SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CAPSTEAD MORTGAGE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 75-2027937
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8401 NORTH CENTRAL EXPRESSWAY
SUITE 800
DALLAS, TEXAS 75225-4410
(214) 874-2323
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(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
ANDREW F. JACOBS
8401 NORTH CENTRAL EXPRESSWAY
SUITE 800
DALLAS, TEXAS 75225-4410
(214) 874-2323
(Name, address, including zip code, and telephone number
including area code, of agent for service)
The Commission is requested to send copies of all communication to:
DAVID BARBOUR
ANDREWS & KURTH L.L.P.
1717 MAIN STREET
SUITE 3700
DALLAS, TEXAS 75201
(214) 659-4400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement, as determined by market conditions.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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Common Stock, $0.01 par value 9,298,717 shares $16.48 $153,242,856.16 $38,311
=============================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c), based upon the average of the high and low sales prices of the Common Stock on June 18, 2001 as reported on the New York Stock Exchange.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
PROSPECTUS
[CAPSTEAD LOGO]
CAPSTEAD MORTGAGE CORPORATION
COMMON STOCK
You should Through this prospectus, Fortress Investment Group, carefully LLC may offer and sell from time to time up to consider the 9,298,717 shares of our common stock, which is listed risk factors on the New York Stock Exchange under the symbol beginning on "CMO." Fortress may sell the shares from time to time page 4 of this at market prices at the time of sale or at negotiated prospectus. prices. |
Fortress may sell all or a portion of the common stock through agents, to or through underwriters or dealers, or directly to other purchasers. See "Plan of Distribution." The related prospectus supplement for each offering of securities will set forth the name of any agents, underwriters or dealers involved in the sale of those securities and any applicable fee, commission, discount or indemnification arrangement with any such party. We will not receive any of the proceeds from the sale of any common stock by Fortress. See "Use of Proceeds."
This prospectus may not be used to consummate sales of common stock without an accompanying prospectus supplement.
You should rely only on the information contained or incorporated by reference in this prospectus and in any prospectus supplement accompanying this prospectus and that we or Fortress have referred you to.
Neither we nor Fortress has authorized anyone to provide you with information that is different.
You should not assume that the information in this prospectus or in any prospectus supplement is accurate as of any date other than the date on the front of those documents.
References in this prospectus to "we," "us," "our" and "the company" are to Capstead Mortgage Corporation. References in this prospectus to "Fortress" are to Fortress Investment Group, LLC.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JUNE 19, 2001.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public at the SEC's web site at http://www.sec.gov and at the public reference rooms of the New York Stock Exchange, 20 Broad Street, New York, New York and the Pacific Stock Exchange, 115 Sansome Street, San Francisco, California.
We have filed a registration statement with the SEC on Form S-3 relating to the securities offered by this prospectus. This prospectus does not contain all of the information included in the registration statement. You may refer to the registration statement and the related exhibits for more information about the securities offered by this prospectus. The statements we make in this prospectus regarding the content of any documents filed as exhibits to the registration statement are not necessarily complete, and you should refer to the filed copy for additional information. All our statements about these documents are qualified in their entirety by the exhibits to the registration statement.
INCORPORATION OF INFORMATION WE FILE
WITH THE SEC BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until all the securities offered under this prospectus are sold. This prospectus is part of the registration statement we filed with the SEC.
1. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2000.
2. Our definitive Proxy Statement dated March 9, 2001, issued in connection with our annual stockholders' meeting.
3. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2001.
4. Our definitive Proxy Statement dated May 17, 2001, issued in connection with a proposed one-for-two reverse split of our common stock.
You may view and obtain copies of these filings in the Investor Relations section of our website at www.capstead.com. You may also request a copy of these filings, at no cost, by writing or telephoning us at Capstead Mortgage Corporation, 8401 N. Central Expressway, Suite 800, Dallas, Texas 75225, telephone (214) 874-2323, Attention: Investor Relations.
RISK FACTORS
THE FOLLOWING INFORMATION, WHICH YOU SHOULD CAREFULLY CONSIDER, IDENTIFIES CERTAIN SIGNIFICANT SOURCES OF RISK ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK.
CHANGES IN INTEREST RATES
MAY ADVERSELY AFFECT OUR
EARNINGS............................ Our earnings currently depend, in part,
on the difference or "spread" between
the interest we receive on our mortgage
securities and other investments, and
the interest we pay on our related
borrowings, which are generally based on
30-day London Interbank Offered Rates.
The resulting spread may be reduced or
even turn negative in a rising
short-term interest rate environment.
Because a substantial portion of our
mortgage investments are adjustable-rate
mortgage securities, the risk of rising
short-term interest rates is generally
offset to some extent by increases in
the rates of interest earned on the
underlying adjustable-rate mortgage
loans, which reset periodically based on
underlying indices (generally 1-year
Constant Maturity U.S. Treasury Note
Rates). Since adjustable-rate mortgage
loans generally limit the amount of
these increases during any single
interest rate adjustment period and over
the life of the loan, interest rates on
borrowings can rise to levels that may
exceed the interest rates on the
underlying loans contributing to lower
or even negative financing spreads. At
other times, as seen in 1998 and now in
2001, declines in these indices during
periods of falling short-term interest
rates will negatively affect yields on
adjustable-rate mortgage securities as
the underlying adjustable-rate loans
reset at lower interest rates. If
declines in these indices exceed
declines in our borrowing rates, our
earnings may be adversely affected.
Another effect of changes in interest
rates is that, as long-term interest
rates decrease, the rate of principal
prepayments on mortgage loans underlying
our mortgage investments generally
increases. As seen in 1998, prolonged
periods of high prepayments can
significantly reduce the expected life
of our mortgage investments; therefore,
the actual yields realized can be lower
due to faster amortization of premiums.
Further, to the extent we cannot
reinvest the proceeds of prepayments on
our mortgage investments at a rate of
interest at least equal to the rate
previously earned on those investments,
our earnings may be adversely affected.
A change in interest rates also impacts
the results we
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recognize in our earnings from our CMO investments, which currently consist primarily of fixed-rate CMO residuals.
As seen in 1998, if mortgage interest
rates fall, prepayments on the
underlying mortgage loans generally will
be higher, accelerating the amortization
of collateral premiums and bond
discounts. Conversely, if mortgage
interest rates rise significantly above
interest rates on the collateral,
principal prepayments will typically
diminish, improving the overall return
on an investment in a fixed-rate CMO
residual because of an increase in time
over which we receive positive net cash
flows and can amortize remaining
collateral premiums and bond discounts.
We periodically sell mortgage assets,
which may increase our income volatility
because of the recognition of
transactional gains or losses. These
sales may become attractive as the value
of our mortgage assets fluctuates with
changes in interest rates. At other
times, such as in the second quarter of
2000, we may shift our investment focus,
resulting in asset sales.
SOME OF OUR MORTGAGE INVESTMENTS
ARE MORE CREDIT SENSITIVE THAN OUR
OTHER INVESTMENTS................... In addition to its residential mortgage
investments, the company invests from
time to time in commercial mortgage
assets including commercial
mortgage-backed securities. Commercial
mortgage assets are generally viewed as
exposing an investor to greater risk of
loss than residential mortgage-backed
securities because such assets are
typically secured by larger loans to
fewer obligors than residential
mortgage-backed securities. Commercial
property values and net operating income
are subject to volatility, and net
operating income may be sufficient or
insufficient to cover debt service on
the related mortgage loan at any given
time. The repayment of loans secured by
income-producing properties is typically
dependent upon the successful operation
of the related real estate project and
the ability of the applicable property
to produce net operating income rather
than upon the liquidation value of the
underlying real estate. Even when the
current net operating income is
sufficient to cover debt service, there
can be no assurance that this will
continue to be the case in the future.
Additionally, commercial properties may
not readily be convertible to
alternative uses if such properties were
to
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become unprofitable due to competition, age of improvements, decreased demand, regulatory changes or other factors. The conversion of commercial properties to alternate uses generally requires substantial capital expenditures, which may or may not be available.
The availability of credit for commercial mortgage loans is significantly dependent upon economic conditions in the markets where such properties are located, as well as the willingness and ability of lenders to make such loans. The availability of funds in the credit markets fluctuates and there can be no assurance that the availability of such funds will increase above, or will not contract below current levels. In addition, the availability of similar commercial properties, and the competition for available credit, may affect the ability of potential purchasers to obtain financing for the acquisition of properties. This could effect the repayment of commercial mortgages.
Credit sensitive residential mortgages differ from commercial mortgages in several important ways, yet can still carry substantial credit risk.
Residential mortgage-backed securities
typically are secured by smaller loans
to more obligors than commercial
mortgage-backed securities, thus
spreading the risk of mortgagor default.
However, most of the mortgages
supporting credit sensitive residential
mortgage-backed securities are made to
homeowners that do not qualify for
agency loan programs for reasons
including loan size, financial
condition, or work or credit history
that may be indicative of higher risk of
default than loans qualifying for such
programs. As with commercial mortgages,
in instances of default we may incur
losses if proceeds from sales of the
underlying collateral are less than the
unpaid principal balances of the
mortgage loans and related foreclosure
costs. However, with residential
mortgages, this risk may be mitigated by
various forms of credit enhancements
including, but not limited to, primary
mortgage insurance.
Through the process of securitizing both
commercial and residential mortgages,
credit risk can be heightened or
minimized. Senior classes in multi-class
securitizations generally have first
priority over cash flows from a pool of
mortgages and, as a result, carry the
least risk, highest investment ratings
and the lowest yields. Typically a
securitization will also have mezzanine classes and subordinated classes.
Mezzanine classes will generally have
somewhat lower credit ratings and may
have average lives that are longer than
the senior classes. Subordinate classes
are junior in the right to receive cash
flow from the underlying mortgages, thus
providing credit enhancement to the
senior and mezzanine classes. As a
result, subordinated securities will
have lower credit ratings because of the
elevated risk of credit loss inherent in
these securities.
The availability of capital from
external sources to finance investments
in credit-sensitive commercial and
residential mortgage assets that are not
financed to maturity at acquisition may
be diminished during periods of mortgage
finance market illiquidity, such as was
experienced in 1998. Additionally, if
market conditions deteriorate resulting
in substantial declines in value of
these assets, sufficient capital may not
be available to support the continued
ownership of these assets, requiring
them to be sold at a loss.
