8,000,000 Shares of Common Stock Capstead Mortgage Corporation UNDERWRITING AGREEMENT November 15, 2007
8,000,000 Shares of Common Stock
Capstead Mortgage Corporation
November 15, 2007
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
JMP SECURITIES LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
JMP SECURITIES LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
As Representatives of the
several Underwriters named in
Schedule I attached hereto (the “Representatives”)
several Underwriters named in
Schedule I attached hereto (the “Representatives”)
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
Capstead Mortgage Corporation, a corporation organized and existing under the laws of Maryland
(the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to
the several underwriters named in Schedule I hereto (the “Underwriters”) an aggregate of 8,000,000
shares (the “Firm Shares”) of its Common Stock, par value $0.01 per share (the “Common Stock”),
and, for the sole purpose of covering over-allotments in connection with the sale of the Firm
Shares, at the option of the Underwriters, up to an additional 1,200,000 shares (the “Additional
Shares”) of Common Stock. The Firm Shares and any Additional Shares purchased by the Underwriters
are referred to herein as the “Shares”. Bear, ▇▇▇▇▇▇▇ & Co. Inc. (“Bear ▇▇▇▇▇▇▇”), JMP Securities
LLC and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. are acting as lead managers in connection with the offering
and sale of the Shares contemplated herein (the “Offering”).
1. Representations and Warranties of the Company. The Company represents and warrants
to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement under the Securities Act of 1933, as amended (the “Securities Act”),
relating to the Shares, on Form S-3 (No. 333-143390) (the initial filing and all pre-effective
amendments thereto collectively being referred to as the “Initial Registration Statement”); and
such Initial Registration Statement, and any post-effective amendment thereto, each in the form
previously delivered to you, have been declared effective by the Commission, in such form. Other
than a registration statement, if any, increasing the size of the Offering (a “Rule 462(b)
Registration Statement”) filed pursuant to Rule 462(b) under the Securities Act,
which will become effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission. The various parts of the
Initial Registration Statement and the 462(b) Registration Statement, if any, including all
exhibits thereto and including (i) the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities Act in accordance with Section
4(a) hereof and deemed by virtue of Rule 430B and 430C under the Securities Act to be part of the
Initial Registration Statement at the time it became effective under the Securities Act with
respect to the Underwriters, and (ii) the documents incorporated by reference in the prospectus
contained in the Initial Registration Statement at the time such part of the Initial Registration
Statement becomes effective, each as amended at the time such part of the Initial Registration
Statement or Rule 462(b) Registration Statement, if any, became or hereafter becomes effective
under the Securities Act with respect to the Underwriters, are hereafter collectively referred to
as the “Registration Statement.” Any reference to any amendment to the Registration Statement
shall be deemed to refer to and include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the
effective date of the Initial Registration Statement that is incorporated by reference therein. No
stop order suspending the effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or, to the Company’s knowledge, threatened by the
Commission.
The final prospectus supplement together with the base prospectus included in the Initial
Registration Statement, in the form in which it has most recently been filed with the Commission on
or prior to the date of this Agreement (the “Basic Prospectus”) relating to the Shares, in the form
first filed with the Commission pursuant to Rule 424(b) under the Securities Act, is hereafter
referred to as the “Prospectus”. Any preliminary prospectus supplement together with the Basic
Prospectus included in the Initial Registration Statement or filed with the Commission pursuant to
Rule 424 under the Securities Act is hereafter referred to as a “Preliminary Prospectus;” and the
Preliminary Prospectus relating to the Shares, as amended or supplemented immediately prior to the
Applicable Time (as defined below), is hereafter referred to as the “Pricing Prospectus”. Any
“issuer free writing prospectus” (as defined in Rule 433 under the Securities Act) relating to the
Shares is hereafter referred to as an “Issuer Free Writing Prospectus”; and the Pricing Prospectus,
as supplemented by the public offering price of the Shares, the number of Shares offered and the
Issuer Free Writing Prospectuses, if any, attached and listed in Annex III hereto, taken together,
are hereafter referred to collectively as the “Pricing Disclosure Package”. Any reference herein
to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3 that were filed under
the Exchange Act on or before the date of such Preliminary Prospectus or Prospectus, as the case
may be; and any reference herein to any “amendment” or “supplement” to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include (i) the filing of any document under the
Exchange Act after the date of such Preliminary Prospectus or Prospectus, as the case may be, which
is incorporated therein by reference and (ii) any such document so filed.
The Company was not an “ineligible issuer” (as defined in Rule 405 under the Securities Act)
as of the eligibility determination date for purposes of Rules 164 and 433 under the Securities Act
with respect to the offering of the Shares contemplated hereby.
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All references in this Agreement to the Registration Statement, any Preliminary Prospectus,
Issuer Free Writing Prospectus or the Prospectus, or any amendments or supplements to any of the
foregoing, shall be deemed to include any copy thereof filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System.
(b) The Registration Statement complies and the Prospectus and any further amendments or
supplements to the Registration Statement or the Prospectus will comply in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations of the Commission thereunder (the “Rules and Regulations”), and do not and will not, as
of the applicable effective date as to each part of the Registration Statement and as of the
applicable filing date as to the Prospectus and any amendment thereof or supplement thereto,
contain an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any information contained in or
omitted from the Registration Statement or the Prospectus or any amendment thereof or supplement
thereto in reliance upon and in conformity with information furnished in writing to the Company by
or on behalf of any Underwriter through Bear ▇▇▇▇▇▇▇ specifically for use therein. The parties
hereto agree that such information provided by or on behalf of any Underwriter through Bear ▇▇▇▇▇▇▇
consists solely of the material referred to in Section 16 hereof.
(c) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free
Writing Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time
of filing thereof, complied in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the Rules and Regulations, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that this representation and warranty shall not apply to any
information contained in or omitted from any Preliminary Prospectus in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf of any Underwriter
through Bear ▇▇▇▇▇▇▇ specifically for use therein. The parties hereto agree that such information
provided by or on behalf of any Underwriter through Bear ▇▇▇▇▇▇▇ consists solely of the material
referred to in Section 16 hereof.
(d) For purposes of this Agreement, the “Applicable Time” means 5:30 p.m., New York City Time,
on November 15, 2007, or such other time as agreed by the Company and the Representatives. The
Pricing Disclosure Package, as of the Applicable Time, did not, and as of the Closing Date and the
Additional Closing Date, if any (each as hereinafter defined), will not, contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading. Each Issuer Free Writing Prospectus complies in all material respects with the
applicable provisions of the Securities Act and the Rules and Regulations, and does not include
information that conflicts with the information contained in the Registration Statement, the
Pricing Prospectus or the Prospectus, and each Issuer Free Writing Prospectus not listed in Annex
III hereto, as supplemented by and taken together with the Pricing Disclosure Package, as of the
Applicable Time, did not, and as of the Closing Date and the Additional Closing Date, if any, will
not, contain an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements
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therein, in light of the circumstances under which they were made, not misleading. No
representation and warranty is made in this Section 1(d) with respect to any information contained
in or omitted from the Pricing Disclosure Package or any Issuer Free Writing Prospectus in reliance
upon and in conformity with information furnished in writing to the Company by or on behalf of any
Underwriter through Bear ▇▇▇▇▇▇▇ specifically for use therein. The parties hereto agree that such
information provided by or on behalf of any Underwriter through Bear ▇▇▇▇▇▇▇ consists solely of the
material referred to in Section 16 hereof.
(e) Ernst & Young LLP, who has certified the financial statements and supporting schedules and
information of the Company and its subsidiaries that are included or incorporated by reference in
the Registration Statement, the Pricing Prospectus or the Prospectus is an independent public
accountant as required by the Securities Act, the Exchange Act and the Rules and Regulations.
