EXHIBIT 1.1
UNDERWRITING AGREEMENT
1,000,000 Shares
Capstead Mortgage Corporation
Common Stock
UNDERWRITING AGREEMENT
November 26, 2001
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Fortress CAP LLC, a Delaware limited liability company (the
"Selling Stockholder"), proposes to sell to you ("you" or the "Underwriter") an
aggregate of 1,000,000 shares (the "Shares") of the common stock, par value
$0.01 per share ("Common Stock"), of Capstead Mortgage Corporation, a Maryland
corporation (the "Company").
Section 1. Registration Statement and Prospectus. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3, including a
prospectus, relating to the Shares and other shares of the Company's Common
Stock. The registration statement, as amended at the time it became effective,
including information incorporated by reference therein, is hereinafter referred
to as the "Registration Statement"; and the prospectus, including the base
prospectus included in the Registration Statement at the time it became
effective, as supplemented by the prospectus supplement relating to the Shares,
in the form filed with the Commission pursuant to Rule 424(b) under the Act,
including information incorporated by reference therein, is hereinafter referred
to as the "Prospectus."
Section 2. Agreements to Sell and Purchase and Lock-Up
Agreements. On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Stockholder
agrees to sell the Shares to the Underwriter and the Underwriter agrees to
purchase from the Selling Stockholder at a price per Share (net of all
underwriting discounts and fees) of $23.50 (the "Purchase Price") the Shares.
The Selling Stockholder hereby agrees not to (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences associated with the
ownership of any Common Stock (regardless of whether any of the transactions
described in clause (i) or (ii) is to be settled by the delivery of Common
Stock, or such other securities, in cash or otherwise, except to the Underwriter
pursuant to this Agreement, for a period of 90 days after the date of the
Prospectus without the prior
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written consent of the Underwriter; provided, however, that the Selling
Stockholder may pledge shares of Common Stock beneficially owned by the Selling
Stockholder in connection with any loan agreement or similar financing
consistent with the margin requirements of Regulation T and Regulation U under
the Securities Exchange Act of 1934, as amended entered into between the Selling
Stockholder or an affiliate and a financial institution ("Loan Transaction")).
The Selling Stockholder further agrees that, for a period of 90 days after the
date of the Prospectus, without the prior written consent of the Underwriter,
the Company will not file a registration statement in response to a request or
demand by the Selling Stockholder for, or the exercise of any right with respect
to, the registration of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock. The Selling Stockholder
shall, prior to or concurrently with the execution of this Agreement, deliver a
letter agreement to the Underwriter to the effect set forth in the preceding 2
sentences. The Selling Stockholder hereby agrees that, for a period of 90 days
after the date of the Prospectus, the Selling Stockholder will promptly inform
the Underwriter of the entering into of any Loan Transaction.
The Company shall, prior to or concurrently with the execution
of this Agreement, deliver an agreement executed by each of the "named executive
officers" of the Company (as defined in paragraph (a)(3) of item 402 of
Regulation S-K under the Act) to the effect that such person will not, during
the period commencing on the date such person signs such agreement and ending 90
days after the date of the Prospectus, without the prior written consent of the
Underwriter, (A) engage in any of the transactions described in the first
sentence of the preceding paragraph or (B) make any demand for, or exercise any
right with respect to, the registration of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock. The
Company hereby agrees not to undertake either a firm or best efforts
underwritten public offering (including, but not limited to, a best efforts
offering with RCG Equity Finance, a division of Ramius Securities, LLC pursuant
to the Form S-3 (File No. 333-68424) relating to such best efforts offering on
file with the Commission) during the 90 day period beginning on the date of the
Prospectus without the prior written consent of the Underwriter.
Section 3. Terms of Public Offering. The Selling Stockholder
is advised by you that the Underwriter proposes (i) to make a public offering of
the Shares as soon after the execution and delivery of this Agreement as in your
judgment is advisable and (ii) initially to offer the Shares upon the terms set
forth in the Prospectus.
Section 4. Delivery and Payment. Delivery to the Underwriter
of the Shares and payment to the Selling Stockholder for the Shares shall be
made at 10:00 a.m., New York City time, on November 29, 2001 (the "Closing
Date") at such place as you shall designate. The Closing Date and the location
of delivery of and payment for the Shares may be varied by agreement between you
and the Selling Stockholder.
Certificates for the Shares shall be registered in such names
and issued in such denominations as you shall request in writing not later than
two full business days prior to the Closing Date. Such certificates shall be
made available to you for inspection not later than 10:00 a.m., New York City
time, on the business day immediately prior to the Closing Date. Certificates in
definitive form evidencing the Shares shall be delivered to you on the Closing
Date with any transfer taxes thereon duly paid by the Selling Stockholder, for
the account of the
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Underwriter, against payment to the Selling Stockholder of the Purchase Price
therefor by wire transfer of Federal or other funds immediately available in New
York City, or to the extent the shares are to be delivered pursuant to the
electronic book-entry system of the Depository Trust Company, delivery of the
Shares will be made in compliance with the applicable procedures thereof.