IF OUR EARNINGS OR THE VALUE OF OUR
MORTGAGE ASSETS ARE ADVERSELY AFFECTED
BY A CHANGE IN INTEREST RATES OR CHANGE
IN THE CREDIT QUALITY OF THE INVESTMENT
PORTFOLIO, THE BOOK VALUE OF OUR COMMON
STOCK MAY DECLINE.
WE ARE CURRENTLY INVOLVED IN
STOCKHOLDER LITIGATION.............. During 1998 twenty-four purported class
action lawsuits were filed against us
and certain of our officers alleging,
among other things, that we violated
federal securities laws by publicly
issuing false and misleading statements
and omitting disclosure of material
adverse information regarding our
business during various periods between
January 28, 1997 and July 24, 1998. The
complaints claim that as a result of
such alleged improper actions, the
market price of our equity securities
were artificially inflated during that
time period. The complaints seek
monetary damages in an undetermined
amount. In March 1999 these actions were
consolidated and in July 2000 a lead
plaintiff group was appointed by the
court. An amended complaint was filed
October 20, 2000. The amended complaint
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seeks monetary damages in an undetermined amount. We responded to this amended complaint on February 20, 2001 with a motion to dismiss all allegations against us and our officers.
On April 20, 2001, the plaintiffs
responded to our motion to dismiss. We
filed our reply to the plaintiff's
response on May 21, 2001. We believe that we have meritorious defenses to the claims and we intend to vigorously defend against the actions. Based on available information, we believe the resolution of these suits will not have a material adverse effect on our financial position.
THE COMPANY
We were incorporated on April 15, 1985 in Maryland and commenced operations in September 1985. We are a mortgage investment firm operating as a real estate investment trust ("REIT") that earns income from investing in mortgage assets on a leveraged basis and from other investment strategies. Currently, our investment strategy focuses on real estate-related assets, including, but not limited to, adjustable-rate single-family residential mortgage-backed securities issued by government-sponsored entities, either Fannie Mae, Freddie Mac or Ginnie Mae ("Agency Securities") and credit-sensitive commercial and residential real estate-related assets.
We and our qualified REIT subsidiaries have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), and intend to continue to do so. As a result of this election, we and our qualified REIT subsidiaries are not taxed at the corporate level on taxable income distributed to stockholders, provided that certain REIT qualification tests are met. Certain other affiliated entities which are consolidated with the company for financial reporting purposes, are not consolidated for federal income tax purposes because such entities were not established as REITs or qualified REIT subsidiaries. All taxable income of these affiliated entities are subject to federal and state income taxes, where applicable.
THE SELLING STOCKHOLDER
Fortress is a real estate investment firm with experience in investing in a variety of asset types across the credit spectrum.
In December 1999, we issued $51.2 million of our Series C and D voting preferred shares to Fortress. The Series C and D voting preferred shares could be convertible into our common stock at any time at Fortress's option. During the fourth quarter of 2000 and the second quarter of 2001, Fortress converted all of its Series C and D voting preferred shares into 5,378,000 common shares. Together with its purchases on the open market of 3,920,717 shares of our common stock, Fortress controlled approximately 34% of our voting shares as of June 18, 2001.
Through this prospectus, Fortress may sell up to 9,298,717 shares of our common stock (the "Fortress Shares") from time to time at market prices at the time of sale or at negotiated prices. Fortress and/or the purchasers of its shares may pay broker-dealers compensation in the form of discounts, concessions or commissions. Fortress and any agents or broker-dealers that participate with Fortress in the distribution of these shares may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). Any
commissions received by them and any profit on the resale of these shares may be deemed to be underwriting commissions or discounts under the Securities Act.
Since Fortress may sell all, some or none of the Fortress Shares, no estimate can be made of the actual aggregate number of shares that will be sold pursuant to this prospectus. See "Plan of Distribution" for more information concerning sales of the Fortress Shares. If all of the Fortress Shares offered hereby are sold, Fortress would no longer own any of our outstanding common stock, assuming Fortress does not purchase or acquire any additional shares of our common stock after the date of this prospectus.
Any prospectus supplement relating to the offering of any Fortress Shares under this prospectus will set forth the number of Fortress Shares being offered for the account of Fortress, as well as the number of Fortress Shares owned by Fortress upon completion of such offering.
In the event that any offering by Fortress is underwritten, we will have the right to select the managing underwriter or underwriters. Additionally, if Fortress makes an offering of Fortress Shares in conjunction with an offering by us of our securities, Fortress must sell its Fortress Shares to the underwriter selected by us on the same terms and conditions as apply to us. Fortress may also elect to sell all or a portion of the Fortress Shares pursuant to an exemption from registration, provided that we have determined to our satisfaction that registration of the Fortress Shares is not required as a result of the availability of such an exemption from registration under the Securities Act.
USE OF PROCEEDS
We will not receive any proceeds from the sale by Fortress of any Fortress Shares.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the historical ratios of earnings to combined fixed charges and our preferred stock dividends for the periods indicated:
YEAR ENDED DECEMBER 31,
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QUARTER ENDED
MARCH 31, 2001 2000 1999 1998 1997 1996
-------------- ------ ------ ------ ------ ------
Ratio of Earnings to Combined
Fixed Charges and Preferred
Stock Dividends(a) 1.15:1 0.87:1 1.07:1 0.63:1 1.20:1 1.14:1
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(a) Includes fixed charges relating to CMO's issued by the company's finance subsidiaries. Excluding interest expense on CMO debt, the ratio of earnings to combined fixed charges and preferred stock dividends would have been 1.26:1, 0.77:1, 1.14:1, 0.28:1, 1.36:1, and 1.28:1, respectively, for the periods indicated.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock currently consists of 100,000,000 shares of common stock, par value $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.10 per share. As of June 18, 2001, there were 27,523,795 shares of our common stock, 373,005 shares of our $1.60 Cumulative Preferred Stock designated as "Series A Preferred Stock" and 15,842,552 shares of our $1.26 Cumulative Convertible Preferred Stock designated as "Series B Preferred Stock" issued and outstanding. The common stock, Series A Preferred Stock and Series B Preferred Stock are listed on the New York Stock Exchange.
COMMON STOCK
Each share of common stock is entitled to one vote. The outstanding shares of common stock are fully paid and non-assessable. Holders of shares of common stock do not have cumulative voting rights or preference, conversion, exchange, subscription or preemptive rights. Subject to our obligations to pay dividends on all shares of our outstanding preferred stock, each share of common stock is entitled to participate equally in dividends on the common stock when and as declared by our board of directors and in the distribution of our assets upon liquidation after payment of our liabilities and liquidation preferences with regard to our preferred stock. The foregoing summary does not purport to be a complete description of our common stock and is subject to, and qualified in its entirety by reference to, our charter and bylaws, in each case as amended and supplemented to date and filed as exhibits to the registration statement.
RECENT EVENTS
On April 30, 2001, we announced that our board of directors has authorized a special dividend of $7.30 per common share, or approximately $200 million of our common stockholders' equity, payable on June 29, 2001 to stockholders of record as of June 13, 2001. Because of the significance of this distribution, the shares will not trade ex-dividend until July 2, 2001. Common stockholders who sell their shares after the record date, and through the payment date, will also be selling their right to receive the special dividend.
On June 15, 2001, our stockholders approved a 1-for-2 reverse common stock split that will become effective at the close of business on June 29, 2001.
REDEMPTION OR REPURCHASE OF CAPITAL STOCK TO MAINTAIN OUR STATUS AS A REIT
Our charter provides that if our board of directors determines in good faith that the direct or indirect ownership of our stock has or may become concentrated to an extent which would cause us to fail to qualify or be qualified as a REIT under Sections 856(a)(5) or (6) of the Code, or similar provisions of successor statutes, we may redeem or repurchase any number of shares of common stock and/or preferred stock sufficient to maintain or bring such ownership into conformity with the Code and may refuse to transfer or issue shares of common stock and/or preferred stock to any person whose acquisition would result in our being unable to conform with
the requirements of the Code. In general, Code Sections 856(a)(5) and (6) provide that, as a REIT, we must have at least 100 beneficial owners for 335 days of each taxable year and that we cannot qualify as a REIT if, at any time during the last half of our taxable year, more than 50% in value of our outstanding stock is owned, directly or indirectly, by or for not more than five individuals. In addition, our charter provides that we may redeem or refuse to transfer any shares of our capital stock to the extent necessary to prevent the imposition of a penalty tax as a result of ownership of those shares by certain disqualified organizations, including governmental bodies and tax-exempt entities that are not subject to tax on unrelated business taxable income. The redemption or purchase price for those shares shall be equal to the fair market value of those shares as reflected in the closing sales price for those shares if then listed on a national securities exchange, or the average of the closing sales prices for those shares if then listed on more than one national securities exchange, or if those shares are not then listed on a national securities exchange, the latest bid quotation for the shares if then traded over-the-counter on the last business day for which closing prices are available immediately preceding the day on which notices of such acquisitions are sent or, if no such closing sales prices or quotations are available, then the net asset value of those shares as determined by our board of directors in accordance with the provisions of applicable law.
Our board of directors has elected to exclude purchases of our common stock by Fortress from the operation of the charter provisions described above.
SPECIAL STATUTORY REQUIREMENTS FOR CERTAIN TRANSACTIONS
The following summary of certain provisions of the Maryland General Corporations Law (the "MGCL") and of the company's charter and the bylaws does not purport to be complete and is subject to and qualified in its entirety by reference to Maryland law and to the company's charter and the bylaws, copies of which are filed with the Commission.
Business Combination Statute. Under the MGCL, certain "business combinations" (including a merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and any person who beneficially owns 10% or more of the voting power of the corporation's shares or an affiliate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation (an "Interested Stockholder") or an affiliate of such an Interested Stockholder are prohibited for five years after the most recent date on which the Interested Stockholder becomes an Interested Stockholder. Thereafter, any such business combination must be recommended by the board of directors of such corporation and approved by the affirmative vote of at least (a) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (b) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the Interested Stockholder with whom (or with whose affiliate) the business combination is to be effected, unless, among other conditions, the corporation's common stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the Interested Stockholder for its shares. These provisions of Maryland law do not apply, however, to
business combinations that are approved or exempted by the board of directors of the corporation prior to the time that the Interested Stockholder becomes an Interested Stockholder.