(f) Subsequent to the respective dates as of which information is given in the Registration
Statement and the Pricing Prospectus, except as disclosed in the Registration Statement, the
Pricing Prospectus and the Prospectus, (i) the Company has not declared or paid any dividends, or
made any other distribution of any kind, on or in respect of its capital stock, (ii) there has not
been any material change in the capital stock or long-term debt of the Company or any of its
subsidiaries listed in Exhibit A hereto (each, a “Subsidiary” and, collectively, the
“Subsidiaries”), (iii) neither the Company nor any Subsidiary has sustained any material loss or
interference with its business or properties from fire, explosion, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute or any legal or
governmental proceeding, and (iv) there has not been any material adverse change or any development
involving a prospective material adverse change, whether or not arising from transactions in the
ordinary course of business, in or affecting the business, general affairs, management, condition
(financial or otherwise), results of operations, stockholders’ equity or properties of the Company
and the Subsidiaries, individually or taken as a whole (a “Material Adverse Change”). Since the
date of the latest balance sheet included, or incorporated by reference, in the Registration
Statement and the Pricing Prospectus, neither the Company nor any Subsidiary has incurred or
undertaken any liabilities or obligations, whether direct or indirect, liquidated or contingent,
matured or unmatured, or entered into any transactions, including any acquisition or disposition of
any business or asset, which are material to the Company and the Subsidiaries, individually or
taken as a whole, except for liabilities, obligations and transactions which are disclosed in the
Pricing Prospectus.
(g) The Company has an authorized capitalization as set forth in the Pricing Prospectus, and
all of the issued and outstanding shares of capital stock of the Company are fully paid and
non-assessable and have been duly and validly authorized and issued, in compliance with all
applicable state, federal and foreign securities laws and not in violation of or subject to any
preemptive or similar right that entitles any person to acquire from the Company or any subsidiary
any Common Stock or other equity security of the Company or any security convertible into, or
exercisable or exchangeable for, Common Stock or any other such security (any “Relevant Security”),
except for such rights as may have been fully satisfied or waived prior to the effectiveness of the
Registration Statement. All of the issued shares of capital stock of or other ownership interests
in each Subsidiary have been duly and validly authorized and issued and are fully paid and
non-assessable and (except as otherwise set forth in the Pricing
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Prospectus) are owned directly or indirectly by the Company free and clear of any lien,
charge, mortgage, pledge, security interest, claim, equity, trust or other encumbrance,
preferential arrangement, defect or restriction of any kind whatsoever (any “Lien”).
(h) The Shares to be delivered on the Closing Date and the Additional Closing Date (as
hereinafter defined), if any, have been duly and validly authorized and, when issued and delivered
in accordance with this Agreement, will be duly and validly issued, fully paid and non-assessable,
will have been issued in compliance with all applicable state, federal and foreign securities laws
and will not have been issued in violation of or subject to any preemptive or similar right that
entitles any person to acquire any Relevant Security from the Company. The Common Stock and the
Shares conform to the descriptions thereof contained in the Registration Statement, the Pricing
Prospectus and the Prospectus. Except as disclosed in the Registration Statement, the Pricing
Prospectus and the Prospectus, the Company has no outstanding warrants, options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, or any contracts or commitments
to issue or sell, any Relevant Security. Except as disclosed in the registration Statement, the
Pricing Prospectus and the Prospectus, no holder of any Relevant Security has any rights to require
registration under the Securities Act of any Relevant Security in connection with the offer and
sale of the Shares contemplated hereby, and any such rights so disclosed have either been fully
complied with by the Company or effectively waived by the holders thereof.
(i) The Subsidiaries are the only “subsidiaries” of the Company (within the meaning of Rule
405 under the Securities Act). Each of the Company and each Subsidiary have been duly organized
and validly exists as a corporation, partnership or limited liability company in good standing
under the laws of its jurisdiction of organization. Each of the Company and each Subsidiary is
duly qualified to do business and is in good standing as a foreign corporation, partnership or
limited liability company in each jurisdiction in which the character or location of its properties
(owned, leased or licensed) or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good standing which (individually and
in the aggregate) could not reasonably be expected to have (i) a material adverse effect on the
business, general affairs, management, condition (financial or otherwise), results of operations,
stockholders’ equity, properties or prospects of the Company and the Subsidiaries, taken as a
whole; or (ii) an adverse effect on the ability of the Company to consummate the Offering or any
other transaction contemplated by this Agreement or the Pricing Prospectus (a “Material Adverse
Effect”).
(j) Commencing with the taxable year ending December 31, 1985, the Company has been organized
and has operated in conformity with the requirements for qualification as a real estate investment
trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), and currently
intends to operate in a manner which allows the Company to continue to meet the requirements for
taxation as a REIT under the Code.
(k) Each of the Company and each Subsidiary has all requisite power and authority, and all
necessary consents, approvals, authorizations, orders, registrations, qualifications, licenses,
filings and permits of, with and from all judicial, regulatory and other legal or governmental
agencies and bodies and all third parties, foreign and domestic (collectively, the “Consents”), to
own, lease and operate its properties and conduct its business as
5
it is now being conducted and as disclosed in the Registration Statement and the Pricing
Prospectus, and each such Consent is valid and in full force and effect, except in each case as
could not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received notice of any investigation or proceedings which, if decided adversely to
the Company or any such Subsidiary, could reasonably be expected to result in, the revocation of,
or imposition of a materially burdensome restriction on, any such Consent.
(l) This Agreement has been duly and validly authorized, executed and delivered by the
Company.
(m) The issue and sale of the Shares, the compliance by the Company with this Agreement and
the consummation of the transactions herein contemplated do not and will not (i) conflict with or
result in a breach or violation of any of the terms and provisions of, or constitute a default (or
an event which with notice or lapse of time, or both, would constitute a default) under, or result
in the creation or imposition of any Lien upon any property or assets of the Company or any
Subsidiary pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement,
instrument, franchise, license or permit to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or their respective properties, operations or assets may be
bound or (ii) violate or conflict with any provision of the certificate or articles of
incorporation, by-laws, certificate of formation, limited liability company agreement, partnership
agreement or other organizational documents of the Company or any Subsidiary, or (iii) violate or
conflict with any statute, law, rule, regulation, ordinance, directive, judgment, decree or order
of any judicial, regulatory or other legal or governmental agency or body, domestic or foreign
applicable to the Company or any Subsidiary.
(n) No Consent of, with or from any judicial, regulatory or other legal or governmental agency
or body or any third party, foreign or domestic, is required for the execution, delivery and
performance of this Agreement or consummation of the transactions contemplated by this Agreement,
except for (i) the registration under the Securities Act of the Shares and such consents as may be
required under state securities or blue sky laws or the by-laws and rules of the Financial Industry
Regulatory Authority (the “FINRA”) in connection with the purchase and distribution of the Shares
by the Underwriters, each of which has been obtained and is in full force and effect and (ii) such
Consents the absence of which could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate .
(o) Except as disclosed in the Registration Statement, the Pricing Prospectus and the
Prospectus, there is no judicial, regulatory, arbitral or other legal or governmental proceeding or
other litigation or arbitration, domestic or foreign, pending to which the Company or any
Subsidiary is a party or of which any property, operations or assets of the Company or any
Subsidiary is the subject which, individually or in the aggregate, if determined adversely to the
Company or any Subsidiary, could reasonably be expected to have a Material Adverse Effect; to the
Company’s knowledge, no such proceeding, litigation or arbitration is threatened or contemplated;
and the defense of all such proceedings, litigation and arbitration against or involving the
Company or any Subsidiary could not reasonably be expected to have a Material Adverse Effect.
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(p) The financial statements and pro forma data, including the notes thereto, and the
supporting schedules included or incorporated by reference in the Registration Statement, the
Pricing Prospectus and the Prospectus present fairly, in all material respects, the financial
position as of the dates indicated and the cash flows and results of operations for the periods
specified of the Company and its consolidated subsidiaries and the other entities for which
financial statements are included or incorporated by reference in the Registration Statement, the
Pricing Prospectus and the Prospectus; except as otherwise stated in the Registration Statement,
the Pricing Prospectus and the Prospectus, said financial statements have been prepared in
conformity with United States generally accepted accounting principles applied on a consistent
basis throughout the periods involved; and the supporting schedules included in the Registration
Statement, the Pricing Prospectus and the Prospectus present fairly, in all material respects, the
information required to be stated therein. No other financial statements or supporting schedules
are required to be included in the Registration Statement, the Pricing Prospectus or the Prospectus
by the Securities Act, the Exchange Act or the Rules and Regulations. The other financial and
statistical information included or incorporated by reference in the Registration Statement, the
Pricing Prospectus and the Prospectus present fairly the information included therein and have been
prepared on a basis consistent with that of the financial statements that are included or
incorporated by reference in the Registration Statement, the Pricing Prospectus and the Prospectus
and the books and records of the respective entities presented therein.