Section 5. Agreements of the Company. The Company agrees with
you and the Selling Stockholder:
(a) To advise you and the Selling Stockholder promptly and, if
requested by you, to confirm such advice in writing, (i) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information, (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any proceeding for
such purposes, (iii) when any amendment to the Registration Statement becomes
effective, (iv) if the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, when the Rule 462(b)
Registration Statement has been filed with the Commission and (v) of the
happening of any event during the period referred to in Section 5(d) below which
makes any statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires any additions to or changes in the
Registration Statement or the Prospectus in order to make the statements therein
not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you six signed copies and to the Selling
Stockholder one signed copy of the Registration Statement as first filed with
the Commission and of each amendment to it, including all exhibits, and to
furnish to you such number of conformed copies of the Registration Statement as
so filed and of each amendment to it, without exhibits, as you may reasonably
request.
(c) To prepare the Prospectus, the form and substance of which
shall be satisfactory to you and the Selling Stockholder, and to file the
Prospectus in such form with the Commission within the applicable period
specified in Rule 424(b) under the Act; and during the period specified in
Section 5(d) below, not to file any further amendment to the Registration
Statement and not to make any amendment or supplement to the Prospectus of which
you and the Selling Stockholder shall not previously have been advised or to
which you shall reasonably object after being so advised unless the Company
shall have determined based on the advice of counsel that such amendment or
supplement is required by law; and, during such period, to prepare and file with
the Commission, promptly upon your reasonable request, any amendment to the
Registration Statement or amendment or supplement to the Prospectus which may be
necessary or advisable in connection with the distribution of the Shares by you,
and to use its best efforts to cause any such amendment to the Registration
Statement to become promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first
business day after the date of this Agreement and from time to time thereafter
for such period as in the opinion of
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counsel for the Underwriter a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish in New York City
to you and any dealer as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as you or such dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event
shall occur or condition shall exist as a result of which, in the opinion of
your counsel, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of
your counsel or counsel for the Selling Stockholder, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to prepare
and file with the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with applicable
law, and to furnish to you and to any dealer that you may specify as many copies
thereof as you or such dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate
with you and your counsel in connection with the registration or qualification
of the Shares for offer and sale by you and by dealers under the state
securities or Blue Sky laws of such jurisdictions as you may request, to
continue such registration or qualification in effect so long as required for
distribution of the Shares and to file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation other than as to matters and
transactions relating to the Prospectus, the Registration Statement, any
preliminary prospectus or the offering or sale of the Shares, in any
jurisdiction in which it is not now so subject.
(g) To mail or otherwise make generally available to its
stockholders as soon as practicable an earnings statement covering the
twelve-month period ending December 31, 2002 that shall satisfy the provisions
of Section 11(a) of the Act, and to advise you in writing when such statement
has been so made available.
(h) During the period of three years after the date of this
Agreement, to make available to you as soon as available via the Company's web
site at ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇, or if not available thereon, furnish to you as soon as
possible copies of all reports or other communications furnished to the record
holders of Common Stock or furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company is
listed and such other publicly available information concerning the Company and
its subsidiaries as you may reasonably request.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the Company's and the Selling
Stockholder's obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and counsel for the Selling
Stockholder and the Company's accountants in connection with the
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registration and delivery of the Shares under the Act and all other fees and
expenses in connection with the preparation, printing, filing and distribution
of the Registration Statement (including financial statements and exhibits), any
preliminary prospectus, the Prospectus and all amendments and supplements to any
of the foregoing prior to or during the period specified in Section 5(d),
including the mailing and delivering of copies thereof to you and dealers in the
quantities specified herein, (ii) all costs and expenses related to the transfer
and delivery of the Shares to be sold hereunder by the Selling Stockholder to
the Underwriter, (iii) all costs of printing or producing this Agreement and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Shares, (iv) all expenses in connection with the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the several states and all costs of printing or producing any
Preliminary and Supplemental Blue Sky Memoranda in connection therewith
(including the filing fees and fees and disbursements of counsel for the
Underwriter in connection with such registration or qualification and memoranda
relating thereto), (v) the filing fees and disbursements of your counsel in
connection with the review and clearance of the offering of the Shares by the
National Association of Securities Dealers, Inc., (vi) all fees and expenses in
connection with the preparation and filing of the registration statement on Form
8-A relating to the Common Stock and all costs and expenses incident to the
listing of the Shares on the New York Stock Exchange ("NYSE") and other national
securities exchanges and foreign stock exchanges, as applicable (vii) the cost
of printing certificates representing the Shares, (viii) the costs and charges
of any transfer agent, registrar and/or depositary, and (ix) all other costs and
expenses incident to the performance of the obligations of the Company and the
Selling Stockholder hereunder for which provision is not otherwise made in this
Section. Notwithstanding any of the foregoing, the Selling Stockholder will pay
all expenses incident to the performance of its obligations under, and the
consummation of the transactions contemplated by, this Agreement, including the
payment of all underwriting discounts and transfer or other taxes payable upon
sale of the Shares to the Underwriter and including the fees and disbursements
of its respective counsel. The provisions of this Section shall not supersede or
otherwise affect any agreement that the Company and the Selling Stockholder may
otherwise have for allocation of such expenses among themselves.
