EXHIBIT 10.2
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PURCHASE AGREEMENT
among
CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE TRUST I
and
BEAR, XXXXXXX & CO. INC.
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Dated as of September 23, 2005
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PURCHASE AGREEMENT
($17,500,000 Trust Preferred Securities)
THIS PURCHASE AGREEMENT, dated as of September 23, 2005 (this "Purchase
Agreement"), is entered into among Capstead Mortgage Corporation, a Maryland
corporation (the "Company"), Capstead Mortgage Trust I, a Delaware statutory
trust (the "Trust", and together with the Company, the "Sellers"), and Bear,
Xxxxxxx & Co. Inc. or its assignee. (the "Purchaser").
WITNESSETH:
WHEREAS, the Trust proposes to issue and sell 17,500 Preferred Securities
of the Trust, having a stated liquidation amount of $1,000 per security, bearing
a fixed rate of interest for the ten-year period commencing with the issue date
and a variable rate, reset quarterly equal to LIBOR (as defined in the
Indenture) plus 3.50% for the twenty-year period commencing on the tenth
anniversary of the issue date (the "Preferred Securities");
WHEREAS, the entire proceeds from the sale of the Preferred Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the "Common Securities"), and will be used by
the Trust to purchase unsecured junior subordinated notes of the Company (the
"Junior Subordinated Notes");
WHEREAS, the Preferred Securities and the Common Securities for the Trust
will be issued pursuant to the Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of the Closing Date, among the Company, as depositor,
Xxxxx Fargo Bank, National Association, a national banking association, as
property trustee (in such capacity, the "Property Trustee"), Xxxxx Fargo
Delaware Trust Company, a national banking association, as Delaware trustee (in
such capacity, the "Delaware Trustee"), the Administrative Trustees named
therein (in such capacities, the "Administrative Trustees") and the holders from
time to time of undivided beneficial interests in the assets of the Trust; and
WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior
Subordinated Indenture, dated as of the Closing Date (the "Indenture"), between
the Company and Xxxxx Fargo Bank, National Association, a national banking
association, as indenture trustee (in such capacity, the "Indenture Trustee").
NOW, THEREFORE, in consideration of the mutual agreements and subject to
the terms and conditions herein set forth, the parties hereto agree as follows:
1. DEFINITIONS. The Preferred Securities, the Common Securities and
the Junior Subordinated Notes are collectively referred to herein as the
"Securities." This Purchase Agreement, the Indenture, the Trust Agreement and
the Securities are collectively referred to herein as the "Operative Documents."
All other capitalized terms used but not defined in this Purchase Agreement
shall have the respective meanings ascribed thereto in the Indenture.
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2. PURCHASE AND SALE OF THE PREFERRED SECURITIES.
(a) The Trust agrees to sell to the Purchaser, and the Purchaser
agrees to purchase from the Trust the Preferred Securities for an amount (the
"Purchase Price") equal to $17,500,000. The Purchaser shall be responsible for
the rating agency costs and expenses. The Trust shall use the Purchase Price,
together with the proceeds from the sale of the Common Securities, to purchase
the Junior Subordinated Notes.
(b) Delivery or transfer of, and payment for, the Preferred
Securities shall be made at 11:00 A.M. Eastern Standard time (11:00 A.M. New
York time), on September 26, 2005, (such date and time of delivery and payment
for the Preferred Securities being herein called the "Closing Date"). The
Preferred Securities shall be transferred and delivered to the Purchaser against
the payment of the Purchase Price to the Trust or the Company made by wire
transfer in immediately available funds on the Closing Date to a U.S. account
designated in writing by the Company at least two business days prior to the
Closing Date.
(c) Delivery of the Preferred Securities shall be made at such
location, and in such names and denominations, as the Purchaser shall designate
at least two business days in advance of the Closing Date. The Company and the
Trust agree to have the Preferred Securities available for inspection and
checking by the Purchaser not later than 2:00 P.M., Eastern Standard time, on
the business day prior to the Closing Date. The closing for the purchase and
sale of the Preferred Securities shall occur at the offices of DLA Xxxxx Xxxxxxx
Xxxx Xxxx US LLP, 0000 X. Xxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, or
such other place as the parties hereto shall agree.
3. CONDITIONS. The obligations of the parties under this Purchase
Agreement are subject to the following conditions:
(a) The representations and warranties contained herein shall be
accurate as of the date of delivery of the Preferred Securities.
(b) The Purchaser shall have sold securities issued by it in such an
amount that the net proceeds therefrom shall be available on the Closing Date
and shall be sufficient to purchase the Preferred Securities and all other
preferred securities contemplated in agreements similar to this Agreement.
(c) Each of Xxxxxxx Xxxxx LLP and Xxxxx & Xxxxxxx L.L.P., counsel
for the Company and the Trust (each, the "Company Counsel"), shall have
delivered an opinion, dated the Closing Date, addressed to the Purchaser,
Taberna Capital Management, LLC and Xxxxx Fargo Bank, National Association, in
substantially the form set out for such Company Counsel in Annex A-I hereto and
(ii) the Company shall have furnished to the Purchaser a certificate signed by
the Company's Chief Executive Officer, President, a Senior Vice President, Chief
Financial Officer, or Treasurer, dated the Closing Date, addressed to the
Purchaser, in substantially the form set out in Annex A-II hereto. In rendering
their opinion, the Company Counsel may rely as to factual matters upon
certificates or other documents furnished by officers, directors and trustees of
the Company and the Trust and by government officials (provided, however, that
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copies of any such certificates or documents are delivered to the Purchaser) and
by and upon such other documents as such counsel may, in their reasonable
opinion, deem appropriate as a basis for the Company Counsel's opinion. The
Company Counsel 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 Company Counsel
is not admitted to practice in the State of New York, the opinion of the Company
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 Company Counsel Opinion 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).