(q) The pro forma financial statements included in the Registration Statement, the Pricing
Prospectus and the Prospectus have been properly compiled and prepared in accordance with the
applicable requirements of the Securities Act and the Exchange Act and the Rules and Regulations
and include all adjustments necessary to present fairly in accordance with United States generally
accepted accounting principles the pro forma financial position of the respective entity or
entities presented therein at the respective dates indicated and their cash flows and the results
of operations for the respective periods specified.
(r) The statistical, industry-related and market-related data included in the Registration
Statement, the Pricing Prospectus and the Prospectus are based on or derived from sources which the
Company reasonably and in good faith believes are reliable and accurate, and such data agree with
the sources from which they are derived.
(s) The Common Stock has been registered pursuant to Section 12(b) of the Exchange Act. The
Common Stock is listed and the Shares will be listed, on the New York Stock Exchange (the “NYSE”),
and the Company has taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common Stock from the
NYSE, nor has the Company received any notification that the Commission or the NYSE is
contemplating terminating such registration or listing.
(t) The Company and its Subsidiaries maintain a system of internal accounting and other
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 conformity with United States generally
accepted accounting principles and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or specific
7
authorization, and (iv) the recorded accounting for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any differences.
(u) The Company maintains a system of internal control over financial reporting (as such term
is defined in Rule 13a-15(f) under the Exchange Act) that complies with the requirements of the
Exchange Act and has been designed by the Company’s principal executive officer and principal
financial officer, or under their supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Except as disclosed in the
Registration Statement, the Pricing Prospectus and the Prospectus, the Company’s internal control
over financial reporting is effective and the Company is not aware of any material weaknesses in
its internal control over financial reporting. Since the date of the latest audited financial
statements included or incorporated by reference in the Registration Statement, the Pricing
Prospectus and the Prospectus, there has been no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
(v) The Company maintains disclosure controls and procedures (as such term is defined in Rule
13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such
disclosure controls and procedures have been designed to ensure that material information relating
to the Company and its subsidiaries is made known to the Company’s principal executive officer and
principal financial officer by others within those entities; and such disclosure controls and
procedures are effective.
(w) There is and has been no failure on the part of the Company or any of its directors or
officers, in their capacities as such, to comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 and the rules and regulations promulgated in connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”),
including, without limitation, Section 402 related to loans and Sections 302 and 906 related to
certifications.
(x) Neither the Company nor any of its affiliates (within the meaning of Rule 144 under the
Securities Act) has taken, directly or indirectly, any action which constitutes or is designed to
cause or result in, or which could reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the sale or resale of the
Shares.
(y) Neither the Company nor any of its affiliates (within the meaning of Rule 144 under the
Securities Act) has, prior to the date hereof, made any offer or sale of any securities which could
be “integrated” (within the meaning of the Securities Act and the Rules and Regulations) with the
offer and sale of the Shares pursuant to the Registration Statement.
(z) The statements set forth in the Registration Statement, the Pricing Prospectus and
Prospectus under the captions “Description of Our Capital Stock” and “Description of Our Common
Stock,” insofar as they purport to constitute a summary of the terms of the Common Stock, under the
caption “Underwriting” (other than the statements in the paragraphs referred to in Section 16),
insofar as it purports to describe the document referred to therein, and under the captions
“Material Provisions of Maryland Law and of Our Charter and
8
Bylaws” and “Federal Income Tax Consequences of Our Status as a REIT,” are accurate, complete
and fair in all material respects.
(aa) The Company is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act and files periodic reports with the Commission, and the conditions for use of Form S-3
to register and offer the Shares under the Securities Act have been satisfied. The documents
incorporated or deemed to be incorporated by reference in the Pricing Prospectus and the
Prospectus, at the time they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Securities Act, the Exchange Act and
the Rules and Regulations and, when read together with the other information in the Pricing
Prospectus or the Prospectus, as applicable, do not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(bb) The Company is not and, at all times up to and including consummation of the transactions
contemplated by this Agreement, and after giving effect to application of the net proceeds of the
Offering as described in the Registration Statement, the Pricing Prospectus and the Prospectus,
will not be, required to register as an “investment company” under the Investment Company Act of
1940, as amended, and is not and will not be an entity “controlled” by an “investment company”
within the meaning of such act.
(cc) Except as disclosed in the Registration Statement, the Pricing Prospectus and the
Prospectus, there are no contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company or any Underwriter for a brokerage
commission, finder’s fee or other like payment in connection with the transactions contemplated by
this Agreement or, to the Company’s knowledge, any arrangements, agreements, understandings,
payments or issuance with respect to the Company or any of its officers, directors, shareholders,
partners, employees, Subsidiaries or affiliates that may affect the Underwriters’ compensation as
determined by the FINRA.
(dd) Each of the Company and each Subsidiary owns or leases all such properties as are
necessary to the conduct of its business as presently operated and as proposed to be operated as
described in the Registration Statement, the Pricing Prospectus and the Prospectus. The Company
and the Subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case free and clear of any and all
Liens except such as are described in the Registration Statement, the Pricing Prospectus and the
Prospectus or such as do not (individually or in the aggregate) materially affect the value of such
property or materially interfere with the use made or proposed to be made of such property by the
Company and the Subsidiaries; and any real property and buildings held under lease or sublease by
the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material to, and do not materially interfere with, the use made and
proposed to be made of such property and buildings by the Company and the Subsidiaries. Neither
the Company nor any Subsidiary has received any notice of any claim adverse to its ownership of any
real or personal property or of any claim against the continued possession of any real property,
whether owned or held under lease or sublease by the Company or any Subsidiary.
9
(ee) Each of the Company and each Subsidiary (i) owns or possesses the right to use all
patents, patent applications, trademarks, service marks, domain names, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses, formulae, customer lists, and
know-how and other intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures, “Intellectual
Property”) necessary for the conduct of their respective businesses as presently conducted and as
described in the Registration Statement, the Pricing Prospectus and the Prospectus and (ii) has no
reason to believe that the conduct of their respective businesses does or will conflict with, and
have not received any notice of any claim of conflict with, any such right of others. To the
Company’s knowledge, all material technical information developed by and belonging to the Company
or any Subsidiary which has not been patented has been kept confidential. Neither the Company nor
any Subsidiary has granted, licensed or assigned to any other person or entity any right to
manufacture, have manufactured, assemble or sell the current products and services of the Company
and its Subsidiaries or those products and services described in the Registration Statement, the
Pricing Prospectus and the Prospectus. There is no infringement by third parties of any such
Intellectual Property; there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the Company’s or any Subsidiary’s rights in or to any
such Intellectual Property, and the Company is unaware of any facts which would form a reasonable
basis for any such claim; and there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others that the Company or any Subsidiary infringes or
otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any other fact which would form a reasonable basis for any
such claim.
(ff) The Company and the Subsidiaries maintain insurance in such amounts and covering such
risks as the Company reasonably considers adequate for the conduct of its business and the value of
its properties and as is customary for companies engaged in similar businesses in similar
industries, all of which insurance is in full force and effect, except where the failure to
maintain such insurance could not reasonably be expected to have a Material Adverse Effect. There
are no material claims by the Company or any Subsidiary under any such policy or instrument as to
which any insurance company is denying liability or defending under a reservation of rights clause.
The Company reasonably believes that it will be able to renew its existing insurance as and when
such coverage expires or will be able to obtain replacement insurance adequate for the conduct of
the business and the value of its properties at a cost that would not have a Material Adverse
Effect.