(j) To maintain the listing of the Shares on the NYSE for a
period of three years after the date of this Agreement.
(k) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Shares which are within the Company's control.
Section 6. Representations and Warranties of the Company. The
Company represents and warrants to you and the Selling Stockholder, and agrees
with you and the Selling Stockholder, that:
(a) The Registration Statement has become effective; and no
stop order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or, to the
Company's knowledge, threatened by the Commission.
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(b) (i) The Registration Statement, when it became effective,
did not contain and, as amended, if applicable, 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 not misleading, (ii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act
and (iii) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph (b) do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to you furnished to the Company in writing by you
expressly for use therein or described in Section 7(e) hereof.
(c) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the Act, complied when so filed in all
material respects with the Act, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this paragraph (c) do not apply to statements or
omissions in any preliminary prospectus based upon information relating to you
furnished to the Company in writing by you for use therein or described in
Section 7(e) hereof.
(d) Each of the Company and its "significant subsidiaries" as
defined in Rule 1-02 of Regulation S-X under the Act (the "Material
Subsidiaries") has been duly incorporated, is validly existing as a corporation
in good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in the
Prospectus and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not reasonably be expected to have a material
adverse effect on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole.
(e) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities or commitments of sale or liens granted
or issued by the Company or any of its Material Subsidiaries relating to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of the Company or any of its Material Subsidiaries, except as
otherwise disclosed in the Registration Statement.
(f) All the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Stockholder) have been duly
authorized and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights.
(g) All of the outstanding shares of capital stock of each of
the Company's Material Subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable, and are owned by the Company, directly or
indirectly through one or more
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subsidiaries, free and clear of any security interest, claim, lien, encumbrance
or adverse interest of any nature.
(h) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained or incorporated by reference
in the Prospectus.
(i) Neither the Company nor any of its Material Subsidiaries
is (i) in violation of its respective charter or bylaws or (ii) in default in
the performance of any obligation, agreement, covenant or condition contained in
any indenture, loan agreement, mortgage, lease or other agreement or instrument
to which the Company or any of its Material Subsidiaries is a party or by which
the Company or any of its Material Subsidiaries or their respective property is
bound, except with respect to item (ii) for such defaults that would not
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(j) The execution, delivery and performance of this Agreement
by the Company, the compliance by the Company with all the provisions hereof and
the consummation of the transactions contemplated hereby will not (i) require
any consent, approval, authorization or other order of, or qualification with,
any court or governmental body or agency, (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter,
bylaws of the Company or any of its Material Subsidiaries is a party or by which
the Company or any of its Material Subsidiaries or their respective property is
bound or, (iii) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which the Company or any of its
Material Subsidiaries is a party or by which the Company or any of its Material
Subsidiaries or their respective property is bound, (iv) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective property; except with
respect to items (i), (iii), (iv) and (v) for such consents, approvals,
authorizations, orders or qualifications which if not made or obtained, or
conflicts, violations or defaults which if existing would not reasonably be
expected to have a material adverse effect on the Company and its subsidiaries,
taken as a whole, or prevent or materially restrict or otherwise adversely
affect in any material respect the performance by the Company of its obligations
hereunder, or (v) result in the suspension, termination or revocation of any
Authorization (as defined below) of the Company or any of its subsidiaries or
any other impairment of the rights of the holder of any such Authorization.
(k) There are no legal or governmental proceedings pending or,
to the Company's knowledge, threatened to which the Company or any of its
Material Subsidiaries is or could be a party or to which any of their respective
property is or could be subject that are required to be described in the
Registration Statement or the Prospectus and are not so described; nor are there
any statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.
(l) Neither the Company nor any of its Material Subsidiaries
has violated any foreign, federal, state or local law or regulation relating to
the protection of human health and
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safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws") or any provisions of the Employee
Retirement Income Security Act of 1974, as amended, or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not reasonably be expected to have a material adverse effect on
the business, financial condition or results of operation of the Company and its
subsidiaries, taken as a whole.
(m) Each of the Company and its Material Subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including, without limitation,
under any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a material adverse effect on the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. Each such Authorization is valid and in full
force and effect and each of the Company and its Material Subsidiaries is in
substantial compliance with all the terms and conditions thereof and with the
rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and, to the knowledge of the Company, no
event has occurred (including, without limitation, the receipt of any notice
from any authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would result
in any other material impairment of the rights of the holder of any such
Authorization; and, except as disclosed in the Prospectus, such Authorizations
contain no restrictions that are burdensome to the Company or any of its
Material Subsidiaries; and, except as disclosed in the Prospectus, except where
such failure to be valid and in full force and effect or to be in compliance,
the occurrence of any such event or the presence of any such restriction would
not, singly or in the aggregate, reasonably be expected to have a material
adverse effect on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole.
(n) This Agreement has been duly authorized, executed and
delivered by the Company.
(o) Ernst & Young LLP are independent public accountants with
respect to the Company and its subsidiaries as required by the Act.