(d) The Purchaser shall have been furnished the opinion of DLA Xxxxx
Xxxxxxx Xxxx Xxxx US LLP, special tax counsel for the Purchaser, dated the
Closing Date, addressed to the Purchaser, the Company and Xxxxx Fargo Bank,
National Association, in substantially the form set out in Annex B hereto.
(e) The Purchaser shall have received the opinion of Potter Xxxxxxxx
& Xxxxxxx, LLP, special Delaware counsel for the Delaware Trustee, dated the
Closing Date, addressed to the Purchaser and its successors and assigns, Xxxxx
Fargo Delaware Trust Company, the Delaware Trustee and the Company, in
substantially the form set out in Annex C hereto.
(f) The Purchaser shall have received the opinion of Potter Xxxxxxxx
& Xxxxxxx, LLP, special counsel for the Property Trustee and the Indenture
Trustee, dated the Closing Date, addressed to the Purchaser and the Company, in
substantially the form set out in Annex D hereto.
(g) The Purchaser shall have received the opinion of Potter Xxxxxxxx
& Xxxxxxx, LLP, special Delaware counsel for the Delaware Trustee, dated the
Closing Date, addressed to the Purchaser, the Company and Xxxxx Fargo Delaware
Trust Company, in substantially the form set out in Annex E hereto.
(h) The Company shall have furnished to the Purchaser a certificate
of the Company, signed by the Chief Executive Officer, President or a Senior
Vice President, and Chief Financial Officer, or Treasurer of the Company, and
the Trust shall have furnished to the Purchaser a certificate of the Trust,
signed by an Administrative Trustee of the Trust, in each case dated the Closing
Date, and, in the case of the Company, as to (i) and (ii) below and, in the case
of the Trust, as to (i) below.
(i) the representations and warranties in this Purchase
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date, and the Company and the Trust have
complied with all the agreements and satisfied all the conditions on
either of their part to be performed or satisfied at or prior to the
Closing Date; and
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(ii) since June 30, 2005 (the date of the latest Financial
Statements), there has been no material adverse change in the condition
(financial or other), earnings, business, liabilities or assets of the
Company and its subsidiaries taken as a whole, whether or not arising from
transactions occurring in the ordinary course of business (a "Material
Adverse Change").
(i) Subsequent to the execution of this Purchase Agreement, there
shall not have been any change in or affecting the condition (financial or
other), earnings, business or assets of the Company and its subsidiaries,
whether or not occurring in the ordinary course of business, the effect of which
is, in the Purchaser's reasonable judgment, so material and adverse as to make
it impractical or inadvisable to proceed with the purchase of the Preferred
Securities.
(j) Prior to the Closing Date, the Company and the Trust shall have
furnished to the Purchaser and its counsel such further information,
certificates and documents as the Purchaser or its counsel may reasonably
request.
If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as provided in this Purchase Agreement, or if any of the
opinions, certificates and documents mentioned above or elsewhere in this
Purchase Agreement shall not be reasonably satisfactory in form and substance to
the Purchaser or its counsel, this Purchase Agreement and all the Purchaser's
obligations hereunder may be canceled at, or at any time prior to, the Closing
Date by the Purchaser. Notice of such cancellation shall be given to the Company
and the Trust in writing or by telephone or facsimile confirmed in writing.
Each certificate signed by any trustee of the Trust or any officer of the
Company and delivered to the Purchaser or the Purchaser's counsel in connection
with the Operative Documents and the transactions contemplated hereby and
thereby shall be deemed to be a representation and warranty of the Trust and/or
the Company, as the case may be, and not by such trustee or officer in any
individual capacity.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE TRUST. The
Company and the Trust jointly and severally represent and warrant to, and agree
with the Purchaser, as follows:
(a) Neither the Company nor the Trust, nor any of their "Affiliates"
(as defined in Rule 501(b) of Regulation D ("Regulation D") under the Securities
Act (as defined below)), nor any person acting on its or 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 of any of the Securities under the Securities Act of 1933, as
amended (the "Securities Act").
(b) Neither the Company nor the Trust, nor any of their Affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of any of the Securities.
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(c) The Securities (i) are not and have not been listed on a
national securities exchange registered under section 6 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or quoted on a U.S.
automated inter-dealer quotation system and (ii) are not of an open-end
investment company, unit investment trust or face-amount certificate company
that are, or are required to be, registered under section 8 of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), and the
Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3)
promulgated pursuant to the Securities Act ("Rule 144A(d)(3)").
(d) Neither the Company nor the Trust, nor any of their Affiliates,
nor any person acting on its or their behalf, has engaged, or will engage, in
any "directed selling efforts" within the meaning of Regulation S under the
Securities Act with respect to the Securities.
