Exhibit 1.1
Capstead Mortgage Corporation
DOCS ®
financing facility*
Shares of Common Stock,
$0.01 par value
SALES AGREEMENT
March 10, 2008
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DOCS ® is a
registered service mark of Brinson Patrick Securities
Corporation. |
THIS SALES AGREEMENT (the
“Agreement”) dated as of March 10, 2008 between
Brinson Patrick Securities Corporation, having its principal office
at 330 Madison Avenue, 9 th Floor, New
York, New York 10017 (the “Sales Manager”) and Capstead
Mortgage Corporation, a corporation organized and existing under
the laws of the State of Maryland (the
“Company”).
WHEREAS , the Company desires
to issue and sell through the Sales Manager shares of its common
stock, par value $0.01 per share (the “Common Stock”)
on the terms set forth in Article II hereof.
IN CONSIDERATION of the
mutual covenants contained in this Agreement, the Company and the
Sales Manager agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
1.1 For purposes of this Agreement,
unless the context requires to the contrary, the term
“Company” shall also include all significant
subsidiaries (as defined by Section 1-02 of Regulation S-X) of
the Company. The Company represents and warrants to, and agrees
with, the Sales Manager that:
(a) The
Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the “Act”), and the
rules and regulations thereunder (“Rules and
Regulations”), and the Company is eligible to use Form S-3
for the transactions contemplated by this Agreement. A registration
statement on Form S-3 (Registration No. 333-143390) with
respect to, among other securities, the Common Stock, including a
form of prospectus, has been prepared by the Company in conformity
with the requirements of the Act and the Rules and Regulations, has
been filed with the Securities and Exchange Commission (the
“Commission”) and has been declared effective by the
Commission. No stop order suspending the effectiveness of such
registration statement has been issued, and no proceeding for that
purpose has been instituted or, to the knowledge of the Company,
threatened by the Commission. Additionally, the Company is eligible
to file a new registration statement on Form S-3 with respect to
the Common Stock that will become effective upon filing with the
Commission pursuant to Rule 462(e) under the Act. Each such
registration statement, as it may have heretofore been or may
hereafter be filed, as amended, is referred to herein as the
“Registration Statement,” and the final form of
prospectus included in the Registration Statement, as amended or
supplemented from time to time, is referred to herein as the
“Prospectus.” Any reference herein to the Registration
Statement, the Prospectus, or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated
(or deemed to be incorporated) by reference therein, and any
reference herein to the terms “amend,”
“amendment” or “supplement” with respect to
the Registration Statement or Prospectus shall be deemed to refer
to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference
therein.
(b) Each
part of the Registration Statement, when such part became or
becomes effective, and the Prospectus and any amendment or
supplement thereto, on the date of
filing
thereof with the Commission and at each Settlement Date (as
hereinafter defined), conformed or will conform in all material
respects with the requirements of the Act and the Rules and
Regulations; each part of the Registration Statement, when such
part became or becomes effective, did not or will not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; and the Prospectus and any
amendment or supplement thereto, on the date of filing thereof with
the Commission and at each Settlement Date, did not or will not
include an 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 foregoing shall not apply to statements
in or omissions from any such document in reliance upon, and in
conformity with, written information furnished to the Company by or
on behalf of the Sales Manager, specifically for use in the
Registration Statement, the Prospectus or any amendment or
supplement thereto.
(c) The
documents incorporated by reference in the Registration Statement
or the Prospectus, or any amendment or supplement thereto, when
they became or become effective under the Act or were or are filed
with the Commission under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as the case may be,
conformed or will conform in all material respects with the
requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder.
(d) The
financial statements of the Company, together with the related
schedules and notes thereto, set forth or included or incorporated
by reference in the Registration Statement and Prospectus, fairly
present the financial condition of the Company as of the dates
indicated and the results of operations, changes in financial
position, stockholders’ equity, and cash flows for the
periods therein specified, in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein). The summary and
selected financial and statistical data included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the information shown therein and, to the extent based upon
or derived from the financial statements, have been compiled on a
basis consistent with the financial statements presented
therein.
(e) The
accountants who certified the financial statements and the
supporting schedules included in the Registration Statement are
and, during the periods covered by their reports, were qualified
and independent public accountants as required by Rule 2-01 of
Regulation S-X.