Pursuant to the statute, our board of directors has elected to exclude purchases of our common stock by Fortress from the operation of the statute. Consequently, the five-year prohibition and the super-majority vote requirements of the statute will not in any event apply to business combinations between Fortress and us. As a result, Fortress may be able to enter into business combinations with us without compliance by Fortress with the super-majority vote requirements and the other provisions of the statute.
Control Share Acquisition Statute. The MGCL provides that "control shares" of a Maryland corporation acquired in a "control share acquisition" have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock owned by the acquiror, by officers or by directors who are employees of the corporation. "Control shares" are voting shares of stock which, if aggregated with all other such shares of stock previously acquired by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power: (1) one-fifth or more but less than one-third, (2) one-third or more but less than a majority, or (3) a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A "control share acquisition" means the acquisition of control shares, subject to certain exceptions. A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting. If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of such shares are considered and not approved.
If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition. The control share acquisition statute does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation and adopted at any time before the acquisition of shares.
Our bylaws have been amended to include a provision exempting from the control share acquisition statute any and all acquisitions by Fortress and its affiliates of up to 40% of the voting power of our common stock. This provision is irrevocable and may only be amended to increase the aggregate percentage of our common stock that Fortress may acquire.
Possible Anti-takeover Effect of Certain Provisions of Maryland Law and of the Company's Charter and Bylaws. The business combination provisions and, if the applicable provision in the company's bylaws is rescinded, the control share acquisition provisions of the MGCL, the provisions of the company's charter on ownership and transfer of stock could delay, defer or prevent a transaction or a change in control of the company or other transaction that might involve a premium price for holders of common stock or otherwise be in their best interest.
PLAN OF DISTRIBUTION
We are registering shares of common stock for Fortress, who may sell or distribute these shares from time to time after the registration statement relating to this prospectus becomes effective. These shares may also be sold by third parties to whom Fortress transfers its stock, or by its successors in interest. Fortress may sell stock to one or more purchasers or through brokers, dealers or underwriters acting as agents or acquiring the stock as principals. Fortress may sell the stock at prices prevailing at the time of sale, at prices related to prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. Fortress may sell its stock in one or more of the following methods, which may include block transactions:
o ordinary brokers' transactions;
o purchases by brokers, dealers or underwriters as principal and resale by such purchasers for their own accounts pursuant to this prospectus;
o "at the market" to or through market makers or into an existing market for the common stock;
o in other ways not involving market makers or established trading markets, including direct sales to purchasers or sales effected through agents;
o through transactions in options, swaps or other derivatives (whether exchange-listed or otherwise);
o in privately negotiated transactions;
o to cover short sales; or
o any combination of the foregoing.
From time to time, Fortress may pledge, hypothecate or grant a security interest in some or all of the shares it owns. If Fortress does so, and if there is a foreclosure or default on those
obligations the pledgees, secured parties or persons to whom Fortress hypothecated its shares will be considered the relevant selling shareholders under this prospectus.
The number of shares Fortress beneficially owns will decrease if it transfers, pledges, donates or assigns its shares. The plan of distribution under this prospectus will otherwise remain unchanged, except that the transferees, pledgees, donees or other successors will be considered additional selling shareholders. Also, Fortress may sell short its common stock from time to time. Fortress may deliver this prospectus in connection with short sales, and it may use shares it sells under this prospectus to cover those short sales.
Fortress may enter into hedging transactions with broker- dealers, and the broker-dealers may engage in short sales of the common stock in the course of hedging the positions they assume with Fortress. This may involve distributions of the common stock by those broker-dealers. Fortress may also enter into option or other transactions with broker-dealers that involve the delivery of shares to the broker-dealers, who may then resell them or otherwise transfer them. Fortress may also pledge its shares to a broker-dealer to secure a loan or other agreement, and the broker-dealer may sell them or otherwise transfer them if Fortress defaults on the underlying loan or agreement.
Brokers, dealers, underwriters or agents participating in the distribution of shares as agents may receive compensation in the form of commissions, discounts or concessions from Fortress and/or purchasers of common stock for whom such broker-dealers may act as agent, or to whom they may sell as principal, or both. This compensation as to a particular broker-dealer may be less than or in excess of customary commissions. Regulators may deem selling shareholders and any broker-dealers who act in connection with the sale of shares under this prospectus "underwriters" within the meaning of the Securities Act. Also, any commission they receive and proceeds of any sale of shares may be deemed to be underwriting discounts and commissions under the Securities Act. We cannot presently estimate the amount of such compensation. In addition, we do not know of existing arrangements between Fortress and any other shareholder, broker, dealer, underwriter or agent relating to the sale or distribution of shares included in this prospectus.
We will pay all of the expenses required to be paid by us under the terms of our registration rights agreement with Fortress in connection with the registration, offering and sale of shares included in this prospectus, other than commissions or discounts of underwriters, broker-dealers or agents.
We advised Fortress that while it seeks to sell shares under this prospectus it is required to comply with Regulation M under the Securities Exchange Act. With certain exceptions, Regulation M precludes it or any affiliated purchasers, and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the shares sold under this prospectus.
TAXATION
The applicable provisions of the Code are highly technical and complex. This summary is not intended as a detailed discussion of all applicable provisions of the Code, the rules and regulations promulgated thereunder, or the administrative and judicial interpretations thereof. For the particular provisions that govern the federal income tax treatment of the company and its stockholders, reference is made generally to Sections 856 and 860 of the Code and the treasury regulations promulgated thereunder. We have not obtained rulings from the Internal Revenue Service with respect to any tax considerations relevant to our organization or operations or to an investment in our common stock. This summary is not intended to substitute for prudent tax planning and stockholders are urged to consult their own tax advisors with respect to these and other federal, state and local tax consequences of the ownership and disposition of any of our common stock and any potential changes in applicable law. Nonresident aliens, non-U.S. persons and entities, tax-exempt organizations, life insurance companies, cooperatives and certain other categories of investors may be subject to special tax rules that are not discussed below and that could affect an investment in our common stock.
FEDERAL INCOME TAXATION OF CAPSTEAD MORTGAGE CORPORATION
As used herein, "Capstead REIT" refers to Capstead Mortgage Corporation and the entities that are effectively consolidated with Capstead Mortgage Corporation for federal income tax purposes. Certain of the our subsidiaries (the "Non-REIT subsidiaries") are consolidated with Capstead Mortgage Company for financial reporting purposes but are not consolidated for federal income tax purposes. All of the Non-REIT subsidiaries' taxable income is subject to federal and state income taxes. We may form additional Non-REIT subsidiaries.
So long as a corporation such as Capstead REIT qualifies as a REIT and distributes at least 90% of its REIT taxable income to stockholders, it will not be subject to federal corporate income taxes on such income distributed to stockholders, with limited exceptions discussed below. Under certain circumstances, a REIT may be subject to the corporate minimum tax or certain other special taxes. However, Capstead REIT does not anticipate generating material items of income or deductions that would cause it to be subject to the minimum tax or any such special tax.
QUALIFICATION AND TAXATION OF CAPSTEAD REIT AS A REIT
Capstead REIT has made an election to be taxed as a REIT under Sections 856 through 860 of the Code effective for its taxable years ending on and after December 31, 1985. Capstead REIT's qualification and taxation as a REIT depends upon Capstead REIT's ability to meet on a continuing basis, through actual annual operating results, distribution levels and diversity of stock ownership, the various qualification tests and organizational requirements imposed under the Code, as discussed below. Capstead REIT believes that it is organized and has operated in such a manner as to qualify under the Code for taxation as a REIT commencing with its 1985 taxable year, and Capstead REIT intends to continue to operate in such a manner. No assurance,
however, can be given that Capstead REIT will operate in a manner so as to qualify or remain qualified as a REIT. See "Failure to Qualify" below.
In the opinion of Andrews & Kurth L.L.P., tax counsel to Capstead REIT, for all of its taxable years beginning September 5, 1985 and ending December 31, 2000, Capstead REIT has met the requirements for qualification as a 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 Capstead REIT continues to be organized and operated after the date of this prospectus so as to satisfy the applicable REIT requirements under the Code. This opinion is based on various assumptions relating to the organization and operation of Capstead REIT, and is conditioned upon the accuracy of certain representations made by Capstead REIT as to certain relevant factual matters relating to the organization and expected manner of operation of Capstead REIT and its subsidiaries. Andrews & Kurth L.L.P. is not aware of any facts or circumstances that are inconsistent with these assumptions and representations. Moreover, such qualification and taxation as a REIT will depend upon Capstead REIT's ability to meet on a continuing basis, through actual annual operating results, distribution levels and diversity of stock ownership, the various qualification tests imposed under the Code discussed below. Andrews & Kurth L.L.P. will not review compliance with these tests on a continuing basis. No assurance can be given that Capstead REIT will satisfy such tests on a continuing basis. See "Failure to Qualify" below.
The sections of the Code relating to qualification and operation as a REIT are highly technical and complex. The following discussion sets forth certain material aspects of the Code sections that govern the federal income tax treatment of a REIT and its stockholders. The discussion is qualified in its entirety by the applicable Code provisions, Treasury Regulations promulgated thereunder and administrative and judicial interpretations thereof, all of which are subject to change prospectively or retroactively.