(e) Neither the Company nor the Trust is, and, immediately following
consummation of the transactions contemplated hereby and the application of the
net proceeds therefrom, will not be, an "investment company" within the meaning
of section 3(a) of the Investment Company Act.
(f) Neither the Company nor the Trust has paid or agreed to pay to
any person any compensation for soliciting another to purchase any of the
Securities, except for the Purchase Fee for the Preferred Shares in the amount
of $1,050,000, the Company has agreed to pay to Bear, Xxxxxxx & Co. Inc.
pursuant to the letter agreement between the Company and Bear, Xxxxxxx & Co.
Inc.
(g) The Trust has been duly created and is validly existing in good
standing as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C.
Section 3801, et seq. (the "Statutory Trust Act") with all requisite 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 to which it is a party. 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 in the condition
(financial or otherwise), earnings, business, liabilities or assets of the
Trust, whether or not arising in transactions occurring in the ordinary course
of business. The Trust is not a party to or otherwise bound by any agreement
other than the Operative Documents. The Trust is and will be, under current law,
classified for federal income tax purposes as a grantor trust and not as an
association or publicly traded partnership taxable as a corporation.
(h) The Trust Agreement has been duly authorized by the Company and,
on the Closing Date specified in Section 2(b), will have been duly executed and
delivered by the Company and the Administrative Trustees of the Trust, and,
assuming due authorization, execution and delivery by the Property Trustee and
the Delaware Trustee, will be a legal, valid and binding obligation of the
Company and the Administrative Trustees, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general principles of equity. Each
of the
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Administrative Trustees of the Trust is an employee of the Company and has been
duly authorized by the Company to execute and deliver the Trust Agreement.
(i) 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 legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(j) The Preferred Securities and the Common Securities have been
duly authorized by the Trust and, when issued and delivered against payment
therefor on the Closing Date in accordance with this Purchase Agreement, in the
case of the Preferred Securities, and in accordance with the Common Securities
Subscription Agreement, in the case of the Common Securities, will be validly
issued, fully paid and non-assessable and will represent undivided beneficial
interests in the assets of the Trust entitled to the benefits of the Trust
Agreement, enforceable against the Trust in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity. The issuance of the
Securities is not subject to any 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 of any kind (each, a "Lien").
(k) The Junior Subordinated Notes have been duly authorized by the
Company and, on 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 to
the Trust against payment therefor in accordance with the Junior Subordinated
Note Purchase Agreement, will constitute legal, 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 applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity.
(l) This Purchase Agreement has been duly authorized, executed and
delivered by the Company and the Trust.
(m) Neither the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, nor the purchase of the
Junior Subordinated Notes by the Trust, nor the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust, nor the
consummation of the transactions contemplated herein or therein, (i) will
conflict with or constitute a violation or breach of the Trust Agreement or the
charter or bylaws of the Company or any subsidiary of the Company or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, governmental authority, agency or instrumentality or court,
domestic or foreign, having jurisdiction over the Trust or the Company or any of
its subsidiaries or their respective properties or assets (collectively, the
"Governmental Entities"), (ii) will conflict with or constitute a violation or
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breach of, or a default or Repayment Event (as defined below) under, or result
in the creation or imposition of any Lien upon any property or assets of the
Trust, the Company or any of the Company's subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which (A) the Trust, the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or (B) to which any of the
property or assets of any of them is subject, or any judgment, order or decree
of any court, Governmental Entity or arbitrator, except, in the case of this
clause (ii), for such conflicts, breaches, violations, defaults, Repayment
Events (as defined below) or Liens which (X) would not, singly or in the
aggregate, materially adversely affect the consummation of the transactions
contemplated by the Operative Documents and (Y) would not, singly or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), earnings, business, liabilities and assets of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions
occurring in the ordinary course of business (a "Material Adverse Effect") or
(iii) require the consent, approval, authorization or order of any court or
Governmental Entity. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Trust or the Company or any of its subsidiaries prior to its scheduled
maturity.
(n) 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, lease and operate 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.
(o) The Company has no "Significant Subsidiaries" as such term is
defined in Rule 1-02(w) of Regulation S-X.
(p) Each of the Trust, the Company and each of the Company's
subsidiaries hold all necessary approvals, authorizations, orders, licenses,
consents, registrations, qualifications, certificates and permits (collectively,
the "Governmental Licenses") of and from Governmental Entities necessary to
conduct their respective businesses as now being conducted, and neither the
Trust, the Company nor any of the Company's subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such Government
License, except where the failure to be so licensed or approved or the receipt
of an unfavorable decision, ruling or finding, would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except where the invalidity or the failure
of such Governmental Licenses to be in full force and effect, would not, 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,
judgments, orders, decrees and consents, except where the failure to be in
compliance would not, singly or in the aggregate, have a Material Adverse
Effect.
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(q) All of the issued and outstanding shares of capital stock of the
Company and each of its subsidiaries are validly issued, fully paid and
non-assessable; all of the issued and outstanding capital stock of each
subsidiary of the Company is owned by the Company, directly or through
subsidiaries, other than the outstanding capital stock of Capstead Inc. which is
owned approximately 98.5% by the Company; all of the issued and outstanding
capital stock of each subsidiary of the Company that is owned by the Company is
free and clear of any Lien, claim or equitable right; and none of the issued and
outstanding capital stock of the Company or any subsidiary 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 or any of its subsidiaries is a party.
