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EXHIBIT 10.34
SERIES C AND SERIES D CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
BY AND AMONG
CAPSTEAD MORTGAGE CORPORATION,
AND
FORTRESS INVESTMENT CORP.
DATED AS OF DECEMBER 9, 1999
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TABLE OF CONTENTS
INTRODUCTORY STATEMENTS.......................................................1
ARTICLE I
THE STOCK PURCHASE.......................................................1
SECTION 1.01 Purchase and Sale of Series C Preferred Shares...1
SECTION 1.02 Purchase and Sale of Series D Preferred Shares...2
SECTION 1.03 Date and Time of Closing.........................2
SECTION 1.04 Deliveries by Fortress...........................2
SECTION 1.05 Deliveries by Capstead. ........................2
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF FORTRESS..............................................................3
SECTION 2.01 Organization.....................................3
SECTION 2.02 Power and Capacity; Charter Documents............3
SECTION 2.03 No Conflicts.....................................3
SECTION 2.04 Consents and Approvals...........................3
SECTION 2.05 Accredited Investor..............................4
SECTION 2.06 Absence of Market................................4
SECTION 2.07 Investment Purposes..............................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF CAPSTEAD..............................................................4
SECTION 3.01 Organization and Qualification of Capstead.......5
SECTION 3.02 Power and Capacity; Charter Documents of
Capstead.........................................5
SECTION 3.03 Subsidiaries.....................................5
SECTION 3.04 Capitalization and Ownership; Authorization of
Preferred........................................7
SECTION 3.05 No Conflicts.....................................7
SECTION 3.06 Consents and Approvals...........................7
SECTION 3.07 Financial and Operating Statements and Reports...7
SECTION 3.08 No Undisclosed or Contingent Liabilities.........8
SECTION 3.09 Absence of Certain Changes.......................9
SECTION 3.10 Real Property...................................11
SECTION 3.11 Company Equipment...............................12
SECTION 3.12 Contracts and Commitments.......................12
SECTION 3.13 Intellectual Property...........................14
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SECTION 3.14 Inventory.......................................14
SECTION 3.15 Pension and Other Employee Plans and
Agreements......................................14
SECTION 3.16 Litigation......................................15
SECTION 3.17 Insurance.......................................15
SECTION 3.18 Collective Bargaining Agreements; Compensation;
Employee Agreements.............................16
SECTION 3.19 Compliance with Law.............................16
SECTION 3.20 Permits.........................................16
SECTION 3.21 Tax Matters.....................................16
SECTION 3.22 Title to Assets.................................17
ARTICLE IV
OTHER OBLIGATIONS OF THE PARTIES........................................19
SECTION 4.01 Conduct of Company Business.....................19
SECTION 4.02 Access to Books and Records.....................19
SECTION 4.03 Consents........................................19
SECTION 4.04 Supplemental Disclosure by Capstead.............19
SECTION 4.05 Governmental Filings............................20
SECTION 4.06 Covenant to Satisfy Conditions..................20
SECTION 4.07 Employees.......................................20
SECTION 4.08 Public Announcements............................20
ARTICLE V
CONDITIONS PRECEDENT....................................................20
SECTION 5.01 Conditions Precedent to Obligations of
Fortress........................................20
SECTION 5.02 Conditions Precedent to Obligations of
Capstead........................................22
ARTICLE VI
INDEMNIFICATION.........................................................23
SECTION 6.01 Survival of Representations and Warranties......23
SECTION 6.02 Indemnification by Capstead.....................23
SECTION 6.03 Indemnification by Fortress.....................23
SECTION 6.04 Limitations Regarding Indemnification
Obligations of Capstead.....................24
SECTION 6.05 Limitations Regarding Indemnification
Obligations of Fortress.....................24
SECTION 6.06 Conditions of Indemnification...................24
SECTION 6.07 Claim Disputes..................................25
SECTION 6.08 Remedies Exclusive..............................26
ARTICLE VII
TERMINATION OF AGREEMENT................................................26
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SECTION 7.01 Termination of Agreement........................26
SECTION 7.02 Procedure Upon Termination......................26
ARTICLE VIII
MISCELLANEOUS...........................................................26
SECTION 8.01 Commissions.....................................27
SECTION 8.02 Definition of Knowledge.........................27
SECTION 8.03 Definition of Material Adverse Effect and
Material Adverse Change.........................27
SECTION 8.04 Expenses, Taxes, Etc............................27
SECTION 8.05 Successors and Assigns..........................27
SECTION 8.06 No Third-Party Benefit..........................27
SECTION 8.07 Entire Agreement; Amendment.....................28
SECTION 8.08 Reformation and Severability....................28
SECTION 8.09 Notices.........................................28
SECTION 8.10 Governing Law...................................29
SECTION 8.11 Counterparts....................................29
EXHIBIT "A" - Form of Articles Supplementary for Series C Convertible
Preferred Stock
EXHIBIT "B" - Form of Articles Supplementary for Series D Convertible
Preferred Stock
EXHIBIT "C" - Form of Registration Rights Agreement EXHIBIT "D" - Form of
Supplemental Agreement EXHIBIT "E" - Form of Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
EXHIBIT "F" - Form of Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
APPENDIX I - Year End Financial Statements
APPENDIX II - Third Quarter Financial Statements
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SERIES C AND SERIES D CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
THIS SERIES C AND SERIES D CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT (this "AGREEMENT"), dated as of December 9, 1999, is by and
among Capstead Mortgage Corporation, a Maryland corporation ("CAPSTEAD") and
Fortress Investment Corp., a Maryland corporation ("FORTRESS").
INTRODUCTORY STATEMENTS
Capstead desires to sell and issue, and Fortress desires to
purchase, 5,378,000 shares of a series of Capstead's preferred stock to be
designated as Series C Convertible Preferred Stock, $.10 par value per share
(the "SERIES C PREFERRED STOCK"). The form of Articles Supplementary for the
Series C Preferred Stock is attached hereto as Exhibit "A" (the "SERIES C
ARTICLES SUPPLEMENTARY"). The shares of Series C Preferred Stock to be acquired
by Fortress shall be termed the "SERIES C SHARES".
Capstead desires to sell and issue, and Fortress desires to
purchase, 5,378,000 shares of a series of preferred stock to be designated as
Series D Convertible Preferred Stock, $.10 par value per share (the "SERIES D
PREFERRED STOCK"). The form of Articles Supplementary for the Series D
Preferred Stock is attached hereto as Exhibit "B" (the "SERIES D ARTICLES
SUPPLEMENTARY"). The shares of Series D Preferred Stock to be acquired by
Fortress shall be termed the "SERIES D SHARES". The Series C Shares and the
Series D Shares shall be termed collectively the "SHARES".
Accordingly, for and in consideration of the foregoing and
the mutual agreements, representations, warranties, covenants and conditions
herein set forth, and other good, valid and binding consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
ARTICLE I
THE STOCK PURCHASE
SECTION 1.01 Purchase and Sale of Series C Preferred Shares.
On and subject to the terms and conditions of this Agreement, Capstead
covenants and agrees that it will issue and sell to Fortress, and Fortress
covenants and agrees that it will purchase from Capstead, the Series C Shares.
The aggregate amount of consideration to be paid to Capstead for the Series C
Shares by Fortress shall be $25,600,000 (the "SERIES C PURCHASE PRICE"). The
Series C Purchase Price shall be paid to Capstead at the Closing by wire
transfer in immediately available funds.
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SECTION 1.02 Purchase and Sale of Series D Preferred Shares.
On and subject to the terms and conditions of this Agreement, Capstead
covenants and agrees that it will issue and sell to Fortress, and Fortress
covenants and agrees that it will purchase from Capstead, the Series D Shares.
The aggregate amount of consideration to be paid to Capstead for the Series D
Shares by Fortress shall be $25,600,000 ("SERIES D PURCHASE PRICE"). The Series
D Purchase Price shall be paid by Fortress to Capstead at the Closing by wire
transfer in immediately available funds.
SECTION 1.03 Date and Time of Closing. The sale and purchase
of the Shares provided for by this Article I shall be consummated, provided
that each of the conditions set forth in Article V hereto shall have been
satisfied or waived, at 10 a.m. on such date and at such place as may be
mutually agreed upon by the parties to this Agreement (the "CLOSING"). The date
on which the Closing actually occurs is referred to herein as the "CLOSING
DATE".
SECTION 1.04 Deliveries by Fortress. At the Closing, Fortress
shall deliver, or cause to be delivered, to Capstead (unless delivered
previously) the following:
(a) the Officers' Certificate referred to in Section 5.02(d)
hereof;
(b) the Secretary's Certificate referred to in Section
5.03(e) hereof;
(c) the Series C Purchase Price and the Series D Purchase
Price (collectively, the "PURCHASE PRICE"); and
(d) all other previously undelivered documents, instruments
and writings required to be delivered by Fortress to Capstead at or prior to
the Closing pursuant to this Agreement or otherwise required in connection
herewith.