So long as Capstead REIT continues to qualify for taxation as a REIT, it generally will not be subject to federal corporate income tax on its net income that is distributed currently to its stockholders. That treatment substantially eliminates the "double taxation" (i.e., taxation at both the corporate and stockholder levels) that generally results from investment in a corporation. However, Capstead REIT will be subject to federal income tax in the following circumstances. First, Capstead REIT will be taxed at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains. Second, under certain circumstances, Capstead REIT may be subject to the "alternative minimum tax" on items of tax preference, if any. Third, if Capstead REIT has (1) net income from the sale or other disposition of "foreclosure property" (which is, in general, property acquired by foreclosure or otherwise on default of a loan or lease secured by the property) that is held primarily for sale to customers in the ordinary course of business or (2) other nonqualifying income from foreclosure property, it will be subject to tax at the highest corporate rate on such income. Fourth, if Capstead REIT has net income from prohibited transactions (which are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business), such income will be subject to a 100% tax. Fifth, if Capstead REIT should fail to satisfy the 75% gross income test or the 95% gross income test (as discussed below), and nonetheless has maintained its qualification as a REIT because certain other requirements have been met, it will be
subject to a 100% tax on the net income attributable to the greater of the amounts by which it fails the 75% or 90% gross income test. Sixth, if Capstead REIT should fail to distribute during each calendar year at least the sum of:
- 85% of its REIT ordinary income for such year,
- 95% of its REIT capital gain net income for such year and
- any undistributed taxable income from prior periods,
it would be subject to a 4% excise tax on the excess of such required distribution over the sum of the amounts actually distributed and amounts retained for which federal income tax was paid. Seventh, Capstead REIT may be subject to a 100% excise tax with respect to certain "redetermined rents," "redetermined deductions," and "excess interest" to ensure arm's length (1) pricing for certain services provided by taxable REIT subsidiaries of Capstead REIT to Capstead REIT's tenants, if any, and (2) allocation of shared expenses between Capstead REIT and its taxable REIT subsidiaries. Finally, if Capstead REIT acquires any asset from a C corporation (i.e., a corporation generally subject to full corporate-level tax) in a transaction in which the basis of the asset in Capstead REIT's hands is determined by reference to the basis of the asset or any other property in the hands of the corporation, and Capstead REIT recognizes gain on the disposition of such asset during the ten-year period beginning on the date on which such asset was acquired by Capstead REIT, then, to the extent of such property's "built-in" gain (the excess of the fair market value of such property at the time of acquisition by Capstead REIT over the adjusted basis of such property at such time), that gain will be subject to the highest corporate rate applicable, provided an election is made by Capstead REIT to defer this gain for the 10-year period under the principles of Section 1374 of the Code.
REQUIREMENTS FOR QUALIFICATION
The Code defines a REIT as a corporation, trust or association:
(1) that is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;
(3) that would be taxable as a domestic corporation, but for the REIT provisions of the Code;
(4) that is neither a financial institution nor an insurance company subject to certain provisions of the Code;
(5) the beneficial ownership of which is held by 100 or more persons;
(6) not more than 50% in value of the outstanding shares of which is owned, directly or indirectly, by five or fewer individuals, as defined in the Code to include certain entities (the "5/50 Rule");
(7) that makes an election to be a REIT, or has made such election for a previous taxable year which has not been revoked or terminated, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met in order to elect and maintain REIT status;
(8) that uses a calendar year for federal income tax purposes; and
(9) that meets certain other tests, described below, regarding the nature of its income and assets.
The Code provides that conditions (1) to (4), inclusive, must be met during the entire taxable year, that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months, and that condition (6) must be met during the last half of the taxable year. For purposes of determining stock ownership under the 5/50 Rule, a supplemental unemployment compensation benefits plan, a private foundation or a portion of a trust permanently set aside or used exclusively for charitable purposes generally is considered an individual. A qualified employee benefit trust, however, generally is not considered an individual, and beneficiaries of such trust are treated as holding shares of a REIT in proportion to their actuarial interests in such trust. Finally, Capstead REIT will be treated as having met condition (6) above if it has complied with certain Treasury Regulations for ascertaining the ownership of its stock for such year and if it did not know, or after the exercise of reasonable diligence would not have known, that its stock was sufficiently closely held during such year to cause it to fail condition (6).
A corporation that is a "qualified REIT subsidiary" is not treated as a separate corporation for federal income tax purposes, and all assets, liabilities and items of income, deduction and credit of a "qualified REIT subsidiary" are treated as assets, liabilities and items of income, deduction and credit of the REIT. A "qualified REIT subsidiary" is a corporation, all of the capital stock of which is owned directly by the REIT. Certain subsidiaries of Capstead REIT constitute qualified REIT subsidiaries. Accordingly, in applying the income and asset tests described below, those subsidiaries will be ignored for federal income tax purposes, and all assets, liabilities and items of income, deduction and credit of those subsidiaries will be treated as assets, liabilities and items of income, deduction, and credit of Capstead REIT. Those subsidiaries therefore will not be subject to federal corporate income taxation, although they may be subject to state and local taxation.
In the case of a REIT that is a partner in an entity that is classified for federal income tax purposes as a partnership, Treasury Regulations provide that the REIT will be deemed to own its proportionate share of the assets of the partnership, based on the REIT's capital interest in the partnership, and will be deemed to be entitled to the gross income of the partnership attributable to such share. In addition, the assets and gross income of the partnership will retain the same
character in the hands of the REIT for purposes of the REIT provisions of the Code, including satisfying the gross income and asset tests described below.
INCOME TESTS. In order for Capstead REIT to maintain its qualification as a REIT, two requirements relating to gross income must be satisfied annually. First, at least 75% of its gross income, excluding gross income from prohibited transactions, for each taxable year must consist of defined types of income derived directly or indirectly from investments relating to real property or mortgages on real property (including "rents from real property" and, in certain circumstances, interest) or temporary investment income. Second, at least 95% of its gross income, excluding gross income from prohibited transactions, for each taxable year must be derived from real property or temporary investments, and from dividends, other types of interest and gain from the sale or disposition of stock or securities, or from any combination of the foregoing.
Capstead REIT does not presently earn substantial amounts of rental income. However, if Capstead REIT were to acquire rental real estate, the rent received by Capstead REIT from its tenants would qualify as "rents from real property" in satisfying the gross income requirements for a REIT described above only if several conditions are met. First, the amount of rent must not be based, in whole or in part, on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term "rents from real property" solely by reason of being based on a fixed percentage or percentages of receipts or sales. Second, rents received from a tenant of Capstead REIT will not qualify as "rents from real property" in satisfying the gross income tests if Capstead REIT, or a direct or indirect owner of 10% or more of Capstead REIT, directly or constructively owns 10% or more of such tenant (a "Related Party Tenant") unless such tenant is a "taxable REIT subsidiary" of the REIT and certain other conditions are satisfied. Third, if rent attributable to personal property that is leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as "rents from real property." Finally, for the rent to qualify as "rents from real property," Capstead REIT generally must not operate or manage its properties or furnish or render services to the tenants of such properties, other than through an "independent contractor" who is adequately compensated and from whom Capstead REIT derives or receives no income. The "independent contractor" requirement, however, does not apply to the extent the services provided by Capstead REIT are "usually or customarily rendered" in connection with the rental of space for occupancy only and are not otherwise considered "rendered to the occupant." In addition, the "independent contractor" requirement will not apply to noncustomary services provided by Capstead REIT, the annual value of which does not exceed 1% of the gross income derived from the property with respect to which the services are provided (the "1% de minimis exception"). For this purpose, such services may not be valued at less than 150% of Capstead REIT's direct cost of providing the services, and any gross income deemed to have been derived by Capstead REIT from the performance of noncustomary services pursuant to the 1% de minimis exception will constitute nonqualifying gross income under the 75% and 95% gross income tests. In addition, a "taxable REIT subsidiary" of a REIT may provide noncustomary services to the tenants of the REIT without causing the rents paid by such tenants to be disqualified as "rents from real property."
If Capstead REIT fails to satisfy one or both of the 75% or 95% gross income tests for any taxable year, it nevertheless may qualify as a REIT for such year if it is entitled to relief under certain provisions of the Code. Those relief provisions generally will be available if the failure to meet such tests is due to reasonable cause and not due to willful neglect, Capstead REIT attaches a schedule of the sources of its income to its return, and any incorrect information on the schedule was not due to fraud with intent to evade tax. It is not possible, however, to state whether in all circumstances Capstead REIT would be entitled to the benefit of those relief provisions. As discussed above in "Qualification and Taxation of Capstead REIT as a REIT," even if those relief provisions apply, a 100% tax would be imposed on the net income attributable to the greater of the amount by which Capstead REIT fails the 75% and 90% gross income tests.
ASSET TESTS. At the close of each quarter of its taxable year, Capstead REIT also must satisfy several tests relating to the nature of its assets. First, at least 75% of the value of Capstead REIT's total assets must be represented by real estate assets, cash, cash items and government securities. Second, of the investments not included in the 75% asset class, the value of any one issuer's debt and equity securities owned by Capstead REIT may not exceed 5% of the value of Capstead REIT's total assets. Third, Capstead REIT may not own more than 10% of any one issuer's outstanding voting securities, nor more than 10% of the total value of any one issuer's outstanding debt and equity securities.
The 5% and 10% asset tests described above do not apply to the securities of a "taxable REIT subsidiary" of Capstead REIT, although the value of the debt and equity securities of all taxable REIT subsidiaries owned by Capstead REIT cannot represent more than 20% of the value of the REIT's total assets. Any corporation in which a REIT directly or indirectly owns stock (other than another REIT, a corporation which directly or indirectly operates or manages a lodging facility or a health care facility, and, with certain exceptions, a corporation which directly or indirectly provides to any other person (under a franchise, license, or otherwise) rights to any brand name under which any lodging facility or health care facility is operated) may be treated as a "taxable REIT subsidiary" if the REIT and the corporation file a joint election with the Internal Revenue Service for the corporation to be treated as a taxable REIT subsidiary of the REIT.
A number of constraints are imposed on REITs and their taxable REIT subsidiaries to ensure that REITs cannot, through taxable REIT subsidiaries, engage in substantial non-real estate activities and also to ensure that taxable REIT subsidiaries pay an appropriate corporate-level tax on their income. For example, a taxable REIT subsidiary will be subject to the "earnings stripping" rules of the Code with respect to interest paid to the REIT, which could disallow a portion of the taxable REIT subsidiary's interest deductions under certain circumstances. In addition, a 100% excise tax may be imposed on the REIT with respect to certain "redetermined rents", "redetermined deductions", and "excess interest" to ensure arm's length (1) pricing for services provided by the taxable REIT subsidiary to REIT tenants and (2) allocation of shared expenses between the REIT and the taxable REIT subsidiary.
DISTRIBUTION REQUIREMENTS. In order to qualify as a REIT, Capstead REIT is required to distribute with respect to each taxable year dividends, other than capital gain dividends, to its stockholders in an aggregate amount at least equal to (1) the sum of (A) 90% of its "REIT taxable income," computed without regard to the dividends paid deduction and its net capital gain, and (B) 90% of the net after tax income, if any, from foreclosure property, minus (2) the sum of certain items of non-cash income. Such distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before Capstead REIT timely files its federal income tax return for such year and if paid on or before the first regular dividend payment date after such declaration. To the extent that Capstead REIT does not distribute all of its net capital gain or distributes at least 90%, but less than 100%, of its "REIT taxable income," as adjusted, it will be subject to tax thereon at regular ordinary and capital gains corporate tax rates.