(gg) Each of the Company and each Subsidiary has accurately prepared and timely filed
(including in accordance with all applicable extensions) all federal, state, foreign and other tax
returns that are required to be filed by it and has paid or made provision for the payment of all
taxes, assessments, governmental or other similar charges, including without limitation, all sales
and use taxes and all taxes which the Company or any Subsidiary is obligated to withhold from
amounts owing to employees, creditors and third parties, with respect to the periods covered by
such tax returns (whether or not such amounts are shown as due on any tax return). No deficiency
assessment with respect to a proposed adjustment of the Company’s or any Subsidiary federal, state,
local or foreign tax is pending or, to the best of the Company’s knowledge, threatened. The
accruals and reserves on the books and records of the Company and the Subsidiaries in respect of
tax liabilities for any taxable period not finally determined are
10
adequate to meet any assessments and related liabilities for any such period and, since
September 30, 2007, the Company and the Subsidiaries have not incurred any liability for taxes
other than in the ordinary course of its business. There is no tax lien, whether imposed by any
federal, state, foreign or other taxing authority, outstanding against the assets, properties or
business of the Company or any Subsidiary.
(hh) No labor disturbance by the employees of the Company or any Subsidiary exists or, to the
best of the Company’s knowledge, is imminent and the Company is not aware of any existing or
imminent labor disturbances by the employees of any of its or any Subsidiary’s, which, in either
case (individually or in the aggregate), could reasonably be expected to have a Material Adverse
Effect.
(ii) No “prohibited transaction” (as defined in either Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published interpretations
thereunder (“ERISA”) or Section 4975 of the Internal Revenue Code of 1986, as amended from time to
time (the “Code”)), “accumulated funding deficiency” (as defined in Section 302 of ERISA) or other
event of the kind described in Section 4043(b) of ERISA (other than events with respect to which
the 30-day notice requirement under Section 4043 of ERISA has been waived) has occurred with
respect to any employee benefit plan for which the Company or any Subsidiary would have any
liability which could (individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect; each employee benefit plan for which the Company or any Subsidiary would have any
liability is in compliance in all material respects with applicable law, including (without
limitation) ERISA and the Code; the Company has not incurred and does not expect to incur liability
under Title IV of ERISA with respect to the termination of, or withdrawal from any “pension plan”;
and each plan for which the Company would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or by
failure to act, which could cause the loss of such qualification.
(jj) There has been no storage, generation, transportation, handling, use, treatment,
disposal, discharge, emission, contamination, release or other activity involving any kind of
hazardous, toxic or other wastes, pollutants, contaminants, petroleum products or other hazardous
or toxic substances, chemicals or materials (“Hazardous Substances”) by, due to, on behalf of, or
caused by the Company or any Subsidiary (or, to the Company’s knowledge, any other entity for whose
acts or omissions the Company is or may be liable) upon any property now or previously owned,
operated, used or leased by the Company or any Subsidiary, or upon any other property, which would
be a violation of or give rise to any liability under any applicable law, rule, regulation, order,
judgment, decree or permit, common law provision or other legally binding standard relating to
pollution or protection of human health and the environment (“Environmental Law”), except for
violations and liabilities which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. There has been no disposal, discharge, emission
contamination or other release of any kind at, onto or from any such property or into the
environment surrounding any such property of any Hazardous Substances with respect to which the
Company or any Subsidiary has knowledge, except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary
has agreed to assume, undertake or provide indemnification for any liability of any other person
under any Environmental Law, including
11
any obligation for cleanup or remedial action, except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. There is no pending or, to the
best of the Company’s knowledge, threatened administrative, regulatory or judicial action, claim or
notice of noncompliance or violation, investigation or proceedings relating to any Environmental
Law against the Company or any Subsidiary. No property of the Company or any Subsidiary is subject
to any Lien under any Environmental Law. Neither the Company nor any Subsidiary is subject to any
order, decree, agreement or other individualized legal requirement related to any Environmental
Law.
(kk) None of the Company, any Subsidiary or, to the Company’s knowledge, any of its employees
or agents acting on behalf of the Company or any Subsidiary, has at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office, or failed to disclose
fully any such contribution in violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United States of any
jurisdiction thereof. The operations of the Company and each Subsidiary are and have been
conducted at all times in compliance with applicable financial record-keeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any arbitrator involving the
Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the best
knowledge of the Company, threatened. Neither the Company nor any Subsidiary nor, to the knowledge
of the Company, any director, officer, agent, employee or affiliate of the Company or any
Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by OFAC.
(ll) Neither the Company nor any Subsidiary (i) is in violation of its certificate or articles
of incorporation, by-laws, certificate of formation, limited liability company agreement,
partnership agreement or other organizational documents, (ii) is in default under, and no event has
occurred which, with notice or lapse of time or both, would constitute a default under or result in
the creation or imposition of any Lien upon any property or assets of the Company or any Subsidiary
pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its property or assets
is subject, or (iii) is in violation of any statute, law, rule, regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other legal or governmental agency or
body, foreign or domestic, except (in the case clauses (ii) and (iii) above) for violations or
defaults that could not (individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect.
(mm) The Company has complied with the requirements of Rule 433 under the Securities Act with
respect to each Issuer Free Writing Prospectus including, without limitation,
12
all prospectus delivery, filing, record retention and legending requirements applicable to any
such Issuer Free Writing Prospectus. The Company has not (i) distributed any offering material in
connection with the Offering other than the Pricing Prospectus, the Prospectus, and any Issuer Free
Writing Prospectus set forth on Annex III hereto, or (ii) filed, referred to, approved, used or
authorized the use of any “free writing prospectus” as defined in Rule 405 under the Securities Act
with respect to the Offering or the Shares, except for any Issuer Free Writing Prospectus set forth
in Annex III hereto and any electronic road show previously approved by Bear ▇▇▇▇▇▇▇.
Any certificate signed by or on behalf of the Company and delivered to the Representatives or
to counsel for the Underwriters’ shall be deemed to be a representation and warranty by the Company
to each Underwriter as to the matters covered thereby.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to
each Underwriter and each Underwriter, severally and not jointly, agrees to purchase from the
Company, at a purchase price per share of $10.1935, the number of Firm Shares set forth opposite
their respective names on Schedule I hereto together with any additional number of Shares which
such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Payment of the purchase price for, and delivery of certificates representing, the Firm
Shares shall be made at the office of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP (“Underwriters’
Counsel”), or at such other place as shall be agreed upon by the Representatives and the Company,
at 10:00 A.M., New York City time, on November 21, 2007, or such other time and date as Bear
▇▇▇▇▇▇▇ and the Company may agree upon in writing (such time and date of payment and delivery being
herein called the “Closing Date”). Payment of the purchase price for the Firm Shares shall be made
by wire transfer in same day funds to the Company upon delivery of certificates for the Firm Shares
to the Representatives through the facilities of The Depository Trust Company for the respective
accounts of the several Underwriters. Certificates for the Firm Shares shall be registered in such
name or names and shall be in such denominations as the Representatives may request. The Company
will permit the Representatives to examine and package such certificates for delivery at least one
full business day prior to the Closing Date.
(c) In addition, on the basis of the representations, warranties, covenants and agreements
herein contained, but subject to the terms and conditions herein set forth, the Company hereby
grants to the Underwriters, acting severally and not jointly, the option to purchase up to
1,200,000 Additional Shares at the same purchase price per share to be paid by the Underwriters for
the Firm Shares as set forth in Section 2(a) above, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may be exercised at
any time and from time to time, in whole or in part on one or more occasions, on or before the
thirtieth day following the date of the Prospectus, by written notice from the Representatives to
the Company. Such notice shall set forth the aggregate number of Additional Shares as to which the
option is being exercised and the date and time, as reasonably determined by Bear ▇▇▇▇▇▇▇, when the
Additional Shares are to be delivered (any such date and time being
13
herein sometimes referred to as the “Additional Closing Date”); provided, however, that no
Additional Closing Date shall occur earlier than the Closing Date or earlier than the second full
business day after the date on which the option shall have been exercised nor later than the eighth
full business day after the date on which the option shall have been exercised. Upon any exercise
of the option as to all or any portion of the Additional Shares, each Underwriter, acting severally
and not jointly, agrees to purchase from the Company the number of Additional Shares that bears the
same proportion of the total number of Additional Shares then being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 10 hereof) bears to the total number of Firm Shares that the
Underwriters have agreed to purchase hereunder, subject, however, to such adjustments to eliminate
fractional shares as Bear ▇▇▇▇▇▇▇ in its sole discretion shall make.