(r) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws or similar organizational
documents or (ii) 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 the
Company or any such subsidiary 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, in the case of clause (ii), where such violation or default would not,
singly or in the aggregate, have a Material Adverse Effect.
(s) There is no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court, domestic or foreign, now pending or,
to the knowledge of the Company or the Trust after due inquiry, threatened
against or affecting the Trust or the Company or any of the Company's
subsidiaries, except for such actions, suits or proceedings that, if adversely
determined, would not, singly or in the aggregate, materially adversely affect
the consummation of the transactions contemplated by the Operative Documents or
have a Material Adverse Effect; and the aggregate of all pending legal or
governmental proceedings to which the Trust or the Company or any of its
subsidiaries is a party or of which any of their respective properties or assets
is subject, including ordinary routine litigation incidental to the business,
are not expected to result in a Material Adverse Effect.
(t) The accountants of the Company who certified the Financial
Statements (as defined below) are independent public accountants of the Company
and its subsidiaries within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder.
(u) The audited consolidated financial statements (including the
notes thereto) and schedules of the Company and its consolidated subsidiaries
for the fiscal year ended December 31, 2004 (the "Financial Statements") and the
interim unaudited consolidated financial statements of the Company and its
consolidated subsidiaries for the quarter ended June 30, 2005 (the "Interim
Financial Statements") provided to the Purchaser are the most recent available
audited and unaudited consolidated financial statements of the Company and its
consolidated subsidiaries, respectively, and fairly present in all material
respects, in accordance with U.S. generally accepted accounting principles, the
financial position of the Company and its consolidated subsidiaries, and the
results of operations and changes in financial condition as of the dates and for
the periods therein specified, subject, in the case of Interim Financial
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Statements, to year-end adjustments (which are expected to consist solely of
normal recurring adjustments). Such consolidated financial statements and
schedules have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP")consistently applied throughout the periods
involved (except as otherwise noted therein).
(v) None of the Trust, the Company nor any of its subsidiaries, to
their knowledge, has any material liability, 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 that
could give rise to any such liability) that, singly or in the aggregate could
reasonably be expected to have a Material Adverse Effect, except for (i)
liabilities set forth in the Financial Statements or the Interim Financial
Statements and (ii) normal fluctuations in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business of
the Trust, the Company and all of its subsidiaries since the date of the most
recent balance sheet included in such Financial Statements.
(w) Since the respective dates of the Financial Statements and the
Interim Financial Statements, there has not been (A) any Material Adverse Change
or (B) 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.
(x) The documents and reports of the Company filed with the
Commission in accordance with the Exchange Act, from and including the
commencement of the fiscal year covered by the Company's most recent Annual
Report on Form 10-K, at the time they were or hereafter are filed by the Company
with the Commission (collectively, the "1934 Act Reports"), complied and will
comply in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), and, at the date of this Purchase Agreement and on the Closing
Date, do not and will not include 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 the light of the circumstances under which they were
made, not misleading; and 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 or
any of its subsidiaries is a party other than the Operative Documents. The
Company is in compliance with all currently applicable requirements of the
Exchange Act that were added by the Xxxxxxxx-Xxxxx Act of 2002.
(y) No labor dispute with the employees of the Trust, the Company or
any of its subsidiaries 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.
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(z) 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.
(aa) Except as disclosed in the Company's 1934 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, each of the
Trust, the Company and each subsidiary of the Company 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, the Company or any subsidiary of the Company
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 none of the Trust, the Company or
any subsidiary of the Company has any notice of any claim of any sort that has
been asserted by anyone adverse to the rights of the Trust, the Company or any
subsidiary of 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.
(bb) 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 real estate investment
trust (a "REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (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 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.
(cc) The Company has timely and duly filed all Tax Returns required
to be filed by them, and all such Tax Returns are true, correct and complete in
all material respects. The Company has timely and duly paid in full all material
Taxes required to be paid by it (whether or not such amounts are shown as due on
any Tax Return). There are no federal, state, or other Tax audits or deficiency
assessments proposed or pending with respect to the Company, and 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
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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.
(dd) The Trust is not subject to United States federal income tax
with respect to income received or accrued on the Junior Subordinated Notes,
interest payable by the Company on the Junior Subordinated Notes is deductible
by the Company, in whole or in part, for United States federal income tax
purposes, and the Trust is not, or will not be within ninety (90) days of the
date hereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges. To the knowledge of the Company and the Trust, 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.
(ee) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each of its
subsidiaries 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.
(ff) The Company is 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 including
but not limited to, real or personal property owned or leased against theft,
damage, destruction, act of vandalism and all other risks customarily insured
against. All policies of insurance and fidelity or surety bonds insuring the
Company or the Company's businesses, assets, employees, officers and directors
are in full force and effect. The Company is in compliance with the terms of
such policies and instruments in all material respects. The Company has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect. Within the past twelve months, the
Company has not been denied any insurance coverage which it has sought or for
which it has applied.
(gg) The Company and its subsidiaries or any person acting on behalf
of the Company and its subsidiaries including, without limitation, any director,
officer, agent or employee of the Company or its subsidiaries has not, directly
or indirectly, while acting on
11
behalf of the Company and its subsidiaries (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.