SECTION 1.05 Deliveries by Capstead. At the Closing, Capstead
shall deliver, or cause to be delivered, to Fortress (unless delivered
previously) the following:
(a) certificates representing the Shares being purchased by
Fortress, which certificates shall be registered in the name of Fortress and
dated the Closing Date;
(b) the Officers' Certificate referred to in Section 5.01(d)
hereof;
(c) the Secretary's Certificates referred to in Section
5.01(e) hereof; and
(d) all other previously undelivered documents, instruments
and writings required to be delivered by Capstead to Fortress at or prior to
the Closing pursuant to this Agreement or otherwise required in connection
herewith.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF FORTRESS
Fortress represents and warrants to Capstead as follows:
SECTION 2.01 Organization. Fortress is a business trust duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
SECTION 2.02 Power and Capacity; Charter Documents.
(a) Fortress has all requisite power and authority to enter
into, execute and deliver this Agreement, the Registration Rights Agreement (as
defined below) and the Supplemental Agreement (as defined below) and perform
its obligations hereunder and thereunder. Each of this Agreement, the
Registration Rights Agreement and the Supplemental Agreement has been duly
executed and delivered by Fortress and is a valid and binding obligation of
Fortress, enforceable in accordance with its terms, subject in each case to
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief
or other equitable remedies.
(b) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by Fortress will
not result in a violation or breach of or constitute a default under any term
or provision of the Articles of Incorporation or Bylaws of Fortress.
SECTION 2.03 No Conflicts. The execution, delivery and
performance of this Agreement by Fortress and the consummation of the
transactions contemplated hereby will not violate any statute or law or any
judgment, decree, order, writ, injunction, regulation or rule of any court or
any local, state or federal governmental or regulatory authority, which
violation, conflict, acceleration, requirement, termination, modification or
default could reasonably be expected to result in a Material Adverse Effect on
the transactions contemplated by this Agreement.
SECTION 2.04 Consents and Approvals. Fortress is not required
to obtain, transfer or cause to be transferred any consent, approval, license,
permit or authorization of, or make any declaration, filing or registration
with, any third party or any public body or authority in connection with (a)
the execution and delivery by Fortress of this Agreement or (b) the
consummation of the transactions contemplated hereby, other than those that may
be required under applicable "blue sky" securities laws or that may be required
solely by reason of Capstead's (as opposed to any other third party's)
participation in the transactions contemplated hereby the failure of which to
obtain, transfer or cause to be transferred could reasonably be expected to
result in a Material Adverse Effect on the transactions contemplated by this
Agreement.
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SECTION 2.05 Accredited Investor. Fortress is an "ACCREDITED
INVESTOR" as such term is defined in Rule 501(a) promulgated under the
Securities Act of 1933 as amended (the "SECURITIES ACT"). Fortress represents
and warrants that it has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its or
his investment in the Shares being issued to it pursuant to Article I hereof.
SECTION 2.06 Absence of Market. Fortress acknowledges that
the Shares lack liquidity as compared with other investments since there is
not, and there is not expected to be, any market therefor, and that the sale or
transfer of the Shares must comply with applicable federal and state securities
laws. Fortress acknowledges that it must bear the economic risk of its
investment in the Shares for an indefinite period of time since none of the
Shares have been registered under the Securities Act and therefore cannot be
sold unless such Shares are subsequently registered pursuant to the terms of
the registration rights agreement attached hereto as Exhibit "C" (the
"REGISTRATION RIGHTS AGREEMENT") or otherwise, or an exemption from
registration is available.
SECTION 2.07 Investment Purposes. Fortress hereby represents
and warrants that it is acquiring the Shares for investment purposes only, for
its own account, and not as nominee or agent for any other person or entity,
and not with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act. Fortress further acknowledges
that representatives of Capstead have advised it that no state or federal
agency or instrumentality has made any finding or determination as to the
investment in the Shares, nor has any state or federal agency or
instrumentality made any recommendation with respect to any purchase or
investment in the Shares.
SECTION 2.08 Access and Information. Fortress hereby
represents and warrants that it has been given access to full and complete
information regarding the Company and, to the extent such access has been
given, Fortress has utilized that access to the satisfaction of Fortress for
the purpose of obtaining information concerning the Company. Fortress has
obtained, in its judgment, sufficient information to evaluate the merits and
risks of an investment in Capstead, understands the business in which the
Company is engaged, and is able to evaluate the merits and risks of an
investment in the Shares.
SECTION 2.09 REIT Status. Fortress has made a valid election
under applicable law to be treated as a real estate investment trust ("REIT")
as defined in Section 856 of the Internal Revenue Code of 1986, as amended (the
"Code") for its taxable year ending December 31, 1998 and has qualified as a
REIT for federal tax purposes for such year.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF CAPSTEAD
Capstead hereby represents and warrants to Fortress as
follows, except as otherwise set forth in the relevant section of the
disclosure schedule of Capstead (the "CAPSTEAD DISCLOSURE SCHEDULE"):
SECTION 3.01 Organization and Qualification of Capstead.
Capstead is (a) a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland and (b) duly qualified to do
business as a foreign corporation and in good standing in each jurisdiction in
which the character of the properties and assets now owned or leased by it or
the nature of the business transacted by it requires it to be so qualified,
except where the failure to be so qualified, individually or in the aggregate,
would not have a Material Adverse Effect (as defined herein) upon the Company
(as defined herein) or the consummation of the transactions contemplated
hereby. Each jurisdiction in which Capstead is qualified to do business is
listed on Section 3.01 of the Capstead Disclosure Schedule. No jurisdiction in
which Capstead is not qualified or licensed has claimed, in writing or
otherwise, that Capstead is required to qualify or be licensed therein.
SECTION 3.02 Power and Capacity; Charter Documents of
Capstead.
(a) Capstead has all requisite power and authority (corporate
and otherwise) to enter into, execute and deliver this Agreement, the
Registration Rights Agreement and the Supplemental Agreement, to sell and issue
the Shares hereunder, to issue the shares of Capstead's common stock ("COMMON
STOCK") issuable upon conversion of the Shares, and to carry out and perform
its obligations hereunder and thereunder. Capstead has the corporate power and
authority to carry on its business as now being conducted and to own and lease
its properties. Each of this Agreement, the Registration Rights Agreement and
the Supplemental Agreement has been duly executed and delivered by Capstead and
is a valid and binding obligation of Capstead, enforceable in accordance with
its terms, subject in each case to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
(b) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby by Capstead will
not result in a violation or breach of or constitute a default under any term
or provision of the Articles of Incorporation or Bylaws of Capstead. Complete
and correct copies of the Articles of Incorporation and Bylaws of Capstead, and
all amendments thereto, have been delivered to Fortress, and no changes therein
will be made subsequent to the date hereof and prior to the Closing without the
consent of Fortress, except that Articles Supplementary will be filed with the
State Department of Assessments and Taxation of Maryland in order to designate
and classify the Shares.
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SECTION 3.03 Subsidiaries.
(a) Section 3.03(a) of the Capstead Disclosure Schedule sets
forth for each subsidiary, direct or indirect, of Capstead (each a
"SUBSIDIARY"), its capital structure, its place of organization and the other
jurisdictions in which it is qualified to do business. Each of the Subsidiaries
has been duly organized and is validly existing and in good standing under the
laws of its respective state of incorporation, has all requisite corporate
power and authority to own or lease and operate its properties and conduct its
business as now conducted and is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties owned or leased by it makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company or the consummation of the transactions contemplated hereby. No
jurisdiction in which any Subsidiary is not qualified or licensed has claimed,
in writing or otherwise, that such Subsidiary is required to qualify or be
licensed therein, except where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company or the consummation of the transactions contemplated hereby.
(b) Capstead owns, free and clear of all mortgages, liens,
claims, charges, pledges, security interests or other encumbrances of any
nature whatsoever ("ENCUMBRANCES"), and has the unrestricted power to dispose
of and vote, all of the outstanding capital stock of each of the Subsidiaries.
There are no outstanding or authorized options, warrants, subscriptions, calls,
conversions or other rights, contracts, agreements, commitments or
understandings of any kind obligating any Subsidiary to issue, sell, purchase,
return or redeem any shares of its capital stock or any other securities
convertible into, exchangeable for or evidencing the right to subscribe for any
shares of capital stock of, or other ownership interest in, any Subsidiary. All
of the outstanding shares of the capital stock of each class of each Subsidiary
have been duly authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive rights or any applicable Law
(as defined herein).
(c) Except for its interest in any Subsidiary, Capstead does
not (i) own, beneficially or of record, any shares of any other corporation or
entity or any interests in any partnerships or limited liability companies or
(ii) participate in any manner in any joint ventures, corporate alliance
agreements or corporate partnering agreements. Except for Capstead's interest
in any Subsidiary, neither Capstead nor any Subsidiary has an interest in, or
is subject to, any agreement, obligation or commitment to make any equity
investment in or loan or advance to, any other Person (as defined herein).