(d) Payment of the purchase price for, and delivery of certificates representing, the
Additional Shares shall be made at the office of Underwriters’ Counsel, or at such other place as
shall be agreed upon by the Representatives and the Company, at 10:00 A.M., New York City time, on
the Additional Closing Date, or such other time as shall be agreed upon by Bear ▇▇▇▇▇▇▇ and the
Company. Payment of the purchase price for the Additional Shares shall be made by wire transfer in
same day funds to the Company upon delivery of certificates for the Additional Shares to the
Representatives through the facilities of The Depository Trust Company for the respective accounts
of the several Underwriters. Certificates for the Additional Shares shall be registered in such
name or names and shall be in such denominations as the Representatives may request. The Company
will permit the Representatives to examine and package such certificates for delivery at least one
full business day prior to the Additional Closing Date.
(e) The Company acknowledges and agrees that (i) the terms of this Agreement and the Offering
(including the price of the Shares) were negotiated at arm’s length between sophisticated parties
represented by counsel; (ii) no fiduciary, advisory or agency relationship between the Company and
the Underwriters has been created as a result of any of the transactions contemplated by this
Agreement or the process leading to such transactions, irrespective of whether any Underwriter has
advised or is advising any such party on other matters, (iii) the Underwriters’ obligations to the
Company in respect of the Offering are set forth in this Agreement in their entirety and (iv) it
has obtained such legal, tax, accounting and other advice as it deems appropriate with respect to
this Agreement and the transactions contemplated hereby and any other activities undertaken in
connection therewith, and it is not relying on the Underwriters with respect to any such matters.
3. Offering. Upon authorization of the release of the Firm Shares by the
Representatives, the Underwriters propose to offer the Shares for sale to the public upon the terms
and conditions set forth in the Prospectus.
4. Covenants of the Company. In addition to the other covenants and agreements of the
Company contained herein, the Company further covenants and agrees with each of the Underwriters
that:
(a) The Company shall prepare the Prospectus in a form approved by you and file such
Prospectus pursuant to, and within the time period specified in, Rule 424(b) and Rule
14
430A and 430C under the Securities Act; prior to the last date on which an Additional Closing
Date, if any, may occur, the Company shall file no further amendment to the Registration Statement
or amendment or supplement to the Prospectus to which you shall object in writing after being
furnished in advance a copy thereof and given a reasonable opportunity to review and comment
thereon; the Company shall notify you promptly (and, if requested by Bear ▇▇▇▇▇▇▇, confirm such
notice in writing) (i) when the Registration Statement and any amendments thereto become effective,
(ii) of any request by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information, (iii) of the Company’s intention to
file, or prepare any supplement or amendment to, the Registration Statement, any Preliminary
Prospectus, the Prospectus or any Issuer Free Writing Prospectus, (iv) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, including but not limited to Rule 462(b) under the Securities Act, (v)
of the issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto, or suspending the use of any
Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus or, in each case, of
the initiation or threatening of any proceedings therefore, (vi) of the receipt of any comments
from the Commission, and (vii) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for that purpose. If the Commission shall propose or enter a stop
order at any time, the Company will make every effort to prevent the issuance of any such stop
order and, if issued, to obtain the lifting of such order as soon as possible.
(b) If at any time when a prospectus relating to the Shares (or, in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required to be delivered under the
Securities Act, any event shall have occurred as a result of which the Pricing Disclosure Package
(prior to the availability of the Prospectus) or the Prospectus as then amended or supplemented
would, in the judgment of the Underwriters or the Company, include an untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances existing at the time of delivery of such
Pricing Disclosure Package or Prospectus (or, in lieu thereof, the notice referred to in Rule
173(a) under the Securities Act) to the purchaser, not misleading, or if to comply with the
Securities Act, the Exchange Act or the Rules and Regulations it shall be necessary at any time to
amend or supplement the Pricing Disclosure Package, the Prospectus or the Registration Statement ,
or to file any document incorporated by reference in the Registration Statement or the Prospectus
or in any amendment thereof or supplement thereto, the Company will notify you promptly and prepare
and file with the Commission an appropriate amendment or document (in form and substance
satisfactory to Bear ▇▇▇▇▇▇▇) that will correct such statement or omission or effect such
compliance, and will use its best efforts to have any amendment to the Registration Statement
declared effective as soon as possible.
(c) The Company will not, without the prior consent of Bear ▇▇▇▇▇▇▇, (i) make any offer
relating to the Shares that would constitute a “free writing prospectus” as defined in Rule 405
under the Securities Act, except for any Issuer Free Writing Prospectus set forth in Annex III
hereto and any electronic road show previously approved by Bear ▇▇▇▇▇▇▇, or (ii) file, refer to,
approve, use or authorize the use of any “free writing prospectus” as defined in Rule 405 under the
Securities Act with respect to the Offering or the Shares. If at any time any event shall
15
have occurred as a result of which any Issuer Free Writing Prospectus as then amended or
supplemented would, in the judgment of the Underwriters or the Company, conflict with the
information in the Registration Statement, the Pricing Prospectus or the Prospectus as then amended
or supplemented or would, in the judgment of the Underwriters or the Company, include an untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances existing at the time of
delivery to the purchaser, not misleading, or if to comply with the Securities Act or the Rules and
Regulations it shall be necessary at any time to amend or supplement any Issuer Free Writing
Prospectus, the Company will notify Bear ▇▇▇▇▇▇▇ promptly and, if requested by Bear ▇▇▇▇▇▇▇,
prepare and furnish without charge to each Underwriter an appropriate amendment or supplement (in
form and substance satisfactory to Bear ▇▇▇▇▇▇▇) that will correct such statement, omission or
conflict or effect such compliance.
(d) The Company has complied and will comply with the requirements of Rule 433 with respect to
each Issuer Free Writing Prospectus including, without limitation, all prospectus delivery, filing,
record retention and legending requirements applicable to each such Issuer Free Writing Prospectus;
and the Company has caused there to be made available at least one version of a “bona fide
electronic road show” (as defined in Rule 433 under the Securities Act) in a manner that causes the
Company not to be required, pursuant to Rule 433(d) under the Securities Act, to file with the
Commission any road show.
(e) The Company will promptly deliver to each of you and Underwriters’ Counsel a signed copy
of the Registration Statement, as initially filed and all amendments thereto, including all
consents and exhibits filed therewith, and will maintain in the Company’s files manually signed
copies of such documents for at least five years after the date of filing. The Company will
promptly deliver to each of the Underwriters such number of copies of any Preliminary Prospectus,
the Prospectus, the Registration Statement, any Issuer Free Writing Prospectus and all amendments
of and supplements to such documents, if any, and all documents incorporated by reference in the
Registration Statement and Prospectus or any amendment thereof or supplement thereto, as you may
reasonably request. Prior to 10:00 A.M., New York City time, on the business day next succeeding
the date of this Agreement and from time to time thereafter, the Company will furnish the
Underwriters with copies of the Prospectus in New York City in such quantities as you may
reasonably request.
(f) Promptly from time to time, the Company will use its best efforts, in cooperation with the
Representatives, to qualify the Shares for offering and sale under the securities laws relating to
the offering or sale of the Shares of such jurisdictions, domestic or foreign, as the
Representatives may designate and to maintain such qualification in effect for so long as required
for the distribution thereof; except that in no event shall the Company be obligated in connection
therewith to qualify as a foreign corporation or to execute a general consent to service of
process.
(g) The Company will make generally available to its security holders as soon as practicable,
but in any event not later than twelve months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Securities Act), an earnings statement of the
Company and the Subsidiaries (which need not be audited) complying with
16
Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of
the Company, Rule 158).