(hh) The information provided by the Company and the Trust pursuant
to this Purchase Agreement and the transactions contemplated hereby does not, as
of the date hereof, and will not as of the Closing Date, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(ii) Except as would not, individually or in the aggregate, result
in a Material Adverse Change, (i) the Company and its subsidiaries have been and
are in compliance with applicable Environmental Laws (as defined below), (ii)
none of the Company, any of its subsidiaries or, to the best of the Company's
knowledge, any other owners of any of the real properties currently or
previously owned, leased or operated by the Company or any of its subsidiaries
(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
or any other real properties previously owned, leased or operated by the Company
or any of its subsidiaries, (iii) neither the Company nor any of its
subsidiaries intends to use the Properties or any subsequently acquired
properties, other than in compliance with applicable Environmental Laws, (iv)
neither the Company nor any of its subsidiaries 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, any other real properties
previously owned, leased or operated by the Company or any of its subsidiaries,
or their respective assets or arising out of the conduct of the Company or its
subsidiaries, (v) none of the Properties are included or, to the best of the
Company's knowledge, proposed for inclusion on the National Priorities List
issued pursuant to CERCLA by the United States Environmental Protection Agency
or, to the best of the Company's knowledge, 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 of its
subsidiaries or agents or, to the best of the Company's knowledge, 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 or any other real properties previously owned, leased or operated
by the Company or any of its subsidiaries 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 (viii) none of
the Company, any of its subsidiaries or, to the best of the Company's knowledge,
any other person or entity for whose conduct any of them is or may be held
responsible, has entered into or been subject to any
12
consent decree, compliance order, or administrative order with respect to the
Properties or any facilities or improvements or any operations or activities
thereon.
As used herein, "Hazardous Material" 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.
Sections 9601-9675 ("CERCLA"), the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Sections 5101-5127, the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Sections 6901-6992k, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the Toxic
Substances Control Act, 15 U.S.C. Sections 2601-2692, the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42
U.S.C. Sections 7401-7642, the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C.
Sections 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C.
Sections 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 collectively, the
"Environmental Laws") or by any Governmental Entity.
(jj) No subsidiary of the Company is currently prohibited, directly
or indirectly, under any agreement or other instrument to which it is a party or
is subject, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, or from repaying to the Company
any loans or advances to such subsidiary from the Company.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to, and agrees with, the Company and the Trust as
follows:
(a) The Purchaser is aware that the Preferred Securities have not
been and will not be registered under the Securities Act and may not be offered
or sold within the United States or to "U.S. persons" (as defined in Regulation
S under the Securities Act) except in accordance with Rule 903 of Regulation S
under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act.
(b) The Purchaser is an institutional "accredited investor," as such
term is defined in Rule 501(a) of Regulation D under the Securities Act.
(c) Neither the Purchaser, nor any of the Purchaser's affiliates,
nor any person acting on the Purchaser's or the Purchaser's Affiliate's behalf
has engaged, or will engage, in any form of "general solicitation or general
advertising" (within the meaning of Regulation D under the Securities Act) in
connection with any offer or sale of the Preferred Securities.
(d) The Purchaser understands and acknowledges that (i) no public
market exists for any of the Preferred Securities and that it is unlikely that a
public market will ever exist for the Preferred Securities, (ii) the Purchaser
is purchasing the Preferred Securities for its own
13
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 Preferred Securities pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption
therefrom or in a transaction not subject thereto, and the Purchaser agrees to
the legends and transfer restrictions applicable to the Preferred Securities
contained in the Indenture, and (iii) the Purchaser has had the opportunity to
ask questions of, and receive answers and request additional information from,
the Company and is aware that it may be required to bear the economic risk of an
investment in the Preferred Securities for an indefinite period of time.
(e) The Purchaser is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction in which it is organized with all
requisite (i) power and authority to execute, deliver and perform the Operative
Documents to which it is a party, to make the representations and warranties
specified herein and therein and to consummate the transactions contemplated
herein and (ii) right and power to purchase the Preferred Securities.
(f) This Purchase Agreement has been duly authorized, executed and
delivered by the Purchaser and 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 Purchase Agreement or
to consummate the transactions contemplated herein.
(g) The Purchaser is a "Qualified Purchaser" as such term is defined
in Section 2(a)(51) of the Investment Company Act.
6. COVENANTS AND AGREEMENTS OF THE COMPANY AND THE TRUST. The
Company and the Trust jointly and severally agree with the Purchaser as follows:
(a) During the period from the date of this Agreement to the Closing
Date, the Company and the Trust shall use their best efforts and take all action
necessary or appropriate to cause their representations and warranties contained
in Section 4 hereof to be true as of the Closing Date, after giving effect to
the transactions contemplated by this Purchase Agreement, as if made on and as
of the Closing Date.
(b) The Company and the Trust will arrange for the qualification of
the Preferred Securities for sale under the laws of such jurisdictions as the
Purchaser may designate in writing and will maintain such qualifications in
effect so long as required for the sale of the Preferred Securities. The Company
or the Trust, as the case may be, will promptly advise the Purchaser of the
receipt by the Company or the Trust, as the case may be, of any notification
with respect to the suspension of the qualification of the Preferred Securities
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
14
(c) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates to, nor will either of them permit any person
acting on its or their behalf (other than the Purchaser) to, resell any
Preferred Securities that have been acquired by any of them.