(f) The
Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Maryland. Other than as disclosed in the Registration Statement,
the Company has no subsidiaries and does not control, directly or
indirectly, any corporation, partnership, limited liability
company, joint venture, association or other business organization.
The Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location
of its assets or properties (owned, leased or licensed) or the
nature of its business makes such qualification necessary
(including every jurisdiction in which it owns or leases property),
except for such jurisdictions where the failure to so qualify would
not have a Material Adverse Effect on the Company. For purposes of
this Agreement, “Material Adverse Effect” means any
adverse effect on the
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business, operations, properties or financial condition of the
Company that is (either alone or together with all other adverse
effects) material to the Company, and any material adverse effect
on the transactions contemplated under this Agreement or any other
agreement or document contemplated hereby or thereby. Each of the
Company’s significant subsidiaries is validly existing as a
corporation, limited liability company or partnership, as
applicable, in its respective jurisdiction of formation.
Schedule 1.1(f) hereto identifies each of the Company’s
subsidiaries that is a significant subsidiary (as defined in
Section 1-02 of Regulation S-X) of the Company. All of
the issued and outstanding capital stock, limited liability company
interests or partnership interests, as applicable, of each
significant subsidiary has been duly authorized and validly issued,
is fully paid and nonassessable and (except as otherwise disclosed
or incorporated by reference in the Registration Statement and the
Prospectus) is owned by the Company, directly or indirectly, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. Except as disclosed or incorporated
by reference in the Registration Statement and the Prospectus, the
Company does not own, lease or license any asset or property or
conduct any business outside the United States of America. The
Company has all requisite corporate or limited liability company
power and authority, as applicable, and all necessary
authorizations, approvals, consents, orders, licenses, certificates
and permits of and from all governmental orders or regulatory
bodies or any other person or entity, to own, lease, license and
operate its assets and properties and conduct its business as now
being conducted and as described or incorporated by reference in
the Registration Statement and the Prospectus; except for such
authorizations, approvals, consents, orders, licenses, certificates
and permits the absence of which would not have a Material Adverse
Effect; and no such authorization, approval, consent, order,
license, certificate or permit contains a materially burdensome
restriction other than as disclosed or incorporated by reference in
the Registration Statement and the Prospectus.
(g) The
Company has good title to each of the items of personal property
which are reflected in the financial statements referred to in
Section 1.1(d) or are referred to in the Registration
Statement and the Prospectus or any document incorporated by
reference therein as being owned by the Company and valid and
enforceable leasehold interests in each of the items of real and
personal property which are referred to in the Registration
Statement and the Prospectus or any document incorporated by
reference therein as being leased by the Company, in each case free
and clear of all liens, encumbrances, claims, security interests
and defects, other than those described in the Registration
Statement and the Prospectus and those which do not and will not
have a Material Adverse Effect.
(h) The
Company has been subject to the requirements of Section 12 of
the Exchange Act during the period commencing 12 months
preceding the filing of the Registration Statement and ending on
the date hereof (the “Reporting Period”) and during
such Reporting Period the Company has timely filed all material and
reports required under Sections 13(a), 14 and/or 15(d) of the
Exchange Act. All such materials and reports conformed in form and
substance to the requirements of the Exchange Act and the rules and
regulations thereunder. As of the date of filing of the
Registration Statement, and as of the date hereof, the aggregate
market value of the voting and non-voting common equity held by
non-affiliates of the Company was and is at least
$150 million.
(i) The
Company has good and marketable title to, or leasehold interests
in, all properties and assets (including, without limitation,
mortgaged assets) as described in the
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Registration Statement and the Prospectus or any document
incorporated by reference therein, owned by the Company, free and
clear of all liens, charges, encumbrances or restrictions, except
such as are described in the Registration Statement and the
Prospectus or any document incorporated by reference therein, and
except such as would not have a Material Adverse Effect on the
Company.
(j) The
debt financing employed by the Company to acquire its portfolio of
mortgage assets is not convertible into shares of common stock of
the Company or other equity interests in the Company.
(k) There
is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or
board pending or, to the knowledge of the Company, threatened (and
the Company does not know of any basis therefor) against, or
involving the assets, properties or businesses of the Company which
would materially adversely affect the value or the operation of any
such assets or otherwise have a Material Adverse Effect on the
Company except as described or incorporated by reference in the
Registration Statement.