(d) For purposes of this Agreement, Capstead and the
Subsidiaries shall collectively be termed the "COMPANY"; when such collective
term is used in connection with financial issues, it shall refer to Capstead
and the Subsidiaries as a consolidated whole. For example, when references are
made to officers, directors and employees of the Company, it shall mean all
officers, directors and stockholders of Capstead and the Subsidiaries.
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SECTION 3.04 Capitalization and Ownership; Authorization of
Preferred.
(a) Section 3.04(a) of the Disclosure Schedule lists, for
Capstead, its authorized capitalization and the number of shares of its capital
stock (or other equity interests) issued and outstanding as of September 30,
1999. All of the outstanding shares of the capital stock of Capstead are
validly issued, fully paid and non-assessable. All such shares are owned free
and clear of any Encumbrance imposed by Capstead. There are no outstanding
options, warrants or other rights to acquire any share of capital stock of
Capstead, there are no outstanding securities authorized, granted or issued by
Capstead that are convertible into or exchangeable for shares of its capital
stock and there are no phantom stock rights, dividend equivalent rights, stock
appreciation rights or similar rights regarding Capstead or any Subsidiary.
(b) The issuance, sale and delivery of the Shares have been
duly authorized by all requisite corporate action of Capstead and when issued,
sold and delivered in accordance with the terms of this Agreement, the Shares
will be validly issued and outstanding, fully paid and nonassessable.
(c) Capstead has duly reserved the number of shares of its
common stock (the "RESERVED SHARES") necessary for issuance upon conversion in
full of the Series C Shares and the Series D Shares. When issued, sold and
delivered in accordance with the terms of the Series C Articles Supplementary
or the Series D Articles Supplementary, as the case may be, the Reserved Shares
will be validly issued and outstanding, fully paid and nonassessable.
SECTION 3.05 No Conflicts. The execution, delivery and
performance of this Agreement by Capstead and the consummation of the
transactions contemplated hereby will not:
(a) result in the creation or imposition of any security
interest, lien, charge or other encumbrance against the assets of the Company,
with or without the giving of notice and/or the passage of time, or
(b) violate, conflict with, affect acceleration of, or result
in termination, cancellation or modification of, or constitute a default under
or give rise to any predetermined rights to any third party under (i) any
contract, agreement or other instrument to which the Company is a party or by
which the Company or its assets is bound or (ii) any note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which the
Company is a party or by which the Company may be bound or affected, or to
which any of the assets of the Company may be subject, or
(c) violate any statute or Law or any judgment, decree,
order, writ, injunction, regulation or rule of any court or any local, state or
federal governmental or regulatory authority, which violation, conflict,
acceleration, requirement, termination, modification or default described in
(a), (b), or (c) above could reasonably be expected to result in a Material
Adverse Effect on Capstead or the transactions contemplated by this Agreement.
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SECTION 3.06 Consents and Approvals. The Company is not
required to obtain, transfer or cause to be transferred any consent, approval,
license, permit or authorization of, or make any declaration, filing or
registration with, any third party or any public body or authority in
connection with the execution and delivery by Capstead of this Agreement or the
consummation of the transactions contemplated hereby, the failure of which to
obtain, transfer or cause to be transferred could reasonably be expected to
result in a Material Adverse Effect on the transactions contemplated by this
Agreement.
SECTION 3.07 Financial and Operating Statements and Reports.
(a) Year End Financial Statements. Attached hereto as
Appendix I is a true and complete copy of audited consolidated financial
statements of the Company for the years ended December 31, 1998 and 1997 (the
"YEAR END FINANCIAL STATEMENTS"). The Year End Financial Statements include
audited balance sheets of the Company as of December 31, 1998 and 1997 (such
1998 balance sheet being termed the "1998 BALANCE SHEET"), together with
related statements of operations, equity and cash flows of the Company (and
notes thereto) for each of such periods. The Year End Financial Statements are
accurate and correct in all material respects, have been prepared on a
consistent basis from, and are in accordance with, the Company's books and
records, and fairly present the consolidated financial position and the results
of operations of the Company for the periods therein identified in conformity
with generally accepted accounting principles ("GAAP") consistently applied.
(b) Third Quarter Financial Statements. Attached hereto as
Appendix II is a true and complete copy of consolidated financial statements of
the Company for the three and nine months ended September 30, 1999 (the "THIRD
QUARTER FINANCIAL STATEMENTS"). The Third Quarter Financial Statements include
a balance sheet of the Company as of September 30, 1999 (such 1999 balance
sheet being termed the "1999 THIRD QUARTER BALANCE SHEET"), together with
related statements of operations and cash flows of the Company (and notes
thereto) for such period. The Third Quarter Financial Statements are accurate
and correct in all material respects, have been prepared on a consistent basis
from, and are in accordance with, the Company's books and records, and fairly
present the consolidated financial position and the results of operations of
the Company for the periods therein identified in conformity with GAAP for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X under the Securities Act (except that the Third Quarter
Financial Statements do not include all of the information and footnotes that
may be required in the Year End Financial Statements or normal year-end
adjustments).
(c) Each report, schedule, registration statement and
definitive proxy statement filed by Capstead with the Securities and Exchange
Commission (the "SEC") since December 31, 1998 and through the date hereof
(collectively, the "SEC REPORTS"), at the time filed, and all forms, reports or
other documents filed by Capstead with the SEC after the date hereof, did not
and will not contain any 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.
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(d) None of the Company or its respective employees or agents
have made any payment of funds of the Company, or received or retained any such
funds in violation of any law, rule or regulation where such actions are of a
character required to be disclosed in the SEC Reports.
SECTION 3.08 No Undisclosed or Contingent Liabilities. Except
for (a) liabilities or obligations incurred by the Company in the ordinary
course of business and not required by GAAP applied on a consistent basis to be
set forth on the 1999 Third Quarter Balance Sheet (all of which known items
exceeding $250,000 per item are described in Section 3.08 of the Capstead
Disclosure Schedule), and (b) liabilities and obligations incurred by the
Company in the ordinary course of business since the date of the 1999 Third
Quarter Balance Sheet, to the best knowledge of the Company, there is no basis
for the assertion against the Company of any liability or obligation of any
nature whatsoever (whether absolute, accrued, contingent or otherwise) that may
encumber or affect the Company or the transactions contemplated hereby which is
not fully reflected or reserved against on the 1999 Third Quarter Balance
Sheet.