(d) Neither the Company nor the Trust will, nor will either of them
permit any of their Affiliates or any person acting on their behalf to, engage
in any "directed selling efforts" within the meaning of Regulation S under the
Securities Act with respect to the Preferred Securities.
(e) Neither the Company nor the Trust will, nor will either of them
permit any of their Affiliates or any person acting on their behalf to, directly
or indirectly, make offers or sales of any security, or solicit offers to buy
any security, under circumstances that would require the registration of any of
the Preferred Securities under the Securities Act.
(f) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates or any person acting on their behalf to, engage in
any form of "general solicitation or general advertising" (within the meaning of
Regulation D) in connection with any offer or sale of the any of the Preferred
Securities.
(g) So long as any of the Preferred Securities are outstanding, (i)
the Preferred Securities shall not be listed on a national securities exchange
registered under section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system and (ii) neither the Company nor the Trust shall
be an open-end investment company, unit investment trust or face-amount
certificate company that is, or is required to be, registered under section 8 of
the Investment Company Act, and, the Preferred Securities shall otherwise
satisfy the eligibility requirements of Rule 144A(d)(3).
(h) Each of the Company and the Trust shall furnish to (i) the
holders, and subsequent holders of the Preferred Securities, (ii) Taberna
Capital Management, LLC (at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, or such other address as designated by Taberna Capital Management, LLC)
and (iii) any beneficial owner of the Preferred Securities reasonably identified
to the Company and the Trust (which identification may be made by either such
beneficial owner or by Purchaser), a duly completed and executed certificate in
the form attached hereto as Annex F, including the financial statements
referenced in such Annex, which certificate and financial statements shall be so
furnished by the Company and the Trust not later than forty five (45) days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company and not later than ninety (90) days after the end of each fiscal year of
the Company; provided, that the financial statements of the Company shall be
deemed to have been furnished in compliance with this Section 6(h) 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.
(i) Each of the Company and the Trust will, during any period in
which it is not subject to and in compliance with section 13 or 15(d) of the
Exchange Act, or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, shall provide to
each holder of the Preferred Securities and to each
15
prospective purchaser (as designated by such holder) of the Preferred
Securities, upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the Securities Act.
If the Company and the Trust are required to register under the Exchange Act,
such reports filed in compliance with Rule 12g3-2(b) shall be sufficient
information as required above. This covenant is intended to be for the benefit
of the Purchaser, the holders of the Preferred Securities, and the prospective
purchasers designated by the Purchaser and such holders, from time to time, of
the Preferred Securities.
(j) Neither the Company nor the Trust will, until one hundred eighty
(180) days following the Closing Date, without the Purchaser's prior written
consent, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, directly or indirectly, (i) any Preferred Securities or
other securities substantially similar to the Preferred Securities other than as
contemplated by this Purchase Agreement or (ii) any other securities convertible
into, or exercisable or exchangeable for, any Preferred Securities or other
securities substantially similar to the Preferred Securities; provided that no
such consent shall be required (A) if such other securities have a different
maturity date, interest rate and other terms than those of the Preferred
Securities or (B) if, after giving effect to any such offer, sale or option of
such other securities shall not result in the required registration of the sale
of the Preferred Securities contemplated herein.
(k) 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 best efforts to meet the requirements to qualify as a REIT under
Sections 856 through 860 of the Code, effective for the taxable year ending
December 31, 2005 (and each fiscal quarter of such year) and succeeding taxable
years.
(l) The Company shall not identify the Purchaser or Taberna Capital
Management, LLC in a press release or any other public statement without the
consent of Purchaser or Taberna Capital Management, LLC, as applicable; provided
that the Company shall not be prohibited from making any public disclosure that
it deems, upon advice of counsel, to be necessary or advisable in order to
comply with the requirements of the federal securities laws.
(m) Each of the Company and the Trust acknowledges and agrees that,
subject to the terms of the Trust Agreement, Purchaser, and each successor to
Purchaser's interest in the Preferred Securities, may (without prior notice to
the Company or the Trust and without the Company's or the Trust's prior
consent), sell or transfer all or a portion of the Preferred Securities or
create separate tranches with respect to the Preferred Securities, and, in
connection therewith, the Company and the Trust shall, at the direction of the
Purchaser (or any successor to Purchaser's interest in the Preferred
Securities), take such actions as are necessary to change the dates that
distributions are to be made with respect to such Preferred Securities or with
respect to a particular tranche of Preferred Securities and to change the
corresponding redemption date and expiration of the five-year no-call period of
such Preferred Securities or such tranche of Preferred Securities. Each of the
Company and the Trust agrees to cooperate with all reasonable requests of
Purchaser in connection with any of the foregoing including, without limitation,
(i) splitting, severing, modifying and/or reissuing the Junior Subordinated
Notes to provide for such modified payment dates, redemption date and five-year
no-call period, (ii) issuing replacement
16
Preferred Securities reflecting the new distribution dates, redemption date and
five-year no-call period, and (iii) re-executing or making modifications to the
Operative Documents and the other documentation evidencing the transactions
contemplated hereby, provided that no such modification, revision, additional
documentation, or other action in connection with such cooperation shall
materially increase the obligations or materially decrease the rights of the
Company pursuant to such documents.