(l) The
Company maintains insurance (issued by insurers of recognized
financial responsibility) of the types and in the amounts generally
deemed adequate for its businesses and, to the knowledge of the
Company, consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, all of which
insurance is in full force and effect.
(m) Subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as described
therein, (i) there has not been any material adverse change in
the assets or properties, business, results of operations or
condition (financial or otherwise) of the Company, whether or not
arising from transactions in the ordinary course of business;
(ii) the Company has not sustained any material loss or
interference with its assets, businesses or properties (whether
owned or leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action,
order or decree; (iii) since the date of the latest balance
sheet, included or incorporated by reference in the Registration
Statement and the Prospectus, except as reflected therein, the
Company has not undertaken any liability or obligation, direct or
contingent, except such liabilities or obligations undertaken in
the ordinary course of business; and (iv) there has not been
any transaction that is material to the Company, except
transactions in the ordinary course of business or as otherwise
disclosed in the Registration Statement and the Prospectus.
(n) There
is no document or contract of a character required to be described
in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement that is not described or
filed as required. Each document, instrument, contract and
agreement of the Company described in the Registration Statement or
the Prospectus or incorporated by reference therein or listed as
exhibits to the Registration Statement is in full force and effect
and is valid and enforceable by and against the Company in
accordance with their terms, assuming the due authorization,
execution and delivery thereof by each of the other
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parties
thereto except as otherwise disclosed in the Registration Statement
or Prospectus. The Company is not, nor to the knowledge of the
Company is any other party, in default in the observance or
performance of any term or obligation to be performed by it under
any such agreement, and no event has occurred which with notice or
lapse of time or both would constitute such a default, which
default or event would have a Material Adverse Effect. No default
exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company of
any other agreement or instrument to which the Company is a party
or by which it or its properties or business may be bound or
affected, which default or event would have a Material Adverse
Effect.
(o) The
Company is not in violation of any term or provision of its
charter, by-laws or operating agreement, as applicable. The Company
is not in violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, where the consequences
of such violation would have a Material Adverse Effect.
(p) Neither
the execution, delivery and performance of this Agreement by the
Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance
and sale by the Company of the Common Stock) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under,
or require any consent or waiver under, or result in the execution
or imposition of any lien, charge, encumbrance, claim, security
interest, restriction or defect upon any properties or assets of
the Company pursuant to the terms of, any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company is a
party or by which the Company is bound, or any of its properties or
businesses are bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the
Company or violate any provision of the charter or by-laws of the
Company, except for such consents or waivers which have already
been obtained and are in full force and effect.
(q) All
of the outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and
nonassessable and none of the shares were issued in violation of
any preemptive or other similar right. The Common Stock, when
issued and sold pursuant to this Agreement, will be duly authorized
and validly issued, fully paid and nonassessable and will not be
issued in violation of any preemptive or other similar right.
Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and there is no commitment, plan or
arrangement to issue, any capital stock of the Company or any
security convertible into or exercisable or exchangeable for such
capital stock, except for standard dividend reinvestment plans. The
Common Stock conforms in all material respects to all statements
relating thereto contained in the Registration Statement and the
Prospectus. Any stock options issued by the Company have been
issued in compliance with law, and the terms and provisions of such
stock options were established in compliance with law.
(r) Subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as
(x) described or referred to therein, or (y) are not
material (as to clauses (i) and (ii) only), are
consistent with past practice (as to clauses (i)
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and
(ii) only), and are publicly disclosed, the Company has not
(i) issued any securities or incurred any liability or
obligation, direct or contingent, except such liabilities or
obligations incurred in the ordinary course of business including,
without limitation, debt financing to acquire and develop
properties, (ii) entered into any transaction not in the
ordinary course of business or (iii) declared or paid any
dividend or made any distribution on any shares of its capital
stock or redeemed, purchased or otherwise acquired or agreed to
redeem, purchase or otherwise acquire any shares of its capital
stock.
(s) Except
as disclosed in the Registration Statement and Prospectus, no
holder of any security of the Company has the right, which has not
been waived, to have any security owned by such holder included in
the Registration Statement or any right to demand registration of
any security owned by such holder.