Capstead REIT has made and intends to continue to make timely distributions sufficient to satisfy the minimum annual distribution requirements. It is possible, however, that Capstead REIT, from time to time, may not have sufficient cash or other liquid assets to meet the distribution requirements due to timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of such income and deduction of such expenses in arriving at Capstead REIT's taxable income, or if the amount of nondeductible expenses (such as principal amortization or capital expenses) exceeds the amount of noncash deductions. In the event that such timing differences occur, in order to meet the distribution requirements, Capstead REIT may arrange for borrowings to permit the payment of required dividends.
If Capstead REIT should fail to distribute during each calendar year at least the sum of:
- 85% of its REIT ordinary income for such year,
- 95% of its REIT capital gain income for such year and
- any undistributed taxable income from prior periods,
it would be subject to a 4% nondeductible excise tax on the excess of such required distribution over the sum of the amounts actually distributed and amounts retained for which federal income tax was paid.
Under certain circumstances, Capstead REIT may be able to rectify a failure to meet the distribution requirements for a year by paying "deficiency dividends" to its stockholders in a later year, which may be included in its deduction for dividends paid for the earlier year. Although Capstead REIT may be able to avoid being taxed on amounts distributed as deficiency dividends, it will be required to pay to the IRS interest based upon the amount of any deduction taken for deficiency dividends.
RECORDKEEPING REQUIREMENTS. Pursuant to applicable Treasury Regulations, Capstead REIT must maintain certain records and request on an annual basis certain information from its
stockholders designed to disclose the actual ownership of its outstanding shares. Capstead REIT intends to comply with these requirements.
FAILURE TO QUALIFY
If Capstead REIT fails to qualify for taxation as a REIT in any taxable year, and the relief provisions do not apply, it will be subject to tax, including any applicable alternative minimum tax on its taxable income at regular corporate rates. Distributions to stockholders in any year in which Capstead REIT fails to qualify will not be deductible nor will they be required to be made. In such event, to the extent of current and accumulated earnings and profits, all distributions to stockholders will be taxable as ordinary income and, subject to certain limitations of the Code, corporate distributees may be eligible for the dividends received deduction. Unless entitled to relief under specific statutory provisions, Capstead REIT also will be disqualified from taxation as a REIT for the four taxable years following the year during which it ceased to qualify as a REIT. It is not possible to predict whether in all circumstances Capstead REIT would be entitled to such statutory relief.
TAXATION OF STOCKHOLDERS
As long as Capstead REIT qualifies as a REIT, distributions made to taxable U.S. Stockholders out of current or accumulated earnings and profits, and not designated as capital gain dividends will be taken into account by such U.S. Stockholders as ordinary income and will not be eligible for the dividends received deduction generally available to corporations. The term "U.S. Stockholder" means a holder of Capstead REIT's shares that for United States federal income tax purposes is:
(1) a citizen or resident of the United States,
(2) a corporation, partnership or other entity created or organized in or under the laws of the United States, any State or the District of Columbia,
(3) an estate the income of which is subject to United States federal income taxation regardless of its source, or
(4) a trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust, and (B) one or more United States persons have the authority to control all substantial decisions of the trust.
Distributions that are designated as capital gain dividends will be taxed as gain from the sale or exchange of a capital asset held for more than one year (to the extent they do not exceed Capstead REIT's actual net capital gain for the taxable year) without regard to the period for which the U.S. Stockholder has held his or her shares. However, corporate U.S. Stockholders may be required to treat up to 20% of certain capital gain dividends as ordinary income. Distributions in excess of current and accumulated earnings and profits will not be taxable to a U.S. Stockholder to the extent that they do not exceed the adjusted basis of the U.S.
Stockholder's shares, but will reduce the adjusted basis of such shares. To the extent that such distributions in excess of current and accumulated earnings and profits exceed the adjusted basis of a U.S. Stockholder's shares, such distributions will be included in income as capital gain, if such shares are capital assets in the hands of the U.S. Stockholder. In addition, any distribution declared by Capstead REIT in October, November or December of any year and payable to a U.S. Stockholder of record on a specified date in any such month will be treated as both paid by Capstead REIT and received by the U.S. Stockholder on December 31 of such year, provided that the distribution is actually paid by Capstead REIT during January of the following calendar year.
Capstead REIT may make an election to treat all or part of its undistributed net capital gain as if it had been distributed to its stockholders. As described above, these undistributed amounts would be subject to corporate level tax payable by Capstead REIT. If Capstead REIT should make such an election, its stockholders would be required to include in their income as long-term capital gain their proportionate share of Capstead REIT's undistributed net capital gain as designated by Capstead REIT. Each such stockholder would be deemed to have paid his proportionate share of the income tax imposed on Capstead REIT with respect to such undistributed net capital gain, and this amount would be credited or refunded to the stockholder. In addition, the tax basis of the stockholder's stock would be increased by his proportionate share of undistributed net capital gains included in his income less his proportionate share of the income tax imposed on Capstead REIT with respect to such gains.
U.S. Stockholders may not include in their individual income tax returns any net operating losses or capital losses of Capstead REIT. Instead, such losses would be carried over by Capstead REIT for potential offset against its future income (subject to certain limitations). Taxable distributions from Capstead REIT and gain from the disposition of its shares will not be treated as passive activity income and, therefore, U.S. Stockholders generally will not be able to apply any "passive activity losses" (such as losses from certain types of limited partnerships in which a stockholder is a limited partner) against such income. In addition, taxable distributions from Capstead REIT generally will be treated as investment income for purposes of the investment interest limitations. Capital gains from the disposition of Capstead REIT's shares (or distributions treated as such), however, will be treated as investment income only if the U.S. Stockholder so elects, in which case such capital gains will be taxed at ordinary income rates. Capstead REIT will notify stockholders after the close of Capstead REIT's taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital and capital gain.
In general, any gain or loss realized upon a taxable disposition of Capstead REIT's shares by a U.S. Stockholder who is not a dealer in securities will be treated as a capital gain or loss. However, any loss upon a sale or exchange by a U.S. Stockholder who has held such shares for six months or less, after applying certain holding period rules, will be treated as a long-term capital loss to the extent of distributions from Capstead REIT required to be treated by such U.S. Stockholder as long-term capital gain. All or a portion of any loss realized upon a taxable disposition of Capstead REIT's shares may be disallowed if other Capstead REIT shares are purchased within 30 days before or after the disposition.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
Capstead REIT will report to its U.S. Stockholders and to the IRS the amount of distributions paid during each calendar year and the amount of tax withheld, if any. Under the backup withholding rules, a U.S. Stockholder may be subject to backup withholding at the rate of 31% with respect to distributions paid unless such holder (1) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact or (2) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with the applicable requirements of the backup withholding rules. A U.S. Stockholder who does not provide Capstead REIT with his correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the U.S. Stockholder's income tax liability. In addition, Capstead REIT may be required to withhold a portion of capital gain distributions to any U.S. Stockholders who fail to certify their non-U.S. Stockholder status to Capstead REIT.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts ("Exempt Organizations"), generally are exempt from federal income taxation. However, they are subject to taxation on their unrelated business taxable income ("UBTI"). The IRS has ruled that dividend distributions from a REIT to an exempt employee pension trust do not constitute UBTI, provided that the shares of the REIT are not otherwise used in an unrelated trade or business of the exempt employee pension trust. Social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal service plans that are exempt from taxation under paragraphs (7), (9), (17) and (20), respectively, of Code section 501(c) are subject to different UBTI rules, which generally will require them to characterize distributions from Capstead REIT as UBTI. In addition, in certain circumstances, a pension trust that owns more than 10% (by value) of the shares of a REIT would be required to treat a percentage of the dividends on its shares as UBTI (the "UBTI Percentage"). The UBTI Percentage is the gross income, less related direct expenses, derived by Capstead REIT from an unrelated trade or business (determined as if Capstead REIT were a pension trust) divided by the gross income, less related direct expenses, of Capstead REIT for the year in which the dividends are paid. The UBTI rule applies to a pension trust holding more than 10% of the Common Stock only if (1) the UBTI Percentage is at least 5%, (2) Capstead REIT qualifies as a REIT by reason of the modification of the 5/50 Rule that allows the beneficiaries of the pension trust to be treated as holding shares of Capstead REIT, in proportion to their actuarial interests in the pension trust and (3) either (A) one pension trust owns more than 25% of the value of such shares or (B) a group of pension trusts individually holding more than 10% of the value of shares collectively owns more than 50% of the value of the shares.
Specific tax rules of a complex nature not summarized herein apply to non-U.S. investors in REITs. Accordingly, non-U.S. Stockholders should consult their own tax advisers concerning the federal income and withholding tax consequences and the state, local and foreign tax consequences of an investment in Capstead REIT.
STATE AND LOCAL TAXES
State or local income tax treatment of Capstead REIT or holders of any of its securities may differ from the federal income tax treatment described above. As a result, prospective stockholders should consult their own tax advisers for an explanation of how state and local tax laws may affect their investment in Capstead REIT.
LEGAL MATTERS
Certain legal matters with respect to the securities offered hereby will be passed on for the company and Fortress by Andrews & Kurth L.L.P., Dallas, Texas, and for the underwriters or agents by counsel to be identified in the related prospectus supplement. Andrews & Kurth L.L.P. will rely as to all matters of Maryland law on Hogan & Hartson L.L.P., Baltimore, Maryland.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated financial statements and schedules included in our Annual Report on Form 10-K for the year ended December 31, 2000, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements and schedules are incorporated by reference in reliance on Ernst & Young's report, given on their authority as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee ........................................................... $38,311
Legal Fees and Expenses ........................................................ $40,000
Accounting Fees and Expenses ................................................... $ 7,500
Printing Expenses .............................................................. $ 5,000
Miscellaneous .................................................................. $ 2,500
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Total ............................................................... $93,311
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ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's charter provides for indemnification of directors to the full extent permitted by Maryland law, indemnification of officers who are also directors to the extent the Registrant shall indemnify its directors and indemnification of officers who are not directors to such further extent as shall be authorized by the Board of Directors and be consistent with law.