(p) The consolidated financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), together with related schedules and notes,
present fairly the consolidated financial position, results of operations and
changes in financial position of the Company and its subsidiaries on the basis
stated therein at the respective dates or for the respective periods to which
they apply; such statements and related schedules and notes have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; the supporting
schedules, if any, included in the Registration Statement present fairly in
accordance with generally accepted accounting principles the information
required to be stated therein; and the other financial and statistical
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information and data set forth in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) are, in all material respects,
accurately presented and prepared in good faith on the basis of the assumptions
described in the Registration Statement and such assumptions are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
(q) The Company is not and, after giving effect to the
offering and sale of the Shares by the Selling Stockholder and the application
of the proceeds thereof as described in the Prospectus, will not be, an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
(r) Except for the Registration Rights Agreement dated as of
December 9, 1999 by and between the Company and Fortress Investment Corp., there
are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company or to require the Company to include such securities with the Shares
registered pursuant to the Registration Statement.
(s) Since the respective dates as of which information is
given in the Prospectus other than as set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there has not occurred any material adverse change or any development
involving a prospective material adverse change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material adverse
change in the capital stock or in the long-term debt of the Company or any of
its subsidiaries and (iii) neither the Company nor any of its subsidiaries has
incurred any material liability or obligation, direct or contingent, except for
trade payables and other similar liabilities incurred in the ordinary course of
business.
(t) Each certificate signed by any officer of the Company and
delivered at the Closing to the Underwriter or counsel for the Underwriter or
the Selling Stockholder or counsel for the Selling Stockholder shall be deemed
to be a representation and warranty by the Company to the Underwriter and the
Selling Stockholder as to the matters covered thereby.
(u) The Company and its subsidiaries have good and marketable
title to all property and assets described in the Registration Statement as
being owned by them and which is material to the business of the Company and its
subsidiaries, taken as a whole, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or such
as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries and which are material to the business
of the Company and its subsidiaries, taken as a whole, are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries, in each case except
as described in the Prospectus.
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(v) The Company and each of its Material Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in
which they are engaged; and neither the Company nor any of its Material
Subsidiaries (i) has received notice from any insurer which indicates that the
Company or such Material Subsidiary will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers at a cost that would not have a material adverse
effect on the business, prospects, financial conditions or results of operations
of the Company and its subsidiaries, taken as a whole.
(w) No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of its
subsidiaries on the other hand, which is required by the Act to be described in
the Registration Statement or the Prospectus which is not so described.
(x) The Company and each of its Material Subsidiaries
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 authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(y) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been filed, other
than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
the Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(z) The Company is organized in conformity with the
requirements for qualification as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code")
and its proposed method of operations described in the Prospectus will enable it
to continue to meet the requirements for taxation as a real estate investment
trust under the Code.
(aa) Neither the Company nor any officer, director or, to the
Company's knowledge, affiliate of the Company has taken or will take, directly
or indirectly, any action designed to cause or result in, or which constitutes
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of shares of Common Stock to facilitate the sale or
resale of the Shares.
(bb) The Company has timely filed all reports, contracts or
documents required to be filed with the Commission under the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder.
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Section 7. Representations and Warranties of the Selling
Stockholder. The Selling Stockholder represents and warrants to you, and agrees
with you, that:
(a) The Selling Stockholder is the lawful owner of the Shares
to be sold by the Selling Stockholder pursuant to this Agreement and has, and on
the Closing Date will have, good and marketable title to such Shares, free of
all restrictions on transfer (other than any restrictions arising pursuant to
applicable securities laws), liens, encumbrances, security interests, equities
and claims whatsoever.
(b) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder.
(c) Upon delivery of and payment for the Shares to be sold by
the Selling Stockholder pursuant to this Agreement, and assuming the Underwriter
has no notice of adverse claim, good and marketable title to such Shares will
pass to the Underwriter, free of all restrictions on transfer, liens,
encumbrances, security interests, equities and claims whatsoever.
(d) The execution, delivery and performance of this Agreement
by or on behalf of the Selling Stockholder, the compliance by the Selling
Stockholder with all the provisions hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under the
Act, or the securities or Blue Sky laws of the various states), (ii) conflict
with or constitute a breach of any of the terms or provisions of, or a default
under, the organizational documents of the Selling Stockholder, (iii) conflict
with or constitute a breach of any of the terms or provisions of, or default
under, any indenture, loan agreement, mortgage, lease or other agreement or
instrument to which the Selling Stockholder is a party or by which the Selling
Stockholder or any property of the Selling Stockholder is bound or (iv) violate
or conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Selling Stockholder or any property of the Selling Stockholder; except for
such consents, approvals, authorizations, orders or qualifications which if not
made or obtained, or conflicts, violations or defaults which if existing, would
not prevent or otherwise adversely affect the performance by the Selling
Stockholder of its obligations hereunder.
(e) The information in the Prospectus under the captions "The
Selling Stockholder" which specifically relates to the Selling Stockholder does
not, and will not on the Closing Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(f) At any time during the period described in Section 5(d),
if there is any change in the information referred to in Section 7(h), the
Selling Stockholder will immediately notify you of such change.