Purchaser and each successor to Purchaser's interest in the
Preferred Securities is granted the right under the Indenture and Amended and
Restated Trust Agreement to request the substitution of new notes for all or a
portion of the Junior Subordinated Notes held by the Trust. The Trust is
required under the terms of the Indenture and Amended and Restated Trust
Agreement to accept such newly issued notes (the "Replacement Notes") and
surrender a like amount of Junior Subordinated Notes to the Company. The
Replacement Notes shall bear terms identical to the Junior Subordinated Notes
with the sole exception of interest payment dates (and corresponding redemption
date and maturity date), which will be specified by Purchaser or applicable
successor. In no event will the interest payment dates (and corresponding
redemption date and maturity date) on the Replacement Notes vary by more than
sixty (60) calendar days from the original interest payment dates (and
corresponding redemption date and maturity date) under the Junior Subordinated
Notes.
Each of the Company and the Trust acknowledges and agrees that, to
the extent of the principal amount of the Replacement Notes issued to the Trust
under the Indenture, Purchaser (and each successor to Purchaser's interest in
the Preferred Securities) will require the Trust to issue a new series of
Preferred Securities having a principal amount related to the principal amount
of the Replacement Notes (the "Replacement Securities") to designated holders of
Preferred Securities, provided that any such Replacement Securities, and any
distributions from the Trust to the holders of Replacement Securities, must
relate solely to the Trust's interest in the Replacement Notes and in no event
will the Preferred Securities other than the Replacement Securities share in the
returns from any Replacement Notes. The Replacement Securities shall have
payment dates (and corresponding redemption date and maturity date) that relate
to the Replacement Notes.
Each of the Company and the Trust agrees to cooperate with all
reasonable requests of Purchaser in connection with any of the foregoing,
provided that no action requested of the Company or the Trust in connection with
such cooperation shall materially increase the obligations or materially
decrease the rights of the Company pursuant to such documents.
Each party hereto acknowledges that (i) each purchaser of Preferred
Securities in addition to the Purchaser (each, an "Additional Purchaser") is
being granted the same right to elect to receive Replacement Notes and cause the
Trust to issue Replacement Securities as described above (the "Payment Date
Election Right") and (ii) upon or prior to the Purchaser's or any Additional
Purchaser's election to exercise the Payment Date Election Right, the Trust
Agreement will need to be amended in order to include certain provisions to
effectuate the Payment Date Election Right. If, at the time the Purchaser or any
Additional Purchaser elects to exercise the Payment Date Election Right, the
Trust Agreement has not been so amended, each
17
party hereto agrees to use commercially reasonable efforts to so amend the Trust
Agreement upon such election.
7. PAYMENT OF EXPENSES. The Company, as depositor of the Trust,
agrees to pay all costs and expenses incident to the performance of the
obligations of the Company and the Trust under this Purchase Agreement, whether
or not the transactions contemplated herein are consummated or this Purchase
Agreement is terminated, including all costs and expenses incident to (i) the
authorization, issuance, sale and delivery of the Preferred Securities and any
taxes payable in connection therewith; (ii) the fees and expenses of qualifying
the Preferred Securities under the securities laws of the several jurisdictions
as provided in Section 6(b); (iii) the fees and expenses of the counsel, the
accountants and any other experts or advisors retained by the Company or the
Trust; (iv) the fees and all reasonable expenses of the Property Trustee, the
Delaware Trustee, the Indenture Trustee and any other trustee or paying agent
appointed under the Operative Documents, including the fees and disbursements of
counsel for such trustees, which fees shall not exceed $2,500 for an acceptance
fee payable to the Delaware Trustee, $4,000 in administrative fees annually
payable to the Delaware Trustee, $4,000 for the legal fees of Potter Xxxxxxxx &
Xxxxxxx, LLP, special Delaware counsel retained by the Delaware Trustee, and all
miscellaneous out-of-pocket expenses of such special Delaware counsel, including
fees related to filing for the creation of the Trust; and (vi) the fees and
expenses incurred by Bear, Xxxxxxx & Co. Inc., which fees shall not exceed
$12,500 for due diligence fees, $2,500 for PORTAL application and settlement
fees; $30,000 for the legal fees and expenses of DLA Xxxxx Xxxxxxx Xxxx Xxxx US
LLP, special counsel retained by the Purchaser, and $5,000 of related expenses
incurred by Bear, Xxxxxxx & Co. Inc.
If the sale of the Preferred Securities provided for in this
Purchase Agreement is not consummated because any condition set forth in Section
3 hereof to be satisfied by either the Company or the Trust is not satisfied,
because this Purchase Agreement is terminated pursuant to any portion of Section
9 other than clauses (ii) or (iv) or because of any failure, refusal or
inability on the part of the Company or the Trust to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder other
than by reason of a default by the Purchaser, the Company will reimburse the
Purchaser upon demand for all reasonable out-of-pocket expenses (including the
fees and expenses of each of the Purchaser's counsel specified in subparagraphs
(v) and (vi) of the immediately preceding paragraph) that shall have been
incurred by the Purchaser in connection with the proposed purchase and sale of
the Preferred Securities. The Company shall not in any event be liable to the
Purchaser for the loss of anticipated profits from the transactions contemplated
by this Purchase Agreement.