Section 2-418 of the Maryland General Corporation Law generally permits a Maryland corporation to indemnify any director made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administration, or investigative, by reason of service in his capacity as a director, unless it is established that (i) the act or omission of the director was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty; or, (ii) the director actually received an improper personal benefit in money, property, or services or, (iii) in the case of any criminal proceeding, the director had reasonable cause to believe that the act or omission was unlawful. Indemnification may be against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the director in connection with the proceeding. If the proceeding was one by or in the right of the corporation, indemnification may not be made in respect of any proceeding in which the director shall have been adjudged to be liable to the corporation. In addition, a director may not be indemnified in respect of any proceeding charging improper personal benefit to the director, whether or not involving action in the director's official capacity, in which the director was adjudged to be liable on the basis that personal benefit was improperly received. The termination of any proceeding by conviction, or a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the director did not meet the requisite standard of conduct.
Section 2-418 also provides that a court of appropriate jurisdiction may, upon application of a director and such notice as the court shall require, order indemnification if it determines that a director is entitled to reimbursement because the director has been successful on the merits or otherwise, in any such proceeding, in which case the director shall be entitled to recover the expenses of securing such reimbursement, or if the court determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director has met the applicable standards of conduct or has been adjudged liable in the proceeding charging improper personal benefit to the director. Indemnification with respect to any proceeding by or in the right of the corporation or in which liability shall have been adjudged on the basis that personal benefit was improperly received shall be limited to expenses. The indemnification and advancement of expenses provided or authorized by Section 2-418 may not be deemed exclusive of any other rights, by
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indemnification or otherwise, to which a director may be entitled under the charter, the bylaws, a resolution of stockholders or directors, an agreement or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. A corporation may indemnify and advance expenses to an officer, employee, or agent in the corporation to the same extent that it may indemnify directors under Section 2-418 and, in addition, may indemnify and advance expenses to an officer, employee, or agent who is not a director to such further extent, consistent with law, as may be provided by its charter, bylaws, general or specific action of its board of directors or contract. Section 2-418 also provides that a corporation may purchase and maintain insurance against liabilities for which indemnification is not expressly provided by the statute.
Capstead Mortgage Corporation provides insurance from commercial carriers against certain liabilities incurred by its directors and officers.
ITEM 16. EXHIBITS
1.1 --Form of Underwriting Agreement
3.1 --Charter of the Company, which includes Articles of Incorporation, Articles Supplementary for each outstanding Series of Preferred Stock and all other amendments to such Articles of Incorporation
3.2 --Amended and Restated Bylaws of the Company
4.1 --Specimen of Common Stock Certificate.
5.1 --Opinion of Andrews & Kurth L.L.P. as to the legality of the Common Stock being offered.
5.2 --Opinion of Hogan & Hartson L.L.P. as to the legality of the Common Stock being offered.
8.1 --Opinion of Andrews & Kurth L.L.P. as to certain tax matters.
23.1 --Consent of Ernst & Young LLP.
23.2 --Consent of Andrews & Kurth L.L.P. (included in its opinions filed as Exhibits 5.1 and 8.1 hereto).
23.3 --Consent of Hogan & Hartson L.L.P. (included in its opinion filed as Exhibit 5.2 hereto).
24.1 --Power of Attorney (set forth on page II-4).
The Company will file as an Exhibit to a Current Report on Form 8-K any related forms utilized in the future and not previously so filed by means of an amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the change in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
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(iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration. Statement or any material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (a)(I)(i) and
(a)(I)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the 1934 Act
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the 1933 Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit of proceeding) is asserted against the Registrant by such director, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as a part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(l) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 19th day of June, 2001.
CAPSTEAD MORTGAGE CORPORATION
By: /s/ ANDREW F. JACOBS -------------------------------------- Andrew F. Jacobs Executive Vice President--Finance and Secretary |
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Wesley R. Edens and Andrew F. Jacobs his true and lawful attorney-in-fact and agent, with full powers of substitution, for him and in his name, place and stead, in any and all capacities, to sign and to file any and all amendments, including post-effective amendments, to this registration statement with the Securities and Exchange Commission, granting to said attorney-in-fact power and authority to perform any other act on behalf of the undersigned required to be done in connection therewith.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ WESLEY R. EDENS Chairman, Chief Executive Officer,
----------------------- President and Director (Principal June 19, 2001
Wesley R. Edens Executive Officer)
/s/ ANDREW F. JACOBS Executive Vice President - Finance
------------------------ and Secretary (Principal Financial June 19, 2001
Andrew F. Jacobs and Accounting Officer)
------------------------- Director June __, 2001
Robert I. Kauffman
/s/ PAUL M. LOW
------------------------- Director June 19, 2001
Paul M. Low
------------------------- Director June __, 2001
Ronn K. Lytle
/s/ MICHAEL G. O'NEIL
------------------------- Director June 19, 2001
Michael G. O'Neil
/s/ HOWARD RUBIN
------------------------- Director June 19, 2001
Howard Rubin
/s/ MARK S. WHITING
------------------------- Director June 19, 2001
Mark S. Whiting
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1.1 --Form of Underwriting Agreement
3.1 --Charter of the Company, which includes Articles of
Incorporation, Articles Supplementary for each outstanding
Series of Preferred Stock and all other amendments to such
Articles of Incorporation
3.2 --Amended and Restated Bylaws of the Company
4.1 --Specimen of Common Stock Certificate.
5.1 --Opinion of Andrews & Kurth L.L.P. as to the legality of the
Common Stock being offered.
5.2 --Opinion of Hogan & Hartson L.L.P. as to the legality of the
Common Stock being offered.
8.1 --Opinion of Andrews & Kurth L.L.P. as to certain tax
matters.
23.1 --Consent of Ernst & Young LLP.
23.2 --Consent of Andrews & Kurth L.L.P. (included in its opinions
filed as Exhibits 5.1 and 8.1 hereto).
23.3 --Consent of Hogan & Hartson L.L.P. (included in its opinion
filed as Exhibit 5.2 hereto).
24.1 --Power of Attorney (set forth on page II-4).
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EXHIBIT 1.1
[FORM OF UNDERWRITING AGREEMENT]
[# OF SHARES] Shares
Capstead Mortgage Corporation
Common Stock
UNDERWRITING AGREEMENT
[DATE]
[NAME OF LEAD UNDERWRITER]
As representatives of the several Underwriters
named in Schedule I hereto
c/o [NAME AND ADDRESS OF LEAD UNDERWRITER]
Dear Sirs:
Fortress Investment Group, LLC (the "Selling Stockholder") proposes to sell to the several underwriters named in Schedule I hereto (the "Underwriters") an aggregate of [# OF SHARES] shares (the "Firm Shares") of the common stock, par value $0.01 per share ("Common Stock"), of Capstead Mortgage Corporation, a Maryland corporation (the "Company"). The Selling Stockholder proposes to sell to the several Underwriters not more than an additional [# ADDITIONAL SHARES] shares of Common Stock of the Company (the "Additional Shares") if requested by the Underwriters as provided in Section 2 hereof, in the amount of [# OF ADDITIONAL SHARES] Additional Shares. The Firm Shares and the Additional Shares are hereinafter referred to collectively as the "Shares." The shares of common stock of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the "Common Stock."
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. The registration statement, as amended at the time it became effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to as the "Registration
Statement"; and the prospectus in the form first used to confirm sales of Shares is hereinafter referred to as the "Prospectus." If the Company has filed or is required pursuant to the terms hereof to file a registration statement pursuant to Rule 462(b) under the Act registering additional shares of Common Stock (a "Rule 462(b) Registration Statement"), then, unless otherwise specified, any reference herein to the term "Registration Statement" shall be deemed to include such Rule 462(b) Registration Statement.
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, (i) Selling Stockholder agrees to sell the Firm Shares to the Underwriters and (ii) each Underwriter agrees, severally and not jointly, to purchase from the Selling Stockholder at a price per Share of $[PURCHASE PRICE] (the "Purchase Price") the number of Firm Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the total number of Firm Shares to be sold by the Selling Stockholder as the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, (i) the Selling Stockholder agrees to sell the Additional Shares and (ii) the Underwriters shall have the right to purchase, severally and not jointly, up to [AN AGGREGATE OF] [# ADDITIONAL SHARES] Additional Shares from the Selling Stockholder at the Purchase Price and in the amounts hereinafter specified. Additional Shares may be purchased solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. The Underwriters may exercise their right to purchase Additional Shares in whole or in part from time to time by giving written notice thereof to the Company and the Selling Stockholder within 30 days after the date of this Agreement. You shall give any such notice on behalf of the Underwriters and such notice shall specify the aggregate number of Additional Shares to be purchased pursuant to such exercise and the date for payment and delivery thereof, which date shall be a business day (i) no earlier than two business days after such notice has been given (and, in any event, no earlier than the Closing Date (as hereinafter defined)) and (ii) no later than ten business days after such notice has been given. If any Additional Shares are to be purchased, each Underwriter, severally and not jointly, agrees to purchase from the Selling Stockholder the number of Additional Shares (subject to such adjustments to eliminate fractional shares as you may determine) which bears the same proportion to the total number of Additional Shares to be purchased from the Selling Stockholder as the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I bears to the total number of Firm 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 Underwriters pursuant to this Agreement, for a period of 180 days after the date of the Prospectus without the prior written consent of [NAME OF LEAD UNDERWRITER] ("Lead Underwriter"). Each Selling Stockholder agrees that, for a period of 180 days after the date of the Prospectus without the prior written consent of [LEAD UNDERWRITER], it will not 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 shall, prior to or concurrently with the execution of this Agreement, deliver an agreement executed by (i) the Selling Stockholder, and (ii) each of the directors and officers of the Company to the effect that such person will not, during the period commencing on the date such person signs such agreement and ending 180 days after the date of the Prospectus, without the prior written consent of [LEAD UNDERWRITER], (A) engage in any of the transactions described in the first sentence of this 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.
SECTION 3. Terms of Public Offering. The Selling Stockholder is advised by you that the Underwriters propose (i) to make a public offering of their respective portions 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 Underwriters of and payment for the Firm Shares shall be made at [FIRM SHARES CLOSING TIME], [FIRM SHARES CLOSING CITY] time, on [FIRM SHARES CLOSING DATE] (the "Closing Date") at such place as you shall designate. The Closing Date and the location of delivery of and payment for the Firm Shares may be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to be purchased by the Underwriters shall be made at such place as you shall designate at [ADDITIONAL SHARES CLOSING TIME], [ADDITIONAL SHARES CLOSING CITY] time, on the date specified in the applicable exercise notice given by you pursuant to Section 2 (an "Option Closing Date"). Any such Option Closing Date and the location of delivery of and payment for such Additional Shares may be varied by agreement between you and the Company.
