reason to constitute at least a majority of the
Board of Directors of Capstead; or
iii. Capstead shall be party to a merger, consolidation,
share exchange, tender offer or similar transaction
or a purchase or other acquisition of all or a
significant portion of the assets of Capstead (a
"Business Combination"), except a Business
Combination approved by Xxxxxx Xxxxx and Xxxxxx
Xxxxxxxx or their Fortress-approved successors.
b. The purchase of Preferred Stock pursuant to this Section 3
shall occur on such date as the parties hereto may agree, which date
shall be within one month after delivery by Fortress of written notice
to Capstead to the effect that it is exercising its rights pursuant to
this Section 3. Payment shall be made to Fortress by wire transfer in
immediately available funds unless some other form of consideration is
agreed to by the parties hereto. On or prior to the purchase of
Preferred Stock pursuant to this Section 3, Fortress shall deliver to
Capstead and Capstead shall deliver to Fortress all documents
reasonably required to be executed in connection with the purchase of
Preferred Stock pursuant to this Section 3.
4. Services Agreement. If (i) the Proposal is approved at the Special
Meeting and the actions contemplated thereby are consummated, (ii) the merger
(the
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"Merger") of Impac Commercial Holdings, Inc., a Maryland corporation, with and
into AMRESCO Capital Trust, a Texas real estate investment trust ("AMRESCO"), is
consummated and (iii) Fortress has not exercised either the Fortress Put or the
Change in Control Put and Capstead has not exercised the Capstead Call, then
Fortress (or its designated Affiliate), the surviving entity of the Merger and
Capstead (or a subsidiary thereof) shall promptly enter into a Services
Agreement mutually satisfactory to the parties thereto for the provision of
services at fair market prices by Capstead to the surviving entity of the
Merger, including, but not limited, to (a) office space in Capstead's existing
offices at Lincoln Park, 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxx, Xxxxx; (b)
office management, including payroll; (c) stockholder relations; (d) financial
reporting; (e) accounting and tax services; (f) mail room services; and (g)
receptionist services.
5. Employment Matters.
a. Subject to approval of the Proposal at the Special Meeting,
Capstead shall take all necessary action as soon as practicable
thereafter to:
i. Have an individual designated by Fortress appointed
to the position of Chief Investment Officer of
Capstead;
ii. Have Xxxxxx X. Xxxxxx appointed to the positions of
Executive Vice President and Chief Financial Officer
of Capstead; and
b. Subject to approval of the Proposal at the Special Meeting,
Capstead will take all necessary action to, and Fortress will not take
any action to prevent Capstead from taking any action to:
i. For at least three years after the date of the
Special Meeting, maintain all of Capstead's
obligations, arrangements, policies or practices to
provide benefits, including officer grade, salary,
bonus and incentive compensation, as compensation for
services rendered by employees of Capstead at levels
that are no less favorable than those in place as of
the date hereof and set forth on a side letter
delivered to Fortress concurrently herewith,
provided, that this obligation shall cease to exist
upon a Change in Control of Capstead;
ii. For at least three years after the date of the
Special Meeting, provide coverage of medical, dental,
life insurance accidental
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death and disability insurance, long term disability,
Flexible Spending Account, 401k, deferred
compensation plan and travel accident insurance at
levels that are no less favorable than those in place
as of the date hereof and set forth on a side letter
delivered to Fortress concurrently herewith,
provided, that this obligation shall cease to exist
upon a Change in Control of Capstead.
6. Common Stock Acquisition. Subject to approval of the Proposal at the
Special Meeting, Fortress or its designated Affiliate will, within the six-month
period following the date of the Special Meeting, acquire no less than five
million shares of Common Stock through, at Fortress' option, (i) open-market
purchases, (ii) the conversion of Preferred Stock or (iii) any combination
thereof; provided, that purchases by Fortress and/or its Affiliates of Common
Stock from and after the date hereof and to and including the date of the
Special Meeting (which shall not exceed 3,300,000 shares) shall be considered as
part of such five million shares of Common Stock; and provided, further, that
this Section 6 and Fortress' obligation hereunder shall terminate and be of no
further force and effect upon exercise of the Fortress Put, Change in Control
Put or Capstead Call.
7. Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and mailed or
facsimiled or delivered by hand or courier service:
If to Fortress, to: Fortress Investment Corp.
1301 Avenue of the Americas, 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Facsimile No. (000) 000-0000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: J. Xxxxxxx Xxxxxx, Esq.
Facsimile No. (000) 000-0000
If to Capstead, to: Capstead Mortgage Corporation
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
Facsimile No. (000) 000-0000
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With a copy to: Xxxxxxx & Xxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile No. (000) 000-0000
8. Entire Agreement. This Agreement (including the attachments hereto)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior or contemporary agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
9. Termination. This Agreement will automatically terminate and be of
no further force and effect at such time that (i) Fortress has received payment
of the applicable payment pursuant to exercise of the Fortress Put, Capstead
Call or Change in Control Put or (ii) Fortress no longer owns Preferred Stock or
Common Stock acquired pursuant to the Preferred Stock Purchase Agreement.
10. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
11. Assignment. This Agreement and the rights hereunder shall not be
assignable or transferable by either party (except (i) by Fortress to any of its
Affiliates and (ii) by operation of law in connection with a merger,
consolidation, or sale of all or substantially all the assets of either party)
without the prior written consent of the other party. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and permitted assigns.
12. Amendment and Modification. This Agreement may be amended,
modified, or supplemented at any time only by an instrument in writing signed on
behalf of the parties hereto.
13. Specific Performance. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with its specific
terms or were otherwise breached, irreparable damage would occur, no adequate
remedy at law would exist, and damages would be difficult to determine, and that
the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
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14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
15. Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
16. Certain Definitions.
a. An "Affiliate" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first Person;
b. Capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Purchase Agreement.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
18. Third-Party Beneficiaries. Nothing contained in this Agreement
shall be construed to give any person other than Fortress and Capstead, and
their successors and assigns, any legal or equitable right, remedy, or claim
under or with respect to this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
CAPSTEAD MORTGAGE CORPORATION
By: /s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
Executive Vice President-Finance
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FORTRESS INVESTMENT CORP.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Chief Operating Officer
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