8. INDEMNIFICATION. (a) The Sellers agree, jointly and severally, to
indemnify and hold harmless the Purchaser, the Purchaser's affiliates, Taberna
Capital Management, LLC, and their respective affiliates, (collectively, the
"Indemnified Parties") each person, if any, who controls any of the Indemnified
Parties within the meaning of the Securities Act or the Exchange Act, and the
Indemnified Parties' respective directors, officers, employees and agents and
each person, if any, who controls the Indemnified Parties within the meaning of
the Securities Act, or the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act") against any losses, claims, damages or liabilities, joint or
several, to which the Indemnified Parties may become subject, under the
Securities Act, the Exchange Act or other federal or state
18
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are connected with the execution and delivery by Sellers, and the consummation
thereby of the transactions contemplated by, this Purchase Agreement or any
other Operative Document other than any such losses, claims, damages or
liabilities are caused by the negligence or willful misconduct of the
Indemnified Party. Sellers agree, jointly and severally, to reimburse the
Indemnified Parties for any legal or other expenses reasonably incurred by the
Indemnified Parties in connection with investigating or defending any such loss,
claim, damage or liability or action arising out of or being connected with the
execution and delivery by the Sellers, and the consummation by the Sellers of
the transactions contemplated by, this Purchase Agreement or the other Operative
Documents. This indemnity agreement will be in addition to any liability that
any of the Sellers may otherwise have.
(b) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever due from the Trust under
paragraph (a) above.
(c) Promptly after receipt by an Indemnified Party under this
Section 8 of notice of the commencement of any action, such Indemnified Party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, promptly notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve the indemnifying party from liability under paragraph (a) above
unless and to the extent that such failure results in the forfeiture by the
indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in paragraph (a) above.
Purchaser shall be entitled to appoint counsel to represent the Indemnified
Party in any action for which indemnification is sought. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
that counsel to the indemnifying party shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. An indemnifying party will not, without
the prior written consent of the Indemnified Parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action, suit or proceeding.
9. TERMINATION; REPRESENTATIONS AND INDEMNITIES TO SURVIVE. This
Purchase Agreement shall be subject to termination in the absolute discretion of
the Purchaser, by notice given to the Company and the Trust prior to delivery of
and payment for the Preferred Securities, if prior to such time (i) the Trust
shall be unable to sell and deliver to the Purchaser at least $17,500,000 stated
liquidation value of Preferred Securities, (ii) a suspension or material
limitation in trading in securities generally shall have occurred on the New
York Stock Exchange, (iii) a suspension or material limitation in trading in any
of the Company's securities
19
shall have occurred on the exchange or quotation system upon which the Company'
securities are traded, if any, or (iv) there shall have occurred any outbreak or
escalation of hostilities, or declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the Purchaser's judgment, impracticable or
inadvisable to proceed with the offering or delivery of the Preferred
Securities. The respective agreements, representations, warranties, indemnities
and other statements of the Company and the Trust or their respective officers
or trustees and of the Purchaser set forth in or made pursuant to this Purchase
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Purchaser, the Company or the Trust or any of the
their respective officers, directors, trustees or controlling persons, and will
survive delivery of and payment for the Preferred Securities. The provisions of
Sections 7 and 8 shall survive the termination or cancellation of this Purchase
Agreement.
10. AMENDMENTS. This Purchase Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement by each of the parties hereto.
11. NOTICES.
(a) Any communication shall be given by letter or facsimile, in the
case of notices to the Issuer, to it at:
Capstead Mortgage Trust I
c/o Capstead Mortgage Corporation
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
in the case of notices to the Sponsor, to it at:
Capstead Mortgage Corporation
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
and in the case of notices to the Purchaser, to it at:
Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Asset Backed Securities
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with a copy to:
DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP
0000 X. Xxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
(b) Any such communication shall take effect, in the case of a
letter, at the time of delivery and in the case of facsimile, at the time of
dispatch.
(c) Any communication not by facsimile shall be confirmed by letter
but failure to send or receive the letter of confirmation shall not invalidate
the original communication.
12. SUCCESSORS AND ASSIGNS. This Purchase Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing expressed or mentioned in this
Purchase Agreement is intended or shall be construed to give any person other
than the parties hereto and the affiliates, directors, officers, employees,
agents and controlling persons referred to in Section 8 hereof and their
successors, assigns, heirs and legal representatives, any right or obligation
hereunder. None of the rights or obligations of the Company or the Trust under
this Purchase Agreement may be assigned, whether by operation of law or
otherwise, without the Purchaser's prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned by
the Purchaser without the Company's or the Trust's consent; provided that the
assignee assumes the obligations of the Purchaser under this Purchase Agreement.
13. APPLICABLE LAW. THIS PURCHASE AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW).
14. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING BY OR
AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE
AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK,
IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF
MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
PURCHASE AGREEMENT.
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15. COUNTERPARTS AND FACSIMILE. This Purchase Agreement may be
executed by any one or more of the parties hereto in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. This Purchase Agreement may be
executed by any one or more of the parties hereto by facsimile.
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IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of
the date first written above.
CAPSTEAD MORTGAGE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
CAPSTEAD MORTGAGE TRUST I
By: Capstead Mortgage Corporation,
as Depositor
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxx Xxxxxx
-----------------------------------
Name: Xxx Xxxxxx
Title: Senior Managing Director
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