(g) Each certificate signed by or on behalf of the Selling
Stockholder and delivered on the Closing Date to the Underwriter or counsel for
the Underwriter shall be deemed
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to be a representation and warranty by the Selling Stockholder to the
Underwriter as to the matters covered thereby.
(h) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action designated to cause or result in or which
constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares.
(i) To the best knowledge of the Selling Stockholder, after
due inquiry, all representations and warranties of the Company made herein are
true and correct.
Section 8. Indemnification. (a) The Company hereby agrees to
indemnify and hold harmless the Selling Stockholder and the Underwriter, and
each of their respective directors, officers and each person, if any, who
controls the Underwriter or the Selling Stockholder, as the case may be, within
the meaning of Section 15 of the Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), from and against any and all
losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
(i) the breach of any representation, warranty, covenant or agreement made
herein, or (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment thereto), the
Prospectus (or any amendment or supplement thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to the
Underwriter furnished in writing to the Company by the Underwriter for use
therein or with respect to the information referred to in Section 7(e) hereof;
provided, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of the Underwriter in
connection with any losses, claims, damages and liabilities and judgments if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given to
the person asserting such losses, claims, damages, liabilities or judgments at
or prior to the written confirmation of the sale of the Shares to such person,
and if the Prospectus (as so amended and supplemented) would have cured the
defect giving rise to such loss, claim, damage, liability or judgment, unless
such failure to deliver such amended or supplemented Prospectus was a result of
noncompliance by the Company with its delivery obligations under Section 5
hereof.
(b) The Selling Stockholder agrees to indemnify and hold
harmless the Company and the Underwriter, and each of their respective directors
and officers and each person, if any, who controls the Company or the
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of
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a material fact referred to in Section 7(e) hereof, or caused by any omission or
alleged omission to state therein a material fact regarding the Selling
Stockholder required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to the
Underwriter furnished in writing to the Company by the Underwriter for use
therein; provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of the Underwriter
in connection with any losses, claims, damages and liabilities and judgments if
a copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given to
the person asserting such losses, claims, damages, liabilities or judgments at
or prior to the written confirmation of the sale of the Shares to such person,
and if the Prospectus (as so amended and supplemented) would have cured the
defect giving rise to such loss, claim, damage, liability or judgment, unless
such failure to deliver such amended or supplemented Prospectus was a result of
noncompliance by the Company with its delivery obligations under Section 5
hereof. Notwithstanding the foregoing, the total liability of the Selling
Stockholder pursuant to this Section 8(b) shall be limited to an amount equal to
the total proceeds received by the Selling Stockholder from the Underwriter for
the Shares sold by the Selling Stockholder hereunder.
(c) The Underwriter agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, the Selling Stockholder and its officers
and members and each person, if any, who controls the Selling Stockholder within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Selling Stockholder to the
Underwriter but only with reference to information relating to the Underwriter
furnished in writing to the Company by or on behalf of the Underwriter expressly
for use in the Registration Statement (or any amendment thereto), the Prospectus
(or any amendment or supplement thereto) or any preliminary prospectus.
(d) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Underwriter shall not be
required to assume the defense of such action pursuant to this Section 8(d), but
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of such Underwriter). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall
-14-
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for the Underwriter, its officers and
directors and all persons, if any, who control the Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act, (ii)
the fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and all persons, if any, who control the Company within
the meaning of either such Section and (iii) the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for the
Selling Stockholder and all persons, if any, who control the Selling Stockholder
within the meaning of either such Section, and all such fees and expenses shall
be reimbursed as they are incurred. In the case of any such separate firm for
the Underwriter, its officers and directors and such control persons of the
Underwriter, such firm shall be designated in writing by the Underwriter. In the
case of any such separate firm for the Company and such directors, officers and
control persons of the Company, such firm shall be designated in writing by the
Company. In the case of any such separate firm for the Selling Stockholder and
such control persons of the Selling Stockholder, such firm shall be designated
in writing by the Selling Stockholder. The indemnifying party shall indemnify
and hold harmless the indemnified party from and against any and all losses,
claims, damages, liabilities and judgments by reason of any settlement of any
action effected with the indemnifying party's written consent which consent will
not be unreasonably withheld. Notwithstanding the immediately preceding
sentence, if in any case where the fees and expenses of counsel are at the
expense of the indemnifying party and an indemnified party shall have requested
the indemnifying party to reimburse the indemnified party for such fees and
expenses of counsel actually incurred by it, such indemnifying party agrees that
it shall be liable for any settlement of any action effected without its written
consent if (i) such settlement is entered into more than 60 days after the
receipt by such indemnifying party of the aforesaid request (ii) such
indemnifying party shall have received notice of the proposed settlement being
entered into at least 20 days prior to such settlement being entered into and
(iii) prior to the date of such settlement such indemnifying party shall have
failed to reimburse the indemnified party in accordance with such request for
reimbursement (or, if within 30 days of the receipt of the aforesaid request,
the indemnifying party shall have made a good faith written challenge to the
reasonableness of the amount of the reimbursement requested or the sufficiency
of the documentation supporting the reimbursement requested (which challenge
shall specifically set forth the amount of the requested reimbursement which the
indemnifying party in good faith believes to be unreasonable or the basis for
the good faith claim as to the insufficiency of any supporting documentation),
this sentence shall only apply if such indemnifying party shall not have
reimbursed the indemnified party for the amount which is not being so
challenged). No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in respect
of which the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the
-15-
indemnified party from all liability on claims that are or could have been the
subject matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(e) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
applicable indemnifying party from the offering of the Shares or (ii) if the
allocation provided by clause 8(e)(i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(e)(i) above but also the relative fault of the
applicable indemnifying party in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Selling Stockholder on the one hand and the Underwriter on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Selling
Stockholder, and the total underwriting discounts and commissions received by
the Underwriter, bear to the total price to the public of the Shares, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company, the Selling Stockholder and the Underwriter, as the case
may be, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Stockholder or the Underwriter and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Selling Stockholder and the Underwriter agree
that it would not be just and equitable if contribution pursuant to this Section
8(e) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which the Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding any other provision of this Agreement, no Selling
Stockholder shall be required to contribute pursuant to this Section 8(d) any
amount in excess of the amount of the total proceeds (before deducting expenses)
received by the Selling Stockholder from the Underwriter for the sale of the
Shares sold by the Selling Stockholder hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
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(f) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
Section 9. Conditions of Underwriter's Obligations. The
obligations of the Underwriter to purchase the Shares under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date.