SECTION 3.09 Absence of Certain Changes. Except as set forth
in Section 3.09 of the Capstead Disclosure Schedule, since September 30, 1999,
the Company has not:
(a) suffered any Material Adverse Effect and there has not
been any event (whether occurring before or after September 30, 1999) that
could reasonably be expected to have a Material Adverse Effect on the Company;
or
(b) experienced any material decrease in the book value of
the assets of the Company from the amounts reflected on the 1999 Third Quarter
Balance Sheet, other than decreases resulting from (i) depreciation or
amortization in accordance with accounting practices in effect at all times
since January 1, 1999 or (ii) changes in the market value of the Company's
mortgage investment portfolio due generally to economic changes in the industry
in which the Company conducts business; or
(c) incurred any liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise and whether due or to
become due), except (i) liabilities or obligations for rent under the Leases
(as defined herein) and (ii) liabilities or obligations for other items
incurred in the ordinary course of business of the Company and consistent with
past practice, none of which other items exceeds $100,000 (considering
liabilities or obligations arising from one transaction or a series of similar
transactions, and all periodic installments or payments under any lease (other
than the Leases and other than repurchase obligations with respect to the
Company's agency security and non-agency security portfolio) or other agreement
providing for periodic installments or payments, as a single obligation or
liability); or
(d) increased (other than increases resulting from the
calculation of reserves in the ordinary course of business and in a manner
consistent with past practice), or experienced any change in any assumptions
underlying or methods of calculating, any bad debt, contingency or other
reserves; or
(e) paid, discharged or satisfied any claims, encumbrances,
liabilities or obligations (whether absolute, accrued, contingent or otherwise
and whether due or to become due)
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other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities and obligations
reflected or reserved against in the 1999 Third Quarter Balance Sheet or
incurred in the ordinary course of business and consistent with past practice
since the date thereof; or
(f) permitted, allowed or suffered any of the material assets
of the Company, including, without limitation, real property, personal property
or any leasehold interest, to be subjected to any mortgage, pledge, lien,
encumbrance, restriction or charge of any kind (except for liens for Taxes (as
defined herein) not yet owing), other than repurchase obligations of the
Company incurred in the ordinary course of business; or
(g) written off as uncollectible any notes or accounts
receivable or any portion thereof, except for write-downs in the ordinary
course of business, consistent with past practice, in accordance with GAAP
consistently applied; or
(h) canceled any material amount of indebtedness or waived
any material claims or rights, except as reserved for in the 1999 Third Quarter
Financial Statements; or
(i) sold, transferred or otherwise disposed of any assets of
the Company except in the ordinary course of business and consistent with past
practice; or
(j) disposed of or permitted to lapse any right to the use of
any patent, trademark, assumed name, service ▇▇▇▇, trade name, copyright,
license or application therefor or disposed of or disclosed to any corporation,
association, partnership, organization, business, individual, government or
political subdivision thereof or government agency (each, a "PERSON"), any
trade secret, formula, process or know-how not theretofore a matter of public
knowledge; or
(k) granted any increase in the salary, compensation, rate of
compensation, commissions or bonuses payable to or to become payable by the
Company to any officer or director of the Company (including, without
limitation, any increase or change pursuant to any bonus, pension,
profit-sharing, retirement or other plan or commitment); or
(l)granted any increase in the salary, compensation, rate of
compensation, commissions of bonuses payable to or to become payable by the
Company to any employee of the Company (including, without limitation, any
increase or change pursuant to any bonus, pension, profit-sharing, retirement
or other plan or commitment), except in the ordinary course of business and
consistent with past practice; or
(m) paid, loaned or advanced any amount to any officer,
director, employee or stockholder of the Company except for amounts advanced to
employees of the Company in the ordinary course of business consistent with
past practice (none of which advances were loans for personal purposes), or
sold, transferred or leased any assets of the Company to, or entered into any
agreement (other than this Agreement) or arrangement with, any officer,
director, employee or stockholder of the Company (except for agreements or
arrangements made in the ordinary course of business and consistent with past
practice); or
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(n) entered into any collective bargaining or labor
agreement, or experienced any labor dispute or difficulty; or
(o) made any single capital expenditure or commitment in
excess of $50,000 for additions to property, plant, equipment or for any other
purpose or made aggregate capital expenditures or commitments in excess of
$100,000 for additions to property, plant, equipment or for any other purpose;
or
(p) made any change in any method of accounting or accounting
practice or policy; or
(q) suffered any casualty loss in excess of $50,000 (whether
or not insured against) or suffered aggregate casualty losses in excess of
$100,000 (whether or not insured against); or
(r)issued any additional shares of capital stock of Capstead
or the Subsidiaries or any option, warrant, right or other security exercisable
for, convertible into or exchangeable for shares of capital stock of Capstead
or the Subsidiaries other than shares of common stock issued upon conversion of
outstanding shares of Capstead's preferred stock; or
(s) paid dividends on or made other distributions or payments
in respect of the capital stock of Capstead or the Subsidiaries; or
(t) paid its suppliers and other vendors in a manner and time
not consistent with past practice other than items in dispute totaling not more
than $200,000; or
(u) taken any other action not either in the ordinary course
of business and consistent with past practice or provided for in this
Agreement; or
(v) entered into or agreed to any transaction not in the
ordinary course of business; or
(w) agreed, whether in writing or otherwise, to take any of
the actions set forth in this Section 3.09.
SECTION 3.10 Real Property.
(a) The Company does not currently own, and has not owned in
the past five years, any real property, other than (i) real estate that the
Company owns or has owned in the ordinary course of business incident to its
master servicing or former servicing operations and (ii) leasehold
improvements.
(b) Section 3.10 of the Capstead Disclosure Schedule contains
a complete and accurate list of all real property leases to which the Company
is a party in any capacity (including all amendments thereof and modifications
thereto) (the "LEASES"). The Company's interests in and to all Leases listed on
Section 3.10 of the Capstead Disclosure Schedule are free and clear of all
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Encumbrances including without limitation subleases, chattel mortgages,
mechanics' and materialmen's liens, conditional sales contracts, collateral
security arrangements and other interest retention arrangements. The Company
has not received notice of any default by the Company under any of the Leases,
and there are no facts or conditions that would, with notice or lapse of time
or both, constitute a default by the Company under any of the Leases. To the
best knowledge of the Company, none of the landlords under any of the Leases is
in default. Any Lease or proposed Lease for which Capstead or an affiliate
thereof or related party thereto is landlord are on terms that are no more
burdensome to the Company than terms for third party leases in the same
geographic area for similarly-situated properties.
(c) The buildings and improvements leased by the Company on
any Lease, and the operation and maintenance thereof as operated and
maintained, do not (i) contravene any zoning or building Law or ordinance or
other administrative regulation or (ii) violate any restrictive covenant or any
applicable Law. To the best knowledge of the Company, all of the plants,
buildings and structures located on any real property owned by the Company or
on any Lease are in a state of good maintenance and repair (normal wear and
tear excepted) suitable in all respects for the operation of the Company
Business.
(d) There is no pending or threatened condemnation, eminent
domain or similar proceeding with respect to, or that could affect, any real
property owned by the Company or any Lease.
SECTION 3.11 Company Equipment. The Company has good and
indefeasible title to all furniture, fixtures and equipment of the Company (the
"COMPANY EQUIPMENT"), free and clear of any Encumbrances. To the best knowledge
of the Company, the Company Equipment is in good and normal operating condition
and repair and adequate for the uses to which it is being put by the Company.
The Company has not received any notification from any governmental or
regulatory authority within the last two years that the Company is in violation
of any health, sanitation, fire, safety, zoning, building or other Law,
ordinance or regulation in respect of the Company Equipment or operations,
which violation has not been appropriately and completely resolved.
SECTION 3.12 Contracts and Commitments.
(a) Except as set forth in Section 3.12(a) of the Capstead
Disclosure Schedule, the Company is not a party to or bound by any agreements,
contracts or commitments which individually or when aggregated with all related
agreements, contracts or commitments, are material to the business, operations,
condition (financial or otherwise), liabilities, assets, earnings or working
capital of the Company or that provide for the grant of any preferential rights
to purchase or lease any of the assets of the Company.
(b) The enforceability of the agreements, contracts and
commitments referred to in this Section 3.12 will not be affected in any
respect by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
(c) No purchase contracts or commitments of the Company are
in excess of the normal, ordinary and usual requirements of the Company, or to
the best knowledge of the Company,
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were entered into at prices materially in excess of those available in the
industry in arm's length transactions on the respective dates thereof.
(d) The Company is not a party to or bound by any outstanding
agreements, arrangements or contracts with any of its directors, officers,
stockholders, employees, agents, consultants, advisors, salesmen or sales
representatives (or any of the affiliates of any of such Persons) that (A) are
not cancelable by it on notice of not longer than 30 days and without the
imposition of any liability, penalty or premium, (B) require non-cancelable
payment by the Company of over $25,000, or (C) provide for any bonus or other
payment based on the sale of the Company or any portion thereof.
(e) The Company is not a party to or bound by any employment
agreement, consulting agreement or any other agreements that contains any
provision for severance or termination pay liabilities or obligations.
(f) The Company is not a party to or bound by:
(i) other than repurchase agreements reflected on the 1999
Third Quarter Financial Statements and entered into in the
ordinary course of business, any mortgage, indenture, note,
installment obligation or other instrument, agreement or
arrangement for or relating to any borrowing of money by the
Company;
(ii) any guaranty, direct or indirect, by the Company of
any obligation for borrowings or otherwise, excluding
endorsements made for collection in the ordinary course of
business;
(iii) any obligation to make payments, contingent or
otherwise, of over $250,000 arising out of any prior
acquisition of the business, assets or stock of other
persons;
(iv) any collective bargaining agreement with any
labor union;
(v) any lease or similar arrangement for the use by the
Company of personal property requiring payments by the
Company, on an annual basis, of over $50,000;
(vi) any agreement containing noncompetition or other
limitations restricting the conduct of the business of the
Company; and
(vii) any partnership, joint venture or similar agreement.
(g) Neither the Company nor any of its officers, directors,
stockholders or affiliates is a party to or bound by any agreement (other than
this Agreement) or arrangement for the sale of any of the assets or capital
stock of Capstead or the Subsidiaries or for the grant of any preferential
rights to purchase any of the assets or capital stock of Capstead or the
Subsidiaries; and
(h) The Company is not bound by any agreement to redeem
shares of capital stock held by any stockholders.
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(i) With respect to each contract and agreement listed in
Section 3.12 of the Capstead Disclosure Schedule, except as set forth therein,
(i) each of such contracts and agreements is valid, binding and in full force
and effect and is enforceable by the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization and other Laws and judicial
decisions of general applicability relating to or affecting creditors' rights
and to general principles of equity; (ii) there have been no cancellations or
threatened cancellations thereof nor are there any outstanding disputes
thereunder; (iii) neither the Company, nor any other party is in breach of any
material provision thereof; and (iv) there does not exist any material default
under, or any event or condition which with the giving of notice or passage of
time or both would become a material breach or material default under, the
terms of any such contract or agreement on the part of the Company or on the
part of any other party thereto.
(j) The Company has delivered or made available to Fortress
true and complete copies of each written contract or agreement listed in
Section 3.12 of the Capstead Disclosure Schedule and true and accurate
summaries of any oral agreement listed thereon.