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 or an Option Closing Date, as the case may be. Such certificates shall be made available to you for inspection not later than [INSPECTION TIME], [INSPECTION CITY] time, on the business day immediately prior to the Closing Date or the applicable Option Closing Date, as the case may be. Certificates in definitive form evidencing the Shares shall be delivered to you on the Closing Date or the applicable Option Closing Date, as the case may be, with any transfer taxes thereon duly paid by the Selling Stockholder, for the respective accounts of the several Underwriters, 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.
SECTION 5. Agreements of the Company. The Company agrees with you:
(a) To advise you 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 of the Registration Statement as first filed with the Commission and of each amendment to it, including all exhibits, and to furnish to you and each Underwriter designated by 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 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 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 counsel for the Underwriters 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 each Underwriter and any dealer as many copies of the Prospectus (and of any amendment or supplement to the Prospectus) as such Underwriter or 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 counsel for the Underwriters, 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 counsel for the Underwriters, 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 each Underwriter and to any dealer that you may specify as many copies thereof as such Underwriter or dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you and counsel for the Underwriters in connection with the registration or qualification of the Shares for offer and sale by the several Underwriters 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 [EARNINGS STATEMENT DATE] 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 furnish to you as soon as available 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 obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company's counsel and the Company's accountants in connection with the 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 the Underwriters 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 Underwriters, including any transfer
or other taxes payable thereon, (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 Underwriters in connection with such registration or qualification and
memoranda relating thereto), (v) the filing fees and disbursements of counsel
for the Underwriters 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, (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 their obligations under, and the consummation of the transactions
contemplated by, this Agreement, 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 use its best efforts to list the Shares on the NYSE and 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 or any Option Closing Date, as the case may be, and to satisfy all conditions precedent to the delivery of the Shares which are within the Company's control.
(l) If the Registration Statement at the time of the effectiveness of this Agreement does not cover all of the Shares, to file a Rule 462(b) Registration Statement with the Commission registering the Shares not so covered in compliance with Rule 462(b) by 10:00 P.M., New York City time, on the date of this Agreement and to pay to the Commission the filing fee for such Rule 462(b) Registration Statement at the time of the filing thereof or to give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
SECTION 6. Representations and Warranties of the Company. The Company represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than any Rule 462(b) Registration Statement to be filed by the Company after the effectiveness of this Agreement); any Rule 462(b) Registration Statement filed after the effectiveness of this Agreement will become
effective no later than 10:00 P.M., New York City time, on the date of this Agreement; 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.
(b)(i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement), 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 (other than
any Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act,
(iii) if the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, such Rule 462(b) Registration
Statement and any amendments thereto, when they become effective (A) 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 and (B) will comply in all material respects with the Act and (iv)
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 any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(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 any Underwriter furnished to the Company in writing by any Underwriter through you expressly for use therein or to statements corrected in a subsequent filing.
(d) Each of the Company and its material subsidiaries (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; and the Shares to be issued and sold by the Company have been duly authorized and, when issued and delivered to the Underwriters against payment therefor as provided by this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be 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 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 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 (except such as are required under the Act or as may be required under 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 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 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 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 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 as has been described in the Prospectus, 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 Underwriters or counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to the Underwriters as to the matters covered thereby.
(u) The Company and its subsidiaries have good and indefeasible 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.
(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.
SECTION 7. Representations and Warranties of the Selling Stockholder. The Selling Stockholder represents and warrants to each Underwriter 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 clear 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) The Selling Stockholder has, and on the Closing Date will have, full legal right, power and authority, and all authorization and approval required by law, to enter into this Agreement, the Custody Agreement signed by the Selling Stockholder and the Company, as Custodian, relating to the deposit of the Shares to be sold by the Selling Stockholder (the "Custody Agreement") and the Power of Attorney of the Selling Stockholder appointing certain individuals as the Selling Stockholder's attorneys-in-fact (the "Attorneys") to the extent set forth therein, relating to the transactions contemplated hereby and by the Registration Statement and the Custody Agreement (the "Power of Attorney") and to sell, assign, transfer and deliver the Shares to be sold by the Selling Stockholder in the manner provided herein and therein.
(c) This Agreement has been duly authorized, executed and delivered by or on behalf of the Selling Stockholder.
(d) The Custody Agreement of the Selling Stockholder has been duly authorized, executed and delivered by the Selling Stockholder and is a valid and binding agreement of the Selling Stockholder, enforceable in accordance with its terms.
(e) The Power of Attorney of the Selling Stockholder has been duly authorized, executed and delivered by the Selling Stockholder and is a valid and binding instrument of the Selling Stockholder, enforceable in accordance with its terms, and, pursuant to such Power of Attorney, the Selling Stockholder has, among other things, authorized the Attorneys, or any one of them, to execute and deliver on the Selling Stockholder's behalf this Agreement and any other document that they, or any one of them, may deem necessary or desirable in connection with transactions contemplated hereby and thereby and to deliver the Shares to be sold by the Selling Stockholder pursuant to this Agreement.
(f) Upon delivery of and payment for the Shares to be sold by the Selling Stockholder pursuant to this Agreement, good and clear title to such Shares will pass to the Underwriters, free of all restrictions on transfer, liens, encumbrances, security interests, equities and claims whatsoever.
(g) The execution, delivery and performance of this Agreement and the Custody Agreement and Power of Attorney of the Selling Stockholder 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, if the Selling Stockholder is not an individual, (iii) conflict with or constitute 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.
(h) The information in the Prospectus under the caption "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.
(i) At any time during the period described in Section 5(d), if there is any change in the information referred to in Section 7(i), the Selling Stockholder will immediately notify you of such change.
(j) Each certificate signed by or on behalf of the Selling Stockholder and delivered on the Closing Date to the Underwriters or counsel for the Underwriters shall be deemed to be a representation and warranty by the Selling Stockholder to the Underwriters as to the matters covered thereby.
SECTION 8. Indemnification. (a) The Selling Shareholder agrees to indemnify and hold harmless each Underwriter, its directors, its officers and each person, if any, who controls any 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 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 any Underwriter furnished in writing to the Company by such Underwriter through you expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any 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 aggregate liability of the Selling Stockholder pursuant to this Section 8(a) shall be limited to an amount equal to the total proceeds (after deducting underwriting discounts and commissions but before deducting expenses) received by the Selling Stockholder from the Underwriters for the sale of the Shares sold by the Selling Stockholder hereunder.
(b) Each Underwriter agrees, severally and not jointly, 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 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 such Underwriter but only with reference to information relating to such Underwriter furnished in writing to the Company by or on behalf of such Underwriter through you expressly for use in the Registration Statement (or any amendment thereto), the Prospectus (or any amendment or supplement thereto) or any preliminary prospectus.
(c) 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(c), 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 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 all Underwriters, their
officers and directors and all persons, if any, who control any 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 Underwriters, their officers and directors and such
control persons of any Underwriters, such firm shall be designated in writing by
[LEAD 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 Attorneys. 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 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.
(d) 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 Selling Stockholder on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 8(d)(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(d)(i) above but also the relative fault of the Selling Stockholder on the one hand and the Underwriters on the other hand 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 Underwriters 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 Underwriters, 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 Selling Stockholder on the one hand and the Underwriters on the other hand 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 or the Selling Stockholder on the one hand or the Underwriters on the other hand and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Selling Stockholder and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to 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 9, no Underwriter shall 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 such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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. The
Underwriters' obligations to contribute pursuant to this Section 8(d) are
several in proportion to the respective number of Shares purchased by each of
the Underwriters hereunder and not joint. 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
Underwriters for the sale of the Shares sold by the Selling Stockholder
hereunder. The Selling Stockholder's obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective number of Shares sold
by the Selling Stockholder hereunder and not joint.
(e) 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.
(f) Each Selling Stockholder hereby designates [REGISTERED AGENT NAME],
[REGISTERED AGENT ADDRESS], as its authorized agent, upon which process may be
served in any action which may be instituted in any state or federal court in
the State of New York by any Underwriter, any director or officer of any
Underwriter or any person controlling any Underwriter asserting a claim for
indemnification or contribution under or pursuant to this Section 8, and the
Selling Stockholder will accept the jurisdiction of such court in such action,
and waives, to the fullest extent permitted by applicable law, any defense based
upon lack of personal jurisdiction or venue. A copy of any such process shall be
sent or given to the Selling Stockholder, at the address for notices specified
in Section 12 hereof.
SECTION 9. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Firm 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) If the Company is required to file a Rule 462(b) Registration Statement after the effectiveness of this Agreement, such Rule 462(b) Registration Statement shall have become effective by 10:00 P.M., New York City time, on the date of this Agreement; and 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 shall have received on the Closing Date a certificate dated the Closing Date, signed by [NAME OF OFFICER], in his capacities as [TITLE OF 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 shall have received on the Closing Date an opinion (in a form reasonably satisfactory to you and counsel for the Underwriters), dated the Closing Date, of [COUNSEL FOR THE COMPANY], counsel for the Company, or [LOCAL COUNSEL FOR THE COMPANY], [LOCAL STATE] 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 as a foreign corporation or foreign limited liability company (as the case may be) 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; provided however that (i) in rendering such opinion as to the jurisdictions in which the Company and its Material Subsidiaries do business or own or lease property, such counsel may rely solely upon certificates of officers of the Company and (ii) in rendering such opinion as to whether each of the Company and its Material Subsidiaries is duly qualified and in good standing in such jurisdictions, such counsel may rely solely upon certificates of governmental officials of such jurisdictions;
(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 Certificate of Incorporation or Bylaws of the Company or the General Corporation Law of the State of Delaware 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) The Shares to be issued and sold by the Company hereunder have been duly authorized by all necessary corporate action on the part of the Company and, when issued and delivered to the Underwriters against payment of the consideration therefor as provided in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable and such Shares will not have been issued in violation of any preemptive or similar rights to subscribe for or purchase the same arising under the Certificate of Incorporation or Bylaws of the Company or the General Corporation Law of the State of Delaware or, to their knowledge, under any agreement to which the Company or any of its subsidiaries is a party or by which it is bound;
(v) 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;
(vi) 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;
(vii) The authorized capital stock of the Company conforms as to legal matters in all material respects to the description thereof contained in the Prospectus;
(viii) 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;
(ix) The statements under the captions "Description of Securities" and "Plan of Distribution" in the Prospectus and Items 14 and 15 of Part II of the Registration Statement, insofar as such statements constitute a summary of the legal matters or documents referred to therein, are accurate and fairly present the information set forth therein, in each case in all material respects;
(x) 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 foreign securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters and the clearance of such offering with the NASD (as to which such counsel need not express an opinion) or (iii) if not made or obtained would not have a material adverse effect on the Company and its subsidiaries, taken as a whole;
(xi) 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 Certificate
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;
(xii) 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;
(xiii) The Company is not and, after giving effect to the offering and sale of the Shares 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;
(xiv) To the knowledge of such counsel, except as described in the Prospectus, no holder of securities of the Company has any right to require the registration of such securities by the Company under Act as a result of the filing of the Registration Statement or in connection with the offering of the Shares pursuant to the Prospectus which have not been waived by such holder or complied with by the Company;
(xv) 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.