(b) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending before or, to the
knowledge of the Company, contemplated by the Commission.
(c) You and the Selling Stockholder shall have received on the
Closing Date a certificate dated the Closing Date, signed by each of the Chief
Executive Officer and Chief Financial Officer of the Company, confirming the
matters set forth in Sections 6(t), 9(a) and 9(b) and that the Company has
complied with all of the agreements and satisfied all of the conditions herein
contained and required to be complied with or satisfied by the Company on or
prior to the Closing Date.
(d) Since the respective dates as of which information is
given in the Prospectus other than as set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(d)(i),
9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) All the representations and warranties of the Selling
Stockholder contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing Date and
you shall have received on the Closing Date a certificate dated the Closing Date
from the Selling Stockholder to such effect and to the effect that the Selling
Stockholder has complied with all of the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied by the
Selling Stockholder on or prior to the Closing Date.
(f) You and the Selling Stockholder shall have received on the
Closing Date an opinion (in a form reasonably satisfactory to you and counsel
for the Underwriter), dated the Closing Date, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel
for the Company, or ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP,
-17-
Maryland counsel for the Company, with respect to the portions of the opinions
rendered below involving questions of Maryland law, to the effect that:
(i) Each of the Company and its Material Subsidiaries which
are corporations has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to
own, lease and operate its property and to conduct its business as
described in the Prospectus;
(ii) Each of the Company and its Material Subsidiaries is duly
qualified and is in good standing in the State of Texas, as a foreign
corporation authorized to do business in the State of Texas; provided
however that in rendering such opinion as to whether each of the
Company and its Material Subsidiaries is duly qualified and in good
standing in the State of Texas, such counsel may rely solely upon
certificates of governmental officials of the State of Texas;
(iii) All the outstanding shares of capital stock of the
Company (including the Shares to be sold by the Selling Stockholder)
have been duly authorized by all necessary corporate action on the part
of the Company and are validly issued, fully paid and non-assessable,
and none of such outstanding shares of Common Stock were issued in
violation of any preemptive or other similar rights to subscribe for or
purchase the same arising under the Articles of Incorporation or Bylaws
of the Company or the General Corporation Law of the State of Maryland
or, to their knowledge, under any agreement to which the Company or any
of its Material Subsidiaries is a party or by which it is bound;
(iv) All of the outstanding shares of capital stock of each of
the Material Subsidiaries which are corporations have been duly
authorized and validly issued and are fully paid and non-assessable; to
the Company's knowledge, all of the outstanding shares of capital stock
of the Material Subsidiaries are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any
perfected security interest;
(v) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company, executed and has been
delivered by the Company;
(vi) The authorized capital stock of the Company conforms as
to legal matters in all material respects to the description thereof
contained in the Prospectus;
(vii) Based solely upon oral confirmation from the staff of
the Commission, the Registration Statement has become effective under
the Act; to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or threatened by the
Commission;
(viii) The statements under the captions "Description of
Securities", "Plan of Distribution" and "Taxation" in the Prospectus
and Item 15 of Part II of the Registration Statement, insofar as such
statements constitute a summary of the legal matters or
-18-
documents referred to therein, are accurate and fairly present the
information set forth therein, in each case in all material respects;
(ix) No consent, approval, authorization or order of, or
qualification with, any Applicable Governmental Authority (as
hereinafter defined) is required pursuant to any Applicable Laws (as
hereinafter defined) for the execution and delivery of this Agreement
by the Company, the performance by the Company of its obligations
hereunder or the consummation by the Company of the transactions
contemplated hereby, except for any such consent, approval,
authorization, order or qualification which (i) has been made or
obtained prior to the Closing Date or (ii) may be required under
applicable state or federal securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriter or
(iii) the clearance of such offering with the NASD (as to which such
counsel need not express an opinion) or (iv) if not made or obtained
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(x) The execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder
and the consummation by the Company of the transactions contemplated
hereby will not (i) result in a violation of the terms of Articles of
Incorporation or Bylaws of the Company or the Material Subsidiaries,
(ii) result in a breach or violation of or constitute (either alone or
with notice or the passage of time, or both) a default under, any
agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or its
Material Subsidiaries is a party or by which the Company, the Material
Subsidiaries or their properties are bound that is filed as an exhibit
to the Registration Statement or (iii) result in a violation of any
Applicable Laws to which the Company, the Material Subsidiaries or