SECTION 3.13 Intellectual Property. Section 3.13 of the
Capstead Disclosure Schedule contains an accurate and complete list of (a) all
material patents, trademarks (registered or unregistered), trade names, assumed
names, copyrights, and all applications therefor, owned or filed by the Company
and used in or necessary for the conduct of the Company Business and, with
respect to registered trademarks, contains a list of all jurisdictions in which
such trademarks are registered and all registration numbers; (b) all material
licenses, permits and other agreements relating thereto; and (c) all material
agreements relating to technology, know-how or processes used in or necessary
for the conduct of the business of the Company Business which the Company is
licensed or authorized to use by others (including, without limitation,
licenses for the use of software of all types). Such patents, trademarks
(registered or unregistered), copyrights, licenses and permits are (i) valid,
subsisting and enforceable, and (ii) duly recorded in the names of the Persons
set forth in Section 3.13 of the Capstead Disclosure Schedule. The Persons set
forth in Section 3.13 of the Capstead Disclosure Schedule have the sole and
exclusive right, free from any liens, mortgages, security interests, charges or
encumbrances, to use the patents, trademarks (registered or unregistered),
copyrights and applications therefor set forth beside their names, and the
Company has the full right to use the trade names, assumed names, technology,
know-how, inventions, works and processes referred to in such lists and all
trade secrets required for or incident to the conduct of the Company Business
in the jurisdictions in which the Company Business is conducted, and the
consummation of the transactions contemplated hereby will not alter or impair
any such rights. No material claims have been asserted by any Person against
the Company with respect to the ownership, validity, enforceability,
misappropriation or use of any product or service of the Company Business or
such patents, trademarks (registered or unregistered, or of any confusingly
similar or dilative trademarks), trade names, assumed names, copyrights,
applications therefor, technology, know-how, processes or trade secrets or
challenging or questioning the validity or effectiveness of any such license,
permits or agreement and there is no valid basis for any such claim, and the
use or other exploitation of any such product or service of the Company
Business or patents, trademarks (registered or unregistered), trade names,
assumed names, copyrights, applications therefor, technology, know-how,
processes and trade secrets by the Company does not infringe on or dilute the
rights of any Person; and, to the best knowledge of the Company, no other
Person is
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infringing the rights of the Company with respect to such patents, trademarks
(registered or unregistered), trade names, assumed names, copyrights, and
applications therefor, technology, know-how, inventions, works, processes or
trade secrets.
SECTION 3.14 Inventory. The Company has no inventory, other
than with respect to office supplies that are stored in amounts necessary for
the reasonably foreseeable use of the Company.
SECTION 3.15 Pension and Other Employee Plans and Agreements.
(a) Section 3.15(a) of the Capstead Disclosure Schedule sets
forth, as of the date of this Agreement, all of the material pension, profit
sharing, stock option, stock purchase, stock bonus, employee stock ownership,
incentive, bonus, life, health, disability or accident plans, deferred
compensation plans, and other employee compensation or benefit plans,
agreements, practices, policies, customs, contracts, arrangements or
commitments, including, without limitation, changes in control or severance
agreements, holiday, vacation or other similar plans, programs or arrangements,
employee benefit plans (within the meaning of section 3(3) of ERISA), and labor
union agreements under or with respect to which the Company or any Person
("ERISA AFFILIATE") who would be treated as being a "single employer" with the
Company under section 414 of the Code, has any liability or obligation, whether
current, contingent, secondary or otherwise (collectively, the "PLANS" and
individually, a "PLAN"), and the Company has furnished to Fortress complete
copies of all of the foregoing as amended and in effect on the date hereof,
including, where applicable, any trust agreements, insurance contracts or other
funding mediums related to any Plan and Summary Plan Descriptions.
(b) Except for any events of noncompliance resulting in
aggregate payments of not greater than $150,000, each Plan is in compliance in
all material respects with its terms and applicable Law, including (without
limitation) ERISA and the Code.
(c) Seller has never been required to contribute to any
multiple employer plan (as defined in Section 412 of the Code) or multiemployer
plan (as defined under Section 3(37) of ERISA), and no Plan is subject to Title
IV of ERISA or Section 412 of the Code.
(d) No Plan provides (or has any commitment to provide)
health benefits with respect to any current or former employees or independent
contractors (or beneficiary thereof) of the Company or any ERISA Affiliate
beyond their retirement or other termination of service (other than coverage
mandated by COBRA). Each Plan can be unilaterally terminated at any time by the
Company without material liability.
SECTION 3.16 Litigation. Except as set forth in Section 3.16
of the Capstead Disclosure Schedule, there are no open and unresolved claims,
actions, suits, proceedings, investigations or inquiries that have been made or
served against the Company or, to the best knowledge of the Company, that are
pending against (without having been so served), threatened by or against, or
otherwise affecting or that, if adversely decided, would reasonably be expected
to have a Material Adverse Effect on the Company or the transactions
contemplated hereby (except as otherwise disclosed in the Disclosure Schedule).
The Company is not a party to or a recipient of
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service of process regarding (and has not otherwise been named and noticed in)
any judgment, order or decree entered in any lawsuit or proceeding which has
had or may have a Material Adverse Effect on the Company or on its ability to
acquire any property or conduct its business in any way.
SECTION 3.17 Insurance. (a) All policies of fire, liability,
workmen's compensation, health, D&O insurance and other forms of insurance
relating to the business of the Company (the "COMPANY BUSINESS") are in full
force and effect, (b) all billed premiums with respect thereto covering all
periods up to and including the Closing Date have been paid or will be paid
prior to the Closing Date, and (c) no notice of cancellation or termination has
been received with respect to any such policy. Capstead maintains insurance of
the types, and at least in the amounts, that to its knowledge are customary for
businesses similar to the Company Business. All information disclosed by
Capstead to Fortress regarding coverage under such insurance policies is true
and correct in all material respects.
SECTION 3.18 Collective Bargaining Agreements; Compensation;
Employee Agreements. The Company does not have in effect any collective
bargaining agreement. The Company is not currently engaged in any bargaining
with any labor union. To the best knowledge of the Company, no petition is on
file with the National Labor Relations Board submitted by a labor union seeking
to represent any of the employees of the Company and the Company is not aware
of any attempts to organize the employees of the Company by any labor union.
SECTION 3.19 Compliance with Law. The Company is in
compliance in all material respects with all federal, state, foreign and local
laws (whether statutory or otherwise), ordinances, rules, regulations, orders,
judgments, decrees, writs and injunctions of any governmental authority
(collectively, "LAWS") applicable to the Company Business. The Company has not
been notified by any governmental or regulatory authority that the Company is
in violation or alleged violation of any Law applicable to the Company Business
which violation has not been appropriately and completely resolved, or that any
governmental or regulatory authority contemplates any investigation or
proceeding with respect to any such violation or alleged violation which has
not been appropriately and completely resolved which, in either case, could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.20 Permits. The Company has all material licenses,
permits and authorizations issued by any federal, state, local or governmental
authority ("PERMITS") necessary for the ownership or leasing of its properties
and the conduct of the Company Business as now being conducted. All such
Permits are in full force and effect. No violations exist or, to the best
knowledge of the Company, have been reported in respect of such Permits. No
notice of any proceeding has been served or otherwise given to the Company or,
to the best knowledge of the Company, is pending (without service or other
notice) or threatened seeking the revocation or limitation of any of such
Permits.
SECTION 3.21 Tax Matters.
(a) All Tax Returns required to be filed on or before the
Closing Date by the Company have been or will be filed within the time
prescribed by Law (including extensions of time approved by the appropriate
taxing authority). "TAX RETURN" means any report, statement, form,
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return or other document or information required to be supplied to a taxing
authority in connection with Taxes. "TAX" or "TAXES" means any United States or
foreign federal, state, or local tax, including without limitation income tax,
ad valorem tax, excise tax, sales tax, use tax, franchise tax, gross receipts
tax, withholding tax, social security tax, occupation tax, service tax, license
tax, payroll tax, transfer and recording tax, severance tax, customs tax,
import tax, export tax, employment tax, or any similar or other tax,
assessment, duty, fee, levy or other governmental charge, together with and
including, without limitation, any and all interest, fines, penalties,
assessments and additions to tax resulting from, relating to, or incurred in
connection with any such tax or any contest or dispute thereof.
(b) The Tax Returns so filed are complete, correct and
accurate representations of the Tax liabilities of the Company and such Tax
Returns accurately set forth or will accurately set forth all items to the
extent required to be reflected or included in such returns.
(c) The Company has timely paid or has made adequate
provision in the 1998 Balance Sheet for the payment of all Taxes due on such
Tax Returns that have been filed or will be filed for periods ending on or
before the date of the 1998 Balance Sheet.
(d) There is no action, suit, investigation, proceeding,
audit or claim that has been served against or otherwise properly noticed to
the Company, or, to the best knowledge of the Company, pending or proposed
against or with respect to the Company in respect of any Tax. There are no
material liens for Taxes upon any of the assets of the Company.