(h) During the period of ninety (90) days from the date of this Agreement (the “Lock-Up
Period”), without the prior written consent of Bear ▇▇▇▇▇▇▇, the Company (i) will not, directly or
indirectly, issue, offer, sell, agree to issue, offer or sell, solicit offers to purchase, grant
any call option, warrant or other right to purchase, purchase any put option or other right to
sell, pledge, borrow or otherwise dispose of any Relevant Security, or make any public announcement
of any of the foregoing, (ii) will not establish or increase any “put equivalent position” or
liquidate or decrease any “call equivalent position” (in each case within the meaning of Section 16
of the Exchange Act and the Rules and Regulations) with respect to any Relevant Security, and (iii)
will not otherwise enter into any swap, derivative or other transaction or arrangement that
transfers to another, in whole or in part, any economic consequence of ownership of a Relevant
Security, whether or not such transaction is to be settled by delivery of Relevant Securities,
other securities, cash or other consideration; and the Company will obtain an undertaking in
substantially the form of Annex II hereto of each of its officers and directors and its
stockholders and other persons or entities listed on Schedule II attached hereto, not to engage in
any of the aforementioned transactions on their own behalf, other than the sale of Shares as
contemplated by this Agreement and the Company’s issuance of Common Stock upon (A) the conversion
or exchange of convertible or exchangeable securities outstanding on the date hereof; (B) the
exercise of currently outstanding options; (C) the exercise of currently outstanding warrants; (D)
the grant and exercise of options under, or the issuance and sale of shares pursuant to, employee
stock option plans in effect on the date hereof, each as described in the Registration Statement,
the Pricing Prospectus and the Prospectus and (E) the issuance and sale of Stock pursuant to the
sales agreement, dated September 22, 2004, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Securities Corporation
and the Company. The Company will not file a registration statement under the Securities Act in
connection with any transaction by the Company or any person that is prohibited pursuant to the
foregoing, except for registration statements on Form S-8 relating to employee benefit plans.
Notwithstanding the foregoing, if (a) during the period that begins on the date that is 15
calendar days plus three business days before the last day of the Lock-Up Period and ends on the
last day of the Lock-Up Period, the Company issues an earnings release or material news or a
material event relating to the Company occurs or (b) prior to the expiration of the Lock-Up Period,
the Company announces that it will release earnings results during the 17-day period beginning on
the last day of the Lock-Up Period, these “lock-up” restrictions imposed will continue to apply
until the expiration of the period that is 15 calendar days plus three business days after the date
on which the issuance of the earnings release or the material news or material event occurs, unless
Bear ▇▇▇▇▇▇▇ waive the extension of such restrictions. Bear ▇▇▇▇▇▇▇ may, in their sole discretion
and at any time or from time to time before the termination of the Lock-Up Period, without notice,
release all or any portion of the securities subject to lock-up agreements. The Company will
provide the Representatives and any co-managers, each officer and director of the Company and each
stockholder and other person or entity listed on Schedule II attached hereto with prior notice of
any such announcement that gives rise to an extension of the Lock-Up Period.
17
(i) During the period of five years from the effective date of the Registration Statement, the
Company will furnish to you copies of all reports or other communications (financial or other)
furnished to security holders or from time to time published or publicly disseminated by the
Company, and will deliver to you (i) as soon as they are available, copies of any reports,
financial statements and proxy or information statements furnished to or filed with the Commission
or any national securities exchange on which any class of securities of the Company is listed and
are not available on the Commission’s Electronic Date Gathering, Analysis and Retrieval System
(“▇▇▇▇▇”); and (ii) such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial information to be on a
consolidated basis to the extent the accounts of the Company and the Subsidiaries are consolidated
in reports furnished to its security holders generally or to the Commission) which are not
available on ▇▇▇▇▇.
(j) The Company will use its best efforts to list the Shares, subject to notice of issuance,
on the NYSE and maintain the listing of the Shares on the NYSE.
(k) The Company will apply the net proceeds from the sale of the Shares as set forth under the
caption “Use of Proceeds” in the Registration Statement, the Pricing Prospectus and the Prospectus.
(l) The Company, during the period when a prospectus (or, in lieu thereof, the notice referred
to in Rule 173(a) under the Securities Act) is required to be delivered under the Securities Act in
connection with the offer or sale of the Shares, will file all reports and other documents required
to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act and the Rules and Regulations within the time periods required thereby.
(m) If the Company elects to rely upon Rule 462(b) under the Securities Act, the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462 by 10:00
p.m. (Eastern time), on the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462 Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Securities
Act.
(n) The Company will not take, and will cause its affiliates (within the meaning of Rule 144
under the Securities Act) not to take, directly or indirectly, any action which constitutes or is
designed to cause or result in, or which could reasonably be expected to constitute, cause or
result in, the stabilization or manipulation of the price of any security to facilitate the sale or
resale of the Shares.
5. Covenant of the Underwriters. Each Underwriter, severally and not jointly,
covenants and agrees with the Company that such Underwriter will not use or refer to any “free
writing prospectus” (as defined in Rule 405 under the Securities Act) without the prior written
consent of the Company if such Underwriter’s use of or reference to such “free writing prospectus”
would require the Company to file with the Commission any “issuer information” (as defined in Rule
433 under the Securities Act).
18
6. Payment of Expenses. Whether or not the transactions contemplated by this
Agreement, the Registration Statement and the Prospectus are consummated or this Agreement is
terminated, the Company hereby agrees to pay all costs and expenses incident to the performance of
its obligations hereunder, including the following: (i) all expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary Prospectus, any
Issuer Free Writing Prospectus, the Prospectus and any and all amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the fees,
disbursements and expenses of the Company’s counsel and accountants in connection with the
registration of the Shares under the Securities Act and the Offering; (iii) the cost of producing
this Agreement and any agreement among Underwriters, blue sky survey, closing documents and other
instruments, agreements or documents (including any compilations thereof) in connection with the
Offering; (iv) all expenses in connection with the qualification of the Shares for offering and
sale under state or foreign securities or blue sky laws as provided in Section 4(f) hereof,
including the fees and disbursements of counsel for the Underwriters in connection with such
qualification or offering and in connection with any blue sky survey; (v) the filing fees incident
to, and the fees and disbursements of counsel for the Underwriters in connection with, securing any
required review by the FINRA of the terms of the Offering; (vi) all fees and expenses in connection
with listing the Shares on the NYSE; (vii) all travel expenses of the Company’s officers and
employees and any other expense of the Company incurred in connection with attending or hosting
meetings with prospective purchasers of the Shares; and (viii) any stock transfer taxes incurred in
connection with this Agreement or the Offering. The Company also will pay or cause to be paid: (x)
the cost of preparing stock certificates representing the Shares; (y) the cost and charges of any
transfer agent or registrar for the Shares; and (z) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically provided for in this
Section 6. It is understood, however, that except as provided in Sections 8, 9 and 12 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of their counsel and
stock transfer taxes on resale of any of the Shares by them.
7. Conditions of Underwriters’ Obligations. The several obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares, as provided herein,
shall be subject to the accuracy of the representations and warranties of the Company herein
contained, as of the date hereof and as of the Closing Date (for purposes of this Section 7,
“Closing Date” shall refer to the Closing Date for the Firm Shares and any Additional Closing Date,
if different, for the Additional Shares), to the performance by the Company of all of its
obligations hereunder, and to each of the following additional conditions:
(a) The Prospectus shall have been filed with the Commission in a timely fashion in accordance
with Section 4(a) hereof; no stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereto, and no stop order suspending or preventing the use of any
Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, shall have been
issued by the Commission and no proceedings therefor shall have been initiated or threatened by the
Commission; all requests for additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction; if the Company has elected to rely on Rule 462(b)
under the Securities Act, the Rule 462(b) Registration Statement shall have become effective by
10:00 p.m. (Washington, D.C. time) on
19
the date of this Agreement; and all necessary domestic regulatory or stock exchange approvals
shall have been received.
(b) At the Closing Date you shall have received the written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, LLP,
counsel for the Company, and ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special Maryland counsel for the Company, dated
the Closing Date and addressed to the Underwriters, in form and substance satisfactory to you, to
the effect set forth in Exhibit A and Exhibit B, respectively, of Annex I hereto.
(c) At the Closing Date, you shall have received the written opinion of Underwriters’ Counsel,
dated the Closing Date and addressed to the Underwriters, in form and substance satisfactory to
you, with respect to the issuance and sale of the Shares, the Registration Statement, the Pricing
Disclosure Package, the Prospectus and such other matters as you may require, and the Company shall
have furnished to Underwriters’ Counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(d) At the Closing Date you shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company, dated the Closing Date, in form and substance
satisfactory to you, as to the accuracy of the representations and warranties of the Company set
forth in Section 1 hereof as of the date hereof and as of the Closing Date, as to the performance
by the Company of all of its obligations hereunder to be performed at or prior to the Closing Date,
as to the matters set forth in subsections (a), (f) and (g) of this Section 7, and as to such other
matters as you may reasonably request.