their properties are subject or any judgment, decree or order of any
Applicable Governmental Authority that specifically names the Company,
the Material Subsidiaries or is directed at their property (provided,
however, that such counsel need not express an opinion with respect to
compliance with any federal or state securities or antifraud law, rule
or regulation except as otherwise specifically stated in the opinion of
such counsel); except for any such violation, breach or default
referred to in clause (i), (ii) or (iii) above which would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole;
(xi) To the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the Company or
any of the Material Subsidiaries or by which any of their respective
property is or could be subject that are required to be described in
the Registration Statement or the Prospectus and are not so described;
(xii) The Company is not and, after giving effect to the
offering and sale of the Shares by the Selling Stockholder and the
application of the proceeds thereof as described in the Prospectus,
will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
-19-
(xiii) To the knowledge of such counsel no holder of
securities of the Company has any right to require the registration of
such securities by the Company under the Act as a result of the filing
of the Registration Statement or in connection with the offering of the
Shares pursuant to the Prospectus;
(xiv) The Registration Statement (and any amendment thereto),
as of its effective date, and the Prospectus (or any supplement or
amendment thereto), as of its date (other than (a) the financial
statements and schedules (including the notes thereto and the auditors'
reports thereon) included therein and (b) the other financial
information included therein) appear on their face to comply as to form
in all material respects with the requirements of the Act.
(xv) For all of its taxable years beginning on September 5,
1985 and ending December 31, 2000, the Company has met the requirements
for qualification as a real estate investment trust ("REIT") under the
Code and will be able to qualify as a REIT for taxable years beginning
on and after January 1, 2001 provided that the Company continues to be
organized and operated during such time so as to satisfy the applicable
REIT requirements under the Code.
As used herein, (i) the term "Applicable Laws" means the
General Corporation Law of the State of Delaware, the contract laws of the State
of New York, the laws of the State of Texas and the laws of the United States of
America that, in the experience of such counsel, are normally applicable to
transactions of the type contemplated by this Agreement and (ii) the term
"Applicable Governmental Authority" means any governmental authority or body of
the United States of America or the State of Texas or the State of New York or
(solely with respect to the General Corporation Law of the State of Maryland)
the State of Maryland.
Such opinion shall also include a statement to the effect that
although such counsel did not independently verify, are not passing upon and do
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except to
the extent stated in paragraphs (f)(vi) and (f)(viii) above), they advise you
that no facts have come to their attention which lead them to believe that the
Registration Statement (other than (i) the financial statements (including the
notes thereto and the auditors' report thereon) included therein, and (ii) the
other financial and statistical information included therein, as to which such
counsel need express no opinion), as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus (other than (i) the financial statements (including the
notes thereto and the auditors' report thereon) included therein and (ii) the
other financial and statistical information included therein), as of its date
and as of the Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits to state any 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.
(g) You shall have received on the Closing Date, with respect
to the Selling Stockholder, an opinion (in form reasonably satisfactory to you
and your counsel), dated the
-20-
Closing Date, of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the
Selling Stockholder, to the effect that:
(i) Assuming that the Underwriter has no notice of any adverse
claims with respect to certificate number ___ registered in the name
Fortress CAP LLC and evidencing 1,000,000 shares of Common Stock of the
Company then, upon delivery to the Underwriter of such certificate
indorsed to the Underwriter or indorsed in blank by an effective
indorsement, the Underwriter will acquire such certificate (and the
shares represented thereby) free of any adverse claims under Section
8?303 of the Uniform Commercial Code as in effect on the date hereof in
the State of New York (the "New York UCC").
(ii) The Selling Stockholder has the limited liability company
power and authority to enter into this Agreement and to sell and
deliver the Shares in the manner provided herein;
(iii) No Governmental Approval is required for the sale of the
Shares by the Selling Stockholder pursuant to this Agreement, except
such as have been made and obtained; and
(iv) The execution and delivery of this Agreement and the
performance by the Selling Stockholder of its obligations hereunder
will not (i) conflict with the Limited Liability Company Agreement of
the Selling Stockholder, (ii) result in a breach or violation of or
constitute a default under any agreement to which the Selling
Stockholder is a party, it being understood that such counsel has been
informed by the Selling Stockholder that there are no such agreements,
or (iii) result in a violation of any Applicable Laws or any Applicable
Order, except for any such breach, violation or default referred to in
clauses (ii) or (iii) above which would not reasonably be expected to
adversely affect the performance by the Selling Stockholder of its
obligations under this Agreement.