(e) The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other Person.
(f) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(g) The Company does not have in effect a consent under
Section 341(f) of the Code concerning collapsible corporations.
(h) There has never been a Tax sharing or allocation
agreement in place between the Company and any other Person other than those,
if any, with respect to which the applicable statute of limitations has run.
(i) The Company is not liable for a Tax incurred by any other
corporation that was a member of a consolidated group of corporations (within
the meaning of Treasury regulation section 1.1502) that included the Company.
(j) The Company has delivered or made available to Fortress
correct and complete copies of all Tax Returns filed by the Company for 1996,
1997 and 1998, all examination reports, and any statements of deficiencies
assessed against or agreed to by the Company.
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(k) Capstead has made a valid election under applicable law
to be treated as a REIT as defined in Section 856 of the Code for each taxable
year ending from December 31, 1985 through December 31, 1998 and has qualified
as a REIT for federal tax purposes for such years.
SECTION 3.22 Title to Assets. The Company has good, valid and
indefeasible title to the assets of the Company, including without limitation
those assets set forth on the 1999 Third Quarter Balance Sheet (other than with
respect to those assets which are subject to repurchase obligations and
collateralized mortgage obligations of the Company), subject to the mortgages,
liens, claims, charges, pledges, security interests set forth in Section 3.22
of the Capstead Disclosure Schedule.
SECTION 3.23 Brokers or Finders; Other Offers. Except as set
forth in Section 3.23 of the Capstead Disclosure Schedule, the Company has not
incurred, and will not incur, directly or indirectly, as a result of any action
taken by the Company, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement.
SECTION 3.24 Articles of Incorporation Exemptions and Other
Exclusions. The issuance of the Shares hereunder and the acquisition of shares
of the Common Stock, upon conversion or redemption of such Shares, are excluded
by resolutions of the Company's board of directors from the application of
Article VIII of Capstead's Articles of Incorporation and from the provisions of
Section 3-602 of the Maryland General Corporation Law (the "MARYLAND GCL")
prohibiting business combinations with Interested Stockholders (as such term is
defined in Section 3-601 of the Maryland GCL and the provisions of Sections
3-701 et seq. of the Maryland GCL). No "fair price," "moratorium," "control
share acquisition," or other similar anti-takeover statute or regulation to
which Capstead or its operations is subject is applicable to the sale of Shares
or the acquisition of Common Stock by Fortress upon conversion or redemption of
such Shares or to Fortress solely as a result of its acquisition of such Shares
or Common Stock.
SECTION 3.25 Investment Company. Capstead is not, and upon
the issuance and sale of the Shares as contemplated herein and the application
of the net proceeds therefrom will not be, an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended (the "INVESTMENT
COMPANY ACT"), and is not required to be registered under the Investment
Company Act.
SECTION 3.26 Internal Controls. Capstead maintains a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable internals and appropriate action is taken with respect to any
differences.
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SECTION 3.27 Year 2000 Compliance.
(a) Capstead has completed a review and assessment of all
areas within its business and operations that could be reasonably expected to
be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by Capstead may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999).
(b) All computer software, computer firmware and computer
hardware (whether general or special purpose) owned by Capstead that are
material to the conduct of Capstead's business is reasonably expected to, on a
timely basis, be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000 (that is, be "YEAR 2000 COMPLIANT").
Capstead has also inquired as to the Year 2000 compliance of service
contractors and suppliers and other third parties with whom Capstead conducts a
material amount of business and, to the knowledge of Capstead, these third
parties are Year 2000 Compliant.
ARTICLE IV
OTHER OBLIGATIONS OF THE PARTIES
SECTION 4.01 Conduct of Company Business. From the date
hereof to the Closing, except as otherwise expressly set forth in this
Agreement, and except for costs and expenses reasonably incurred in connection
with the transactions contemplated by this Agreement, the Company shall conduct
the business, operations, activities and practices of the Company only in the
ordinary course, in accordance with prudent practice and consistent with past
practice since January 1, 1999.
SECTION 4.02 Access to Books and Records. In order that
Fortress may have a full opportunity to make investigations of Capstead in
connection with the actions contemplated by this Agreement, Capstead shall
permit Purchaser and its counsel, accountants, auditors, lenders, environmental
consultants and other representatives reasonable access, upon reasonable
notice, to all of the offices, properties, books and records, contracts and
commitments of Capstead from the date hereof through the Closing Date.
SECTION 4.03 Consents. Each of Capstead and Fortress agree to
use commercially reasonable best efforts to obtain prior to the Closing all
consents and approvals necessary, in the reasonable determination of Fortress,
to consummate the transactions contemplated hereby, including, without
limitation, the consents and approvals listed or referred to in Section 3.06 of
the Disclosure Schedule. All such consents shall be in writing and in form and
substance reasonably satisfactory to Fortress, and executed counterparts
thereof shall be delivered to Fortress promptly after receipt thereof by
Capstead but in no event later than the Closing.
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SECTION 4.04 Supplemental Disclosure by Capstead.
(a) The Capstead Disclosure Schedule shall be considered to
be part of the representations and warranties of Capstead.
(b) Following delivery of the Capstead Disclosure Schedule in
accordance with the provisions of Article III and continuing through the
Closing, Capstead shall have the continuing obligation to supplement or amend
the Capstead Disclosure Schedule with respect to any matter hereafter arising
or discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in such specific Sections of
the Capstead Disclosure Schedule ("CAPSTEAD SUPPLEMENTAL DISCLOSURES").
(c) Capstead acknowledges that the Capstead Disclosure
Schedule is an important and integral part of this Agreement. Fortress shall be
entitled to treat any Capstead Supplemental Disclosures as a breach of the
appropriate representation or warranty, whether or not the event or condition
giving rise to such Capstead Supplemental Disclosures occurred on or prior to
the date hereof, unless such supplementation or amendment is a result of any of
the activities not prohibited by Section 4.01 ("SECTION 4.01 ITEMS"); provided,
that as a result of the occurrence of the Closing despite such supplementation
or amendment of the Capstead Disclosure Schedule, Fortress shall be deemed to
have waived any breach arising from such supplementation or amendment.
SECTION 4.05 Governmental Filings. As soon as practicable,
Capstead and Fortress shall make any and all filings and submissions to any
governmental agency that are required to be made in connection with the
transactions contemplated hereby. Capstead shall furnish to Fortress, and
Fortress shall furnish to Capstead, such information and assistance as the
other party or parties may reasonably request in connection with the
preparation of any such filings or submissions.
SECTION 4.06 Covenant to Satisfy Conditions. Capstead and
Fortress shall each use their commercially reasonable best efforts to insure
that the conditions set forth in Article V hereof are satisfied, insofar as
such matters are within their respective control.
SECTION 4.07 Employees. From the date hereof Capstead shall
use its commercially reasonable best efforts to retain as employees of the
Company through the Closing Date the active employment of the Company's current
employees, except as may be otherwise agreed by the parties. Capstead agrees in
this regard to cooperate with Fortress by permitting Fortress throughout the
period prior to the Closing Date to meet with the employees of the Company
(especially the corporate officers of the Company) at such times as shall be
approved by Capstead (which approval shall not be unreasonably withheld).
SECTION 4.08 Public Announcements. Neither the Company nor
Fortress, nor any of their affiliates, shall make any public statement,
including, without limitation, any press release, with respect to this
Agreement and the transactions contemplated hereby, without the prior written
consent of the other party (which consent may not be unreasonably withheld),
except as may be required by law.
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ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions Precedent to Obligations of Fortress.
The obligations of Fortress under this Agreement are subject to the
satisfaction or, unless prohibited by law, the waiver by Fortress, at or before
the Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Capstead contained herein shall be true, complete and accurate in
all material respects as of the date when made and at and as of the Closing
Date as though such representations, warranties and statements were made at and
as of such date.
(b) Performance. Capstead shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to
be so performed or complied with by it or them at or prior to the Closing.
(c) No Injunction. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction restraining or prohibiting
the consummation of the transactions contemplated hereby.
(d) Compliance Certificates. Capstead shall have delivered to
Fortress a certificate, dated the Closing Date, executed by its Chief Executive
Officer and Chief Financial Officer certifying the fulfillment of the
conditions specified in Section 5.01(a) and (b) hereof with respect to its
representations, warranties, agreements, obligations and conditions hereunder.
(e) Secretary's Certificate. Capstead shall have delivered to
Fortress a certificate, dated the Closing Date, executed by its Secretary or
Assistant Secretary and certifying as to Capstead's articles of incorporation,
bylaws, enabling resolutions, incumbency of officers and other reasonably
related matters (including, without limitation, the certificate of
incorporation and bylaws of any Subsidiary).