(e) At the time this Agreement is executed and at the Closing Date, you shall have received a
comfort letter, from Ernst & Young LLP, independent public accountants for the Company, dated,
respectively, as of the date of this Agreement and as of the Closing Date, addressed to the
Underwriters and in form and substance satisfactory to the Underwriters and Underwriters’ Counsel.
(f) (i) Neither the Company nor any Subsidiary shall have sustained, since the date of the
latest audited financial statements included or incorporated by reference in the Pricing
Prospectus, any material loss or interference with its business or properties from fire, explosion,
flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding, other than as set forth in the Pricing
Prospectus (exclusive of any supplement thereto); and (ii) subsequent to the dates as of which
information is given in the Registration Statement (exclusive of any amendment thereto subsequent
to the date hereof) and the Pricing Prospectus (exclusive of any supplement thereto), there shall
not have been any change in the capital stock or long-term or short-term debt of the Company or any
Subsidiary or any change or any development involving a change, whether or not arising from
transactions in the ordinary course of business, in the business, general affairs, management,
condition (financial or otherwise), results of operations, stockholders’ equity, properties or
prospects of the Company and the Subsidiaries, individually or taken as a whole, the effect of
which, in any such case described above, is, in the judgment of the Representatives, so material
and adverse as to make it impracticable or inadvisable to proceed with the Offering on the terms
and in the manner contemplated in the Pricing Prospectus (exclusive of any such supplement).
20
(g) On or after the Applicable Time, (i) no downgrading shall have occurred in the rating
accorded the Company’s debt securities or preferred stock by any “nationally recognized statistical
rating organization”, as such term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act, and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of any of the
Company’s debt securities or preferred stock.
(h) You shall have received a duly executed lock-up agreement from each person who is a
director or officer of the Company and each shareholder and other person or entity listed on
Schedule II hereto, in each case substantially in the form attached hereto as Annex II.
(i) At the Closing Date, the Shares shall have been approved for listing, upon notice of
issuance, on the NYSE.
(j) At the Closing Date, the FINRA shall have confirmed that it has not raised any objection
with respect to the fairness and reasonableness of the underwriting terms and arrangements for the
Offering.
(k) At the Closing Date, you shall have received a certificate, dated such Closing Date, of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice President and Chief Financial Officer of the Compamy,
substantially in the form set forth in Annex IV hereto.
(l) The Company shall have furnished the Underwriters and Underwriters’ Counsel with such
other certificates, opinions or other documents as they may have reasonably requested.
If any of the conditions specified in this Section 7 shall not have been fulfilled when and as
required by this Agreement, or if any of the certificates, opinions, written statements or letters
furnished to you or to Underwriters’ Counsel pursuant to this Section 7 shall not be satisfactory
in form and substance to the Representatives and to Underwriters’ Counsel, all obligations of the
Underwriters hereunder may be cancelled by the Representatives at, or at any time prior to, the
Closing Date and the obligations of the Underwriters to purchase the Additional Shares may be
cancelled by the Representatives at, or at any time prior to, the Additional Closing Date. Notice
of such cancellation shall be given to the Company in writing or by telephone. Any such telephone
notice shall be confirmed promptly thereafter in writing.
8. Indemnification.
(a) The Company shall indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, and each affiliate of any Underwriter within the meaning of Rule 405 under the
Securities Act from and against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys’ fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as
21
such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in (A) the Registration Statement, as
originally filed or any amendment thereof, or in any Preliminary Prospectus, the Pricing Disclosure
Package or the Prospectus, or in any supplement thereto or amendment thereof, or in any Issuer Free
Writing Prospectus, or in any “issuer information” (as defined in Rule 433(h)(2) under the
Securities Act) filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or
(B) any other materials or information provided to investors by, or with the approval of, the
Company in connection with the Offering, including in any “road show” (as defined in Rule 433 under
the Securities Act) for the Offering (“Marketing Materials”), or (ii) the omission or alleged
omission to state (A) in the Registration Statement, as originally filed or any amendment thereof,
a material fact required to be stated therein or necessary to make the statements therein not
misleading, or (B) in any Preliminary Prospectus, the Pricing Disclosure Package or the Prospectus,
or in any supplement thereto or amendment thereof, or in any Issuer Free Writing Prospectus, or in
any “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) filed or required
to be filed pursuant to Rule 433(d) under the Securities Act, or in any Marketing Materials, a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided, however, that the
Company will not be liable in any such case to the extent but only to the extent that any such
loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement
or alleged untrue statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of any Underwriter
through Bear ▇▇▇▇▇▇▇ expressly for use therein. The parties agree that such information provided
by or on behalf of any Underwriter through Bear ▇▇▇▇▇▇▇ consists solely of the material referred to
in Section 16 hereof. This indemnity agreement will be in addition to any liability which the
Company may otherwise have, including but not limited to other liability under this Agreement.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, each of the directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
losses, liabilities, claims, damages and expenses whatsoever as incurred (including but not limited
to attorneys’ fees and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to which they or any of
them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, as originally filed or any amendment thereof, or the omission or
alleged omission therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a
material fact included in any Preliminary Prospectus, the Pricing Disclosure Package or the
Prospectus, or in any amendment thereof or supplement thereto, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises
out of or is based
22
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through Bear ▇▇▇▇▇▇▇ specifically for use
therein; provided, however, that in no case shall any Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares to be purchased by such
Underwriter hereunder. The parties agree that such information provided by or on behalf of any
Underwriter through Bear ▇▇▇▇▇▇▇ consists solely of the material referred to in Section 16 hereof.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice
of any claims or the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such subsection, notify each
party against whom indemnification is to be sought in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve the indemnifying
party from any liability which it may have under this Section 8). In case any such claim or action
is brought against any indemnified party, counsel to such indemnified party shall be selected by
such indemnified party. An indemnifying party may participate at its own expense in the defense of
any such claim or action; provided, however, 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. No indemnifying party shall, without
the prior written consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened claim, investigation,
action or proceeding in respect of which indemnity or contribution may be or could have been sought
by an indemnified party under this Section 8 or Section 9 hereof (whether or not the indemnified
party is an actual or potential party
thereto), unless such settlement, compromise or judgment (i) includes an unconditional release
of the indemnified party from all liability arising out of such claim, investigation, action or
proceeding and (ii) does not include a statement as to or an admission of fault, culpability or any
failure to act, by or on behalf of the indemnified party. If at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by subsections (a) or (b), as applicable, effected without its written consent if (A)
such settlement is entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (B) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and (C) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.
9. Contribution. In order to provide for contribution in circumstances in which the
indemnification provided for in Section 8 hereof is for any reason held to be unavailable from any
indemnifying party or is insufficient to hold harmless a party indemnified thereunder, the Company
and the Underwriters shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
23
case of losses,
claims, damages, liabilities and expenses suffered by the Company, any contribution received by the
Company from persons, other than the Underwriters, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company and one or more of the Underwriters may
be subject, in such proportions as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the Offering or, if such allocation
is not permitted by applicable law, in such proportions as are appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as (x) the total proceeds from the
Offering (net of underwriting discounts and commissions but before deducting expenses) received by
the Company bears to (y) the underwriting discount or commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus. The relative fault of
each of the Company and of the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the Company on the one
hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to above
in this Section 9 shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or other legal or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of this Section 9, (i)
no Underwriter shall be required to contribute any amount in excess of the amount by which the
discounts and commissions applicable to the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged omission and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act
shall have the same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the Company, as applicable,
subject in each case to clauses (i) and
24
(ii) of the immediately preceding sentence. Any party
entitled to contribution will, promptly after receipt of notice of commencement of any action, suit
or proceeding against such party in respect of which a claim for contribution may be made against
another party or parties, notify each party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this Section 9 or
otherwise. The obligations of the Underwriters to contribute pursuant to this Section 9 are
several in proportion to the respective number of Shares to be purchased by each of the
Underwriters hereunder and not joint.