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)(vii) and (f)(ix) 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 counsel for the Underwriters), dated the
Closing Date, of [COUNSEL FOR THE COMPANY] (to the extent that [COUNSEL FOR THE COMPANY] is counsel to the Selling Stockholder) or other counsel reasonably acceptable to you to the effect that:
(i) Such Selling Stockholder is the sole registered holder of the Shares to be sold by the Selling Stockholder pursuant to this Agreement; upon delivery of the Shares to be sold by the Selling Stockholder under this Agreement and payment of the purchase price therefor in accordance with this Agreement, assuming that (a) the Underwriters have purchased such Shares in good faith and without notice of any "adverse claim" (within the meaning of the Uniform Commercial Code) and (b) certificates evidencing such Shares have been registered in the name of the Underwriters or certificates evidencing the same which are registered in the name of the Selling Stockholder have been delivered to the Underwriters duly endorsed for transfer (or accompanied by duly executed stock powers or other forms of assignment in proper form for transfer), the Underwriters will acquire such shares free and clear of any security interests, liens, encumbrances or other "adverse claims" (within the meaning of the Uniform Commercial Code);
(ii) Such Selling Stockholder has full legal right and power (if the Selling Stockholder is not a corporation or a partnership), or all requisite corporate or partnership authority (if the Selling Stockholder is a corporation or partnership) to enter into this Agreement and the Custody Agreement and the Power of Attorney of the Selling Stockholder and to sell, assign, transfer and deliver the Shares to be sold by the Selling Stockholder in the manner provided herein and therein;
(iii) The Custody Agreement and Power of Attorney of the Selling Stockholder has been duly authorized, executed and delivered by the Selling Stockholder and is a valid and binding agreement of the Selling Stockholder, enforceable in accordance with its terms except as enforceability thereof may be limited (a) by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws relating to or affecting creditors' rights generally, (b) by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (c) by principles of public policy;
(iv) No consent, approval, authorization or order of, or qualification with, any Applicable Governmental Authority is required pursuant to any Applicable Laws for the execution and delivery of this Agreement or the Custody Agreement and Power of Attorney of the Selling Stockholder (collectively, the "Selling Stockholder Agreements") by or on behalf of the Selling Stockholder, the performance by the Selling Stockholder of its obligations hereunder or thereunder or the consummation by it of the transactions contemplated hereby or thereby, except for any such consent, approval, authorization, order or qualification which (i) has been made or obtained prior to the Closing Date, (ii) may be required under the Act, the Exchange Act or any applicable state or foreign securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters and the clearance of such offering with the NASD (as to which such counsel need not express an opinion) or (iii) if not made or obtained, would not reasonably be expected to adversely
affect the performance by the Selling Stockholder of its obligations under the Selling Stockholder Agreements; and
(v) The execution and delivery of the Selling Stockholder
Agreements on behalf of the Selling Stockholder, the performance by the
Selling Stockholder of its obligations hereunder or thereunder and the
consummation by the Selling Stockholder of the transactions
contemplated hereby or thereby will not (i) result in a breach or
violation of the terms of the Certificate of Incorporation or Bylaws or
the partnership agreement of the Selling Stockholder, if applicable,
(ii) to such counsel's knowledge, result in a breach or violation of or
constitute (either alone or with the passage of time or both) a default
under any agreement or other instrument binding upon the Selling
Stockholder, (iii) result in a violation of any Applicable Laws to
which the Selling Stockholder or its properties are subject or any
judgment, decree or order of any Applicable Governmental Authority that
specifically names the Selling Stockholder or is directed at the
Selling Stockholder's 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 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 the
Selling Stockholder Agreements.
For purposes of the foregoing opinions, the definitions of the term "Applicable Laws" and "Applicable Governmental Authority" shall mean federal laws and the laws of the jurisdiction of incorporation or formation (as the case may be) of the Selling Stockholder.
The opinion of [COUNSEL FOR THE COMPANY] or such other counsel as described in Section 9(f) and 9(g) 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 shall have received on the Closing Date an opinion, dated the Closing Date, of [COUNSEL FOR THE UNDERWRITERS], counsel for the Underwriters, as to the matters referred to in Sections 9(f)(iv), 9(f)(vi) [(BUT ONLY WITH RESPECT TO THE COMPANY)], and 9(f)(ix) (but only with respect to the statements under the caption "Description of Capital Stock" and "Underwriting") and the last paragraph of Section 9(f).
In giving such opinions with respect to the matters covered by the last paragraph of Section 9(f), [COUNSEL FOR THE COMPANY] and [COUNSEL FOR THE UNDERWRITERS] may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified.
(i) You 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.
(j) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(k) The Shares shall have been duly listed on the NYSE.
(l) The Company and the Selling Stockholder 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.
The several obligations of the Underwriters to purchase any Additional Shares hereunder are subject to the delivery to you on the applicable Option Closing Date of such documents as you may reasonably request with respect to the good standing of the Company, the due authorization and issuance of such Additional Shares and other matters related to the issuance of such Additional Shares.
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 Sellers 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 or the Nasdaq National Market or limitation on prices for securities or other instruments on any such exchange or the Nasdaq National Market, (iii) the suspension of trading of the Common Stock on any exchange or in the over-the-counter market, (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 (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.
If on the Closing Date or on an Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase the Firm Shares or Additional Shares, as the case may
be, which it or they have agreed to purchase hereunder on such date and the aggregate number of Firm Shares or Additional Shares, as the case may be, which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the total number of Shares to be purchased on such date by all Underwriters, each non-defaulting Underwriter shall be obligated severally, in the proportion which the number of Firm Shares set forth opposite its name in Schedule I bears to the total number of Firm Shares which all the non-defaulting Underwriters, as the case may be, have agreed to purchase, or in such other proportion as you may specify, to purchase the Firm Shares or Additional Shares, as the case may be, which such defaulting Underwriter or Underwriters, as the case may be, agreed but failed or refused to purchase on such date; provided that in no event shall the number of Firm Shares or Additional Shares, as the case may be, which any Underwriter has agreed to purchase pursuant to Section 2 hereof be increased pursuant to this Section 11 by an amount in excess of one-ninth of such number of Firm Shares or Additional Shares, as the case may be, without the written consent of such Underwriter. If on the Closing Date any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased by all Underwriters and arrangements satisfactory to you, the Company and the Selling Stockholder for purchase of such Firm Shares are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter, the Company or the Selling Stockholder. In any such case which does not result in termination of this Agreement, either you or the Selling Stockholder shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and the Prospectus or any other documents or arrangements may be effected. If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased on such date, the non-defaulting Underwriters shall have the option to (i) terminate their obligation hereunder to purchase such Additional Shares or (ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase on such date in the absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of any such Underwriter under this Agreement.
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 the Underwriters.
(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 or to the Selling Stockholder, to [COMPANY FULL NAME], [COMPANY ADDRESS], and (ii) if to any Underwriter or to you, to you [C/O [NAME AND ADDRESS OF LEAD UNDERWRITER], ATTENTION: SYNDICATE DEPARTMENT], 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 the
several Underwriters 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 any 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 Underwriters, the Underwriters' 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, 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 any of the several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the laws of the State of New York.
This Agreement may be signed in various counterparts which together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among the Company, the Selling Stockholder and the several Underwriters.
Very truly yours,
CAPSTEAD MORTGAGE CORPORATION
President
FORTRESS INVESTMENT GROUP, LLC
Attorney-in-Fact
[NAMES OF UNDERWRITERS]
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By: [LEAD UNDERWRITER]
SCHEDULE I
NUMBER OF
FIRM SHARES
UNDERWRITERS TO BE PURCHASED
------------ ---------------
Total
|
EXHIBIT 3.1
ARTICLE OF INCORPORATION
OF
LOMAS MORTGAGE CORPORATION
ARTICLE I
The undersigned, William G. Strench, whose post-office address is 1000 Dallas Building, Dallas, Texas 75201, being at least eighteen years of age, as incorporator, does hereby form a corporation under and by virtue of the General Laws of the State of Maryland.
ARTICLE II
NAME
The name of the corporation (which is hereinafter called the "Corporation") is:
LOMAS MORTGAGE CORPORATION
ARTICLE III
PURPOSE
The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the General Laws of the State of Maryland as now or hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post-office address or the principal office of the Corporation in the State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland 21202. The name and post-office address of the resident agent of the Corporation in the State of Maryland are The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
ARTICLE V
CAPITAL STOCK
1. The total number of shares of stock of all classes which the Corporation has authority to issue is Fifty Five Million (55,000,000) shares, having an aggregate par value of One Million Dollars ($1,000,000.00) of which Fifty Million (50,000,000) shares of the par value of one cent
($.01) per share, amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000.00) shall be Common Stock and Five Million (5,000,000) shares of the par value of ten cents ($.10) per share, amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000.00) shall be Preferred Stock. The Board of Directors may classify and reclassify any unissued shares of capital stock by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares of stock.
2. The following is a description of the preferences, conversion and other rights, voting powers and limitations as to dividends of the Common Stock of the Corporation.
(a) Each share of Common