(t) All
necessary corporate or limited liability company action, as
applicable, has been duly and validly taken by the Company to
authorize the execution, delivery and performance of this Agreement
and the issuance and sale of the Common Stock by the Company. This
Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes and will constitute the
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. Except for any
“blue sky” filings or Trading Market (as defined below)
listing applications to be filed pursuant hereto, each approval,
consent, order, authorization, designation, declaration or filing
by or with any regulatory, administrative or other governmental
body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions
contemplated hereby and the issuance and sale of the Common Stock
by the Company has been obtained or made and is in full force and
effect. The Company will use its best reasonable efforts to cause
the Common Stock to be listed for trading on the Trading Market.
For purposes of this Agreement, the “Trading Market” is
(i) the New York Stock Exchange, Inc., and (ii) each
other securities exchange on which the common stock of the Company
is admitted for trading.
(u) The
Company has not incurred any liability for a fee, commission or
other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this
Agreement other than as contemplated hereby or as described in the
Registration Statement.
(v) The
Company is conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in
which it is conducting business, except where the failure to be so
in compliance would not have a Material Adverse Effect.
(w) No
transaction has occurred between or among the Company and any of
its officers or directors or any affiliate or affiliates of any
such officer or director that is required to be described in and is
not described in the Registration Statement and the
Prospectus.
(x) The
Company has not taken, nor will it take, directly or indirectly,
any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the
sale or resale of any of the Common Stock.
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(y) The
Company has filed all federal, state, local and foreign tax returns
which are required to be filed through the date hereof (and will
file all such tax returns when and as required to be filed after
the date hereof), or has received extensions thereof, and has paid
all taxes shown on such returns to be due on or prior to the date
hereof (and will pay all taxes shown on such returns to be due
after the date hereof) and all assessments received by it to the
extent that the same are material and have become due, except where
the failure to file such a return or pay such amount would not have
a Material Adverse Effect.
(z) The
Company has met the qualification requirements for a “real
estate investment trust” during its taxable years ending on
or after December 31, 1999 and its proposed method of
operations will enable it to continue to meet the requirements for
qualification and taxation as a “real estate investment
trust” under the Internal Revenue Code of 1986, as amended
(the “Code”), assuming no change in the applicable
underlying law. The Company does not know of any event that would
cause or is likely to cause the Company to fail to qualify as a
“real estate investment trust” at any time.
(aa) The
Company is not an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
(bb) The
Company’s systems of internal accounting controls taken as a
whole are sufficient to meet the broad objectives of internal
accounting control insofar as those objectives pertain to the
prevention or detection of errors or irregularities in amounts that
would be material in relation to the Company’s financial
statements; and, to the best of the Company’s knowledge,
neither the Company nor any employee or agent thereof has made any
payment of funds of the Company or received or retained any funds,
and no funds of the Company have been set aside to be used for any
payment, in each case in violation of any law, rule or
regulation.
(cc) There
is and has been no failure on the part of the Company or any of the
Company’s directors or officers, in their capacities as such,
to comply with any provision of the Sarbanes-Oxley Act of 2002 and
the rules and regulations promulgated in connection therewith,
including without limitation Section 402 related to loans and
Sections 302 and 906 related to certificates.
ARTICLE II
SALE AND DELIVERY OF SECURITIES
2.1 (a) On the basis of the
representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company
agrees to issue and sell through the Sales Manager, as agent, and
the Sales Manager agrees to sell, as agent for the Company, on a
best efforts basis, shares of the Common Stock during the term of
this Agreement on the terms set forth herein. The Common Stock will
be sold from time to time as described in the Registration
Statement and Prospectus, in amounts and, subject to price
limitations, at prices as directed by the Company and as agreed to
by the Sales Manager; provided that nothing in this Agreement shall
be construed to require the Company to sell any shares of Common
Stock through the Sales Manager.
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(b) The
Company or the Sales Manager may, upon notice to the other party
hereto by telephone (confirmed promptly by telecopy or e-mail), at
any time and from time to time suspend the offering of Common
Stock; provided , however , that such suspension
shall not affect or impair the parties’ respective
obligations with respect to the Common Stock sold hereunder prior
to the giving of such notice.
(c) The
compensation to the Sales Manager for sales of Common Stock sold
under this Agreement shall be at the following commission rates:
3.0% of the gross sales price per share (“sales
proceeds”) for the first $8 million of agg
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