For the purposes of these opinions, (a) the term "Applicable
Laws" means the Delaware Limited Liability Company Act (the "DLLC") and those
laws, rules and regulations of the State of New York and the federal laws of the
United States of America, in each case, which, in our experience, are normally
applicable to transactions of the type contemplated by the Underwriting
Agreement, but without our having made any special investigation concerning any
other laws, rules or regulations; provided that the term "Applicable Laws" does
not include (1) any federal or state securities or blue sky laws, (2) any
antifraud laws or (3) the rules and regulations of the National Association of
Securities Dealers, Inc.; (b) the term "Governmental Authorities" means any
executive, legislative, judicial, administrative or regulatory body of the State
of New York, the State of Delaware or the United States of America having
jurisdiction over the Selling Stockholder under Applicable Laws; (c) the term
"Governmental Authority" means any consent, approval, license, authorization or
validation of, or filing or registration with, any Governmental Authority
required to be made or obtained by the Selling Stockholder pursuant to
Applicable Laws, other than any consent, approval, license, authorization,
validation, or filing or registration which may have become applicable as a
result of your involvement in the transactions contemplated by the Underwriting
Agreement or because of your legal or regulatory
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status or because of any other facts specifically pertaining to you; (d) the
term "Applicable Order" means those judgments, orders or decrees identified on
Schedule I hereto; (e) the term "Applicable Contract" means those agreements and
instruments identified on Schedule II hereto; and (f) "notice of adverse claim"
has the meaning set forth in Section 8-105 of the UCC and includes, without
limitation, any adverse claim that Bear ▇▇▇▇▇▇▇ Inc. ("Bear ▇▇▇▇▇▇▇") would
discover upon any investigation which such person has a duty, imposed by stature
or regulation, to investigate.
The respective opinions of counsel for the Company and the
Selling Stockholder describe above shall be rendered to you at the request of
the Company or the Selling Stockholder, as applicable, and shall so state
therein.
(h) You and the Selling Stockholder shall have received, on
each of the date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance satisfactory to you,
from Ernst & Young LLP, independent public accountants, containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the
Prospectus.
(i) The Selling Stockholder and the Company shall each have
delivered to you the agreements specified in Section 2 hereof which agreements
shall be in full force and effect on the Closing Date.
(j) The Shares shall have been duly listed on the NYSE.
(k) The Company and the Selling Stockholder, as the case may
be, shall not have failed on or prior to the Closing Date to perform or comply
with any of the agreements herein contained and required to be performed or
complied with by the Company or the Selling Stockholder, as the case may be, on
or prior to the Closing Date.
Section 10. Effectiveness of Agreement and Termination. This
Agreement shall become effective upon the execution and delivery of this
Agreement by the parties hereto.
This Agreement may be terminated at any time on or prior to
the Closing Date by you by written notice to the Company and the Selling
Stockholders if any of the following has occurred: (i) any outbreak or
escalation of hostilities or other national or international calamity or crisis
or change in economic conditions or in the financial markets of the United
States or elsewhere that, in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange (NYSE) or limitation on prices for securities or other instruments on
the NYSE, (iii) the suspension of trading of the Common Stock on the NYSE, (iv)
the enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your reasonable opinion materially and adversely affects, or will
materially and adversely affect, the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or
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(vi) the taking of any action by any federal or state government or agency in
respect of its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the financial markets in the United States.
Section 11. Agreements of the Selling Stockholder. The Selling
Stockholder agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes payable
in connection with the transfer of the Shares to be sold by the Selling
Stockholder to you.
(b) To do and perform all things to be done and performed by
the Selling Stockholder under this Agreement prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Shares to be sold by the
Selling Stockholder pursuant to this Agreement.
Section 12. Miscellaneous. Notices given pursuant to any
provision of this Agreement shall be addressed as follows:
(i) if to the Company, to:
Capstead Mortgage Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to you, to:
Bear ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a required copy to:
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Block, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to the Selling Stockholder, to
Fortress CAP LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or in any case to such other address as the person to be notified may have
requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, the Selling
Stockholder and you set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Shares, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, the officers or
directors of any Underwriter, any person controlling the Underwriter, the
Company, the officers or directors of the Company, any person controlling the
Company, the Selling Stockholder or any person controlling the Selling
Stockholder, (ii) acceptance of the Shares and payment for them hereunder and
(iii) termination of this Agreement.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Selling Stockholder, the Underwriter, the Underwriter's directors and officers,
any controlling persons referred to herein, the Company's directors and the
Company's officers who sign the Registration Statement and their respective
successors and assigns and the Selling Stockholder's officers and members and
any controlling persons, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from the Underwriter merely because of such purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
-24-
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
[SIGNATURE PAGE TO FOLLOW]
-25-
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Stockholder and the Underwriter.
Very truly yours,
CAPSTEAD MORTGAGE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
and Secretary
FORTRESS CAP LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary and Chief
Operating Officer
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Managing Director