(f)Consents and Approvals. All licenses, permits, consents,
approvals and authorizations of all third parties and governmental bodies and
agencies shall have been obtained which are necessary, in the reasonable
determination of counsel to Fortress, in connection with (a) the execution and
delivery by each of the parties, as appropriate, of this Agreement or (b) the
consummation by each of the parties of the transactions contemplated hereby or
thereby.
(g) Filings with Secretary of State. On or prior to the
Closing, Capstead shall have filed the Series C Articles Supplementary and
Series D Articles Supplementary with the Department of Assessments and Taxation
of the State of Maryland.
(h) Registration Rights Agreement. On or prior to the
Closing, Capstead shall execute and deliver to Fortress a registration rights
agreement in the form attached hereto as Exhibit "C" (the "REGISTRATION RIGHTS
AGREEMENT").
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(i) Supplemental Agreement. On or prior to the Closing,
Capstead and Fortress shall execute and deliver the supplemental agreement to
the stock purchase agreement in the form attached hereto as Exhibit "D" (the
"SUPPLEMENTAL AGREEMENT").
(j) No Material Adverse Change. Except as specifically
disclosed herein or in the Disclosure Schedule, the events occurring since
September 30, 1999, and the conditions arising since such date shall not, in
the aggregate, have resulted in a Material Adverse Change to the Company.
(k) Documents. All documents to be delivered by Capstead to
Fortress at the Closing shall be duly executed and in form and substance
reasonably satisfactory to Fortress.
(l) Blue Sky. The Company shall have obtained all necessary
blue sky law permits, if any, and qualifications, or secured exemptions
therefrom, required by any state for the offer and sale of the Shares and the
Common Stock issuable upon conversion of the Shares.
(m) Legal Matters. All material matters of a legal nature
that pertain to this Agreement and the transactions contemplated hereby shall
have been reasonably approved by counsel to Fortress.
(n) Opinion of Company's Counsel. At the Closing, Fortress
shall have received from ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel to the Company, an
opinion addressed to them, dated the Closing Date, in the form attached hereto
as Exhibit "E".
(o) Opinion of Company's Maryland Counsel. At the Closing,
Fortress shall have received from ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., Maryland counsel to
the Company, an opinion addressed to them, dated the Closing Date, in the form
attached hereto as Exhibit "F".
(p) REIT Opinion. At the Closing, Fortress shall have
received an opinion from ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., tax counsel to the Company,
substantially to the effect that, for all of its taxable years beginning
September 5, 1985 and ending on December 31, 1998, Capstead has met the
requirements for qualification as a REIT under the Code and Capstead will
continue to qualify as a REIT for the taxable year beginning January 1, 1999,
provided that after the Closing Date, Capstead continues to be organized and
operated according to representations made by Capstead to ▇▇▇▇▇▇▇ & ▇▇▇▇▇
L.L.P. and therefore continues to satisfy the income tests, asset tests and
distribution, shareholder, record keeping and other applicable REIT
requirements under the Code.
(q) Other. Fortress shall have received such other documents
or certificates as Fortress may reasonably have requested.
SECTION 5.02 Conditions Precedent to Obligations of Capstead.
The obligations of Capstead under this Agreement are subject to the
satisfaction or, unless prohibited by law, the waiver by Capstead at or before
the Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Fortress contained herein shall be true, complete and accurate in
all material respects as of the date
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when made and at and as of the Closing Date as though such representations and
warranties were made at and as of such date.
(b) Performance. Fortress shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to
be so performed or complied with by them at or prior to the Closing.
(c) No Injunction. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by a court of competent jurisdiction restraining or prohibiting
consummation of the transactions contemplated hereby.
(d) Officers' Certificates. Fortress shall have delivered to
Capstead a certificate, dated the Closing Date and executed by its respective
Chief Executive Officer and Chief Financial Officer certifying the fulfillment
of the conditions specified in Sections 5.02(a) and (b) hereof.
(e) Secretary's Certificates. Fortress shall have delivered
to Capstead a certificate, dated the Closing Date, executed by its Secretary or
Assistant Secretary and certifying as to its organizational documents, enabling
resolutions, incumbency of officers and other related matters.
(f) Documents. All documents to be delivered by Fortress to
Capstead at the Closing shall be duly executed and in form and substance
reasonably satisfactory to Capstead.
(g) Supplemental Agreement. On or prior to the Closing,
Capstead and Fortress shall execute and deliver the Supplemental Agreement.
(h) Other. Capstead shall have received such other documents
or certificates as Capstead may reasonably have requested.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01 Survival of Representations and Warranties. All
representations and warranties made hereunder shall survive any investigation
made by or on behalf of any party hereto and shall survive for a period of
twelve months following the Closing; provided, however, that the
representations and warranties contained in this Agreement relating to Taxes or
made pursuant to Sections 3.17 hereof shall survive until 90 days following the
expiration of the period of limitations for any matter relating thereto, plus
any extended period applicable thereto by reason of any waiver of the period of
limitations. Each covenant and agreement (but not representations and
warranties, since they are covered above) of the parties hereunder shall
survive any investigation made by or on behalf of any party hereto and shall
survive the Closing hereunder.
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SECTION 6.02 Indemnification by Capstead. Subject to the
other terms and conditions of this Agreement, Capstead agrees to indemnify,
defend and hold harmless Fortress and any of its officers, directors,
employees, representatives, affiliates, subsidiaries, successors and assigns
(collectively, the "FORTRESS GROUP"), at any time after the Closing, from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses including, without limitation,
interest, penalties and reasonable attorneys' fees and expenses (collectively
"FORTRESS GROUP DAMAGES") asserted against, resulting to, imposed upon or
incurred by the Fortress Group or any member thereof, directly or indirectly,
by reason of or resulting from any misrepresentation or breach of any
representation, warranty or agreement of Capstead contained in or made pursuant
to this Agreement or any facts or circumstances constituting such a breach (the
"FORTRESS GROUP CLAIMS").
SECTION 6.03 Indemnification by Fortress. Subject to the
other terms and conditions of this Agreement, Fortress agrees to indemnify,
defend and hold harmless Capstead and any of its stockholders, officers,
directors, employees, representatives, affiliates, subsidiaries, successors and
assigns (collectively, the "CAPSTEAD GROUP"), at any time after the Closing,
from and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses including, without limitation,
interest, penalties and reasonable attorneys' fees and expenses, after
deducting any insurance proceeds received by Capstead in connection therewith,
(collectively "CAPSTEAD GROUP DAMAGES") asserted against, resulting to, imposed
upon or incurred by the Capstead Group or any member thereof, directly or
indirectly, by reason of or resulting from any misrepresentation or breach of
any representation, warranty or agreement of Fortress contained in or made
pursuant to this Agreement or any facts or circumstances constituting such a
breach (collectively, the "CAPSTEAD GROUP CLAIMS"; the Capstead Group Claims
and the Fortress Group Claims are hereinafter collectively referred to as the
"CLAIMS").
SECTION 6.04 Limitations Regarding Indemnification
Obligations of Capstead. Notwithstanding any other provision in this Agreement,
the liability of Capstead to indemnify the Fortress Group pursuant to Section
6.02 hereof against any Fortress Group Damages sustained by reason of any
Fortress Group Claim shall be limited to Fortress Group Claims as to which any
member of the Fortress Group has given to Capstead written notice thereof
within twelve months following the Closing, whether or not any Fortress Group
Damages have then actually been sustained; provided, however, that,
notwithstanding the foregoing, the liability of Capstead to indemnify the
Fortress Group against any Fortress Group Damages sustained by reason of any
Fortress Group Claim relating to a breach of any of the representations,
warranties or agreements relating to Taxes or made pursuant to Sections 3.17 of
this Agreement shall be limited to Fortress Group Claims as to which a member
of the Fortress Group has given to Capstead written notice thereof at or prior
to 90 days following the expiration of the period of limitations applicable to
the event giving rise to such Fortress Group Claim, plus any extended period
applicable thereto by reason of any waiver of the period of limitations;
provided further, that the provisions for indemnity contained in this Agreement
shall be effective against Capstead only after the aggregate amount of all
Fortress Claims for which Capstead is liable hereunder equals or exceeds the
amount of $500,000 (and then such indemnity shall cover such first $500,000 in
Fortress Group Damages), but in no event in excess of the sum of the Series C
Purchase Price and the Series D Purchase Price payable hereunder to Fortress.
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SECTION 6.05 Limitations Regarding Indemnification
Obligations of Fortress. Notwithstanding any other provision in this Agreement,
the liability of Fortress to indemnify the Capstead Group pursuant to Section
6.03 hereof against any Capstead Group Damages sustained by reason of any
Capstead Group Claim shall be limited to Capstead Group Claims as to which any
member of the Capstead Group has given to Fortress written notice thereof
within twelve months following the Closing, whether or not any Capstead Group
Damages have then actually been sustained; provided, further, the provisions
for indemnity contained in this Agreement shall be effective against Fortress
only after the aggregate amount of all Capstead Claims for which Fortress is
liable hereunder equals or exceeds $500,000 (and then such indemnity shall
cover such first $500,000 in Capstead Group Damages), but in no event in excess
of the sum of the Series C Purchase Price and the Series D Purchase Price.