10. Underwriter Default.
(a) If any Underwriter or Underwriters shall default in its or their obligation to purchase
Firm Shares or Additional Shares hereunder, and if the Firm Shares or Additional Shares with
respect to which such default relates (the “Default Shares”) do not (after giving effect to
arrangements, if any, made by the Representatives pursuant to subsection (b) below) exceed in the
aggregate 10% of the number of Firm Shares or Additional Shares, each non-defaulting Underwriter,
acting severally and not jointly, agrees to purchase from the Company that number of Default Shares
that bears the same proportion of the total number of Default Shares then being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto bears to
the aggregate number of Firm Shares set forth opposite the names of the non-defaulting
Underwriters, subject, however, to such adjustments to eliminate fractional shares as the
Representatives in their sole discretion shall make.
(b) In the event that the aggregate number of Default Shares exceeds 10% of the number of Firm
Shares or Additional Shares, as the case may be, the Representatives may in their discretion
arrange for itself or for another party or parties (including any non-defaulting Underwriter or
Underwriters who so agree) to purchase the Default Shares on the terms
contained herein. In the event that within five calendar days after such a default the
Representatives do not arrange for the purchase of the Default Shares as provided in this Section
10, this Agreement or, in the case of a default with respect to the Additional Shares, the
obligations of the Underwriters to purchase and of the Company to sell the Additional Shares shall
thereupon terminate, without liability on the part of the Company with respect thereto (except in
each case as provided in Sections 6, 8, 9, 11 and 12) or the Underwriters, but nothing in this
Agreement shall relieve a defaulting Underwriter or Underwriters of its or their liability, if any,
to the other Underwriters and the Company for damages occasioned by its or their default hereunder.
(c) In the event that any Default Shares are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid, the Representatives
or the Company shall have the right to postpone the Closing Date or Additional Closing Date, as the
case may be for a period, not exceeding five business days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus or in any other documents
and arrangements, and the Company agrees to file promptly any amendment or supplement to the
Registration Statement or the Prospectus which, in the opinion of Underwriters’ Counsel, may
thereby be made necessary or advisable. The term “Underwriter” as used in this Agreement shall
include any party substituted under this Section 10
25
with like effect as if it had originally been a
party to this Agreement with respect to such Firm Shares and Additional Shares.
11. Survival of Representations and Agreements. All representations and warranties,
covenants and agreements of the Underwriters and the Company contained in this Agreement or in
certificates of officers of the Company or any Subsidiary submitted pursuant hereto, including the
agreements contained in Section 4 and 5, the indemnity agreements contained in Section 8 and the
contribution agreements contained in Section 9, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any controlling person
thereof or by or on behalf of the Company, any of its officers and directors or any controlling
person thereof, and shall survive delivery of and payment for the Shares to and by the
Underwriters. The representations contained in Section 1 and the agreements contained in Sections
6, 8, 9 and 12 through 15 hereof shall survive any termination of this Agreement, including
termination pursuant to Section 10 or 12 hereof.
12. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective when the parties hereto have executed and delivered
this Agreement.
(b) The Representatives shall have the right to terminate this Agreement at any time prior to
the Closing Date or to terminate the obligations of the Underwriters to purchase the Additional
Shares at any time prior to the Additional Closing Date, as the case may be, if, at or after the
Applicable Time, (i) any domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Representatives will in the immediate future disrupt the market
for the Company’s securities or securities in general; or (ii) a suspension or material limitation
in trading in securities generally on the NYSE or Nasdaq shall have occurred; or (iii) a suspension
or material limitation in trading in the Company’s securities on the NYSE shall have
occurred; or (iv) a banking moratorium has been declared by any state or federal authority or
any material disruption in commercial banking or securities settlement or clearance services shall
have occurred; or (v) any downgrading shall have occurred in the Company’s corporate credit rating
or the rating accorded the Company’s debt securities or preferred stock by any “nationally
recognized statistical rating organization” (as defined for purposes of Rule 436(g) under the
Securities Act) or any such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any of the Company’s
debt securities; or (vi) (A) there shall have occurred any outbreak or escalation of hostilities or
acts of terrorism involving the United States or there is a declaration of a national emergency or
war by the United States or (B) there shall have been any other calamity or crisis or any change in
political, financial or economic conditions if the effect of any such event in (A) or (B), in the
judgment of the Representatives, makes it impracticable or inadvisable to proceed with the
offering, sale and delivery of the Firm Shares or the Additional Shares, as the case may be, on the
terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 12 shall be in writing.
(d) If this Agreement shall be terminated pursuant to any of the provisions hereof (other than
pursuant to Section 10(b) hereof), or if the sale of the Shares provided for
26
herein is not
consummated because any condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject to demand by the
Representatives, reimburse the Underwriters for all out-of-pocket expenses (including the fees and
expenses of their counsel), incurred by the Underwriters in connection herewith.
13. Notices. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or faxed and confirmed in writing,
to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ Parish, Senior Managing Director, Equity Transactions Group and c/o ▇.▇. ▇▇▇▇▇▇
Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Equity Syndicate
Desk, with a copy to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇;
(b) if sent to the Company, shall be mailed, delivered, or faxed and confirmed in writing to
the Company and its counsel at the addresses set forth in the Registration Statement, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer; provided, however, that any notice to an
Underwriter pursuant to Section 8 shall be delivered or sent by mail or facsimile transmission to
such Underwriter at its address set forth in its acceptance facsimile to Bear ▇▇▇▇▇▇▇, which
address will be supplied to any other party hereto by Bear ▇▇▇▇▇▇▇ upon request. Any such notices
and other communications shall take effect at the time of receipt thereof.
14. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters and the Company and the controlling persons, directors, officers,
employees and agents referred to in Sections 8 and 9 hereof, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended to be for the sole
and exclusive benefit of the parties hereto and said controlling persons and their respective
successors, officers, directors, heirs and legal representatives, and it is not for the benefit of
any other person, firm or corporation. The term “successors and assigns” shall not include a
purchaser, in its capacity as such, of Shares from any of the Underwriters.
15. Governing Law and Jurisdiction. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. The Company irrevocably (a) submits to the
jurisdiction of any court of the State of New York or the United State District Court for the
Southern District of the State of New York for the purpose of any suit, action, or other proceeding
arising out of this Agreement, or any of the agreements or transactions contemplated by this
Agreement, the Registration Statement and the Prospectus (each, a “Proceeding”), (b) agrees that
all claims in respect of any Proceeding may be heard and determined in any such court, (c) waives,
to the fullest extent permitted by law, any immunity
27
from jurisdiction of any such court or from
any legal process therein, (d) agrees not to commence any Proceeding other than in such courts, and
(e) waives, to the fullest extent permitted by law, any claim that such Proceeding is brought in an
inconvenient forum.
16. The parties acknowledge and agree that, for purposes of Sections 1(b), 1(c), 1(d) and 8
hereof, the information provided by or on behalf of any Underwriter consists solely of the material
included in third, seventeenth and eighteenth paragraphs under the caption “Underwriting” in the
Prospectus.
17. Counterparts. This Agreement may be executed 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. Delivery of a signed counterpart of this Agreement by facsimile
transmission shall constitute valid and sufficient delivery thereof.
18. Headings. The 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.
19. Time is of the Essence. Time shall be of the essence of this Agreement. As used
herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C.
is open for business.
[Signature page follows]
28
If the foregoing correctly sets forth your understanding, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a binding agreement among
us.
| Very truly yours, CAPSTEAD MORTGAGE CORPORATION |
||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Chief Executive Officer and President | |||
Accepted as of the date first above written
| BEAR, ▇▇▇▇▇▇▇ & CO. INC. | ||||
By:
|
/s/ ▇▇▇▇▇▇▇ Parish
|
|||
| Title: Senior Managing Director | ||||
| JMP SECURITIES LLC | ||||
By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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| Title: Co-President and Director of Investment Banking | ||||
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC. | ||||
By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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| Title: Managing Director | ||||
On behalf of themselves and as Representatives of the other
Underwriters named in Schedule I hereto.
Underwriters named in Schedule I hereto.
SCHEDULE I
SCHEDULE II
EXHIBIT A
Subsidiaries
ANNEX I
EXHIBIT A
Form of Opinion of Company Counsel
1
EXHIBIT B
Form of Opinion of Special Maryland Counsel to Company
2
ANNEX II
Form of Lock-Up Agreement
ANNEX III
ANNEX IV
OFFICER’S CERTIFICATE
EXHIBIT A