SECTION 6.06 Conditions of Indemnification. The obligations
and liabilities of the parties with respect to Claims shall be subject to the
following terms and conditions:
(a) The indemnified party shall give the indemnifying party
prompt notice of any such Claim, and the indemnifying party shall have the
right to undertake the defense thereof by representatives chosen by it;
(b) If the indemnifying party fails to defend the indemnified
party against such Claim within a reasonable time after being notified of the
Claim, then the indemnified party shall (upon further notice to the
indemnifying party) have the right to defend, compromise or settle such Claim
on behalf of and for the account and risk of the indemnifying party subject to
the right of the indemnifying party to assume the defense of such Claim at any
time prior to settlement, compromise or final determination thereof; provided,
that the indemnified party shall provide the indemnifying party with notice of
any proposed settlement or compromise of such Claim (as far in advance of the
actual settlement or compromise of the Claim as is reasonably practicable); and
(c) Anything in this Agreement to the contrary
notwithstanding, (i) if there is a reasonable probability that a Claim may
materially and adversely affect the indemnified party other than as a result of
money damages or other money payments, the indemnified party shall have the
right, at the cost and expense of the indemnifying party, to manage the
defense, compromise or settlement of such Claim; provided, however, that if
such Claim is settled without the indemnifying party's consent (which consent
shall not be unreasonably withheld), the indemnified party shall be deemed to
have waived all rights hereunder against the indemnifying party for money
damages arising out of such Claim; and (ii) the indemnifying party shall not,
without the written consent of the indemnified party, settle or compromise any
Claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
indemnified party a release from all liability in respect to such Claim.
SECTION 6.07 Claim Disputes.
(a) Within 30 days of its receipt from Fortress of written
notice under Section 6.06 above regarding a Fortress Group Claim and the amount
of Fortress Group Damages related thereto, Capstead shall deliver to Fortress
written notice containing specific objections (prepared in good faith) to the
nature of the Fortress Group Claim or the amount of Fortress Group Damages
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specified in the original notice. In such event, Fortress and Capstead shall
work in good faith during the next 30 days toward resolving any such
objections. If a resolution is reached within such 30 days, the Fortress Group
shall be indemnified for the amount so agreed upon in accordance with the other
terms and conditions of this Agreement.
(b) Within 30 days of its receipt of written notice from
Capstead under Section 6.06 above regarding an Capstead Group Claim and the
amount of Capstead Group Damages related thereto, Fortress shall deliver to
Capstead written notice containing specific objections (prepared in good faith)
to the nature of the Capstead Group Claim or the amount of Capstead Group
Damages specified in the original notice. In such event, Fortress and Capstead
shall work in good faith during the next 30 days toward resolving any such
objections. If a resolution is reached within such 30 days, the Capstead Group
shall be indemnified for the amount so agreed upon in accordance with the other
terms and conditions of this Agreement.
(c) In the event no mutually agreeable resolution of an
indemnification matter is reached under the foregoing clauses (a) or (b) within
such 30 day period, such dispute shall be submitted to three arbitrators in
accordance with the Rules of Commercial Arbitration of the American Arbitration
Association. If there is a dispute as to whether all or any part of a Claim
arose after the Closing, this issue (as well as the resulting allocation of
damages) may, without limitation as to other matters, be among the matters
addressed by the arbitrators. The arbitrators shall be governed by and shall
apply the substantive law of the State of Texas in making their determination,
and their ruling shall be binding and conclusive upon Fortress and Capstead.
SECTION 6.08 Remedies Exclusive. The remedies provided to the
parties in this Agreement shall be exclusive and shall preclude assertion by
them of any other rights or the seeking of any other remedies against any other
party hereto.
ARTICLE VII
TERMINATION OF AGREEMENT
SECTION 7.01 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of Capstead and Fortress;
(b) by Fortress, on or after December 15, 1999, if any of the
conditions provided in Section 5.01 hereof of this Agreement have not been met
or, to the extent permitted by applicable law, have not been waived in writing
by Fortress prior to such date; or
(c) by Capstead, on or after December 15, 1999, if any of the
conditions provided in Section 5.02 hereof have not been met or, to the extent
permitted by applicable law, have not been waived in writing by Capstead prior
to such date.
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SECTION 7.02 Procedure Upon Termination. In the event of
termination by Capstead or Fortress pursuant to Section 7.01 hereof, written
notice thereof shall promptly be given to the other parties and the
transactions contemplated by this Agreement shall be terminated, without
further action by any party. If the transactions contemplated by this Agreement
are terminated as provided herein:
(a) each of Capstead and Fortress shall return all documents,
work papers and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same; and
(b) all confidential information received by Capstead and
Fortress with respect to the business of any other party or its subsidiaries or
affiliates shall be treated confidentially.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Commissions. No party hereto has employed any
investment banker, broker, finder or similar agent in connection with any
transaction contemplated by this Agreement.
SECTION 8.02 Definition of Knowledge. For the purpose of this
Agreement, the Exhibits and Appendices to this Agreement and the Disclosure
Schedule, the phrases "to the best knowledge" of any party and "known" and
words of like effect shall mean to the knowledge of such party, which knowledge
shall also include information existing in the records and files of such party.
SECTION 8.03 Definition of Material Adverse Effect and
Material Adverse Change. "MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE"
means, with respect to any party, any direct or indirect change, occurrence or
effect (other than as a result of changes in general conditions, including
economical or political developments, applicable to the industry in which such
party operates) on the business, operations, properties (including tangible
properties), condition (financial or otherwise), assets, obligations or
liabilities (whether absolute, contingent or otherwise and whether due or to
become due) of such party and its subsidiaries taken as a whole that reasonably
could be expected to be materially adverse to such party.
SECTION 8.04 Expenses, Taxes, Etc. Except as otherwise
provided herein, in the event of the termination of this Agreement prior to
Closing, each of the parties hereto shall pay all fees and expenses incurred by
it or any of its affiliates in connection with the transactions contemplated by
this Agreement.
SECTION 8.05 Successors and Assigns. Except as set forth in
the next sentence, no party shall have the right to assign all or any part of
its interest in this Agreement without the prior written consent of the other
parties, and any attempted transfer without such consent shall be null and
void. Fortress' rights and obligations hereunder shall be assignable by and
among Fortress and its affiliates; provided, that (i) each such assignment
shall assign the full rights and obligations of Fortress or, as the case may
be, its affiliate (if Fortress has already assigned its full rights and
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obligations hereunder to such affiliate), (ii) each such assignment shall be
made between Fortress or, as the case may be, such affiliate to only one of
Fortress' affiliates per assignment (i.e., Fortress may not distribute its
rights and obligations hereunder among more than one affiliate at any time),
(iii) Capstead shall receive prior notice of such proposed assignment and (iv)
Fortress shall remain primarily liable for its obligations hereunder unless its
assignee-affiliate (and any further assignee- affiliate) has a net worth that
is reasonably acceptable to Capstead (as evidenced by Capstead's prior written
consent, not to be unreasonably withheld).
SECTION 8.06 No Third-Party Benefit. Nothing in this
Agreement shall be deemed to create any right or obligation in any Person not a
party hereto and this Agreement shall not be construed in any respect to be a
contract or agreement in whole or in part for the benefit of or binding upon
any Person not a party hereto.
SECTION 8.07 Entire Agreement; Amendment. This Agreement, the
Exhibits, the Appendices, the Capstead Disclosure Schedule and the Fortress
Disclosure Schedule hereto constitute the entire agreement among the parties
hereto with respect to the transactions contemplated herein and supersede all
prior oral and written agreements, memoranda, understandings and undertakings
between the parties hereto relating to the subject matter hereof including,
without limitation, the summary of terms executed by Capstead and Fortress.
Neither this Agreement nor any term hereof may be modified, amended, waived,
altered or supplemented except by a written instrument executed and delivered
by each of the parties hereto.
SECTION 8.08 Reformation and Severability. If any provision
of this Agreement is held to be illegal, invalid or unenforceable under present
or future laws effective during the term hereof and such illegality, invalidity
or unenforceability does not result in a material failure of consideration,
then;
(a) in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable; and
(b) the legality, validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
SECTION 8.09 Notices. All notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or telecopied
or five business days after being mailed (registered or certified mail, postage
prepaid, return receipt requested) as follows:
If to Capstead:
Capstead Mortgage Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Fortress:
Fortress Investment Corp.
1301 Avenue of the Americas
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above,
provided that notice of a change of address shall be deemed given only upon
receipt.
SECTION 8.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES.
SECTION 8.11 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
The remainder of this page is intentionally left blank.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by parties hereto on the date first above written.
CAPSTEAD MORTGAGE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President - Finance
FORTRESS INVESTMENT CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Operating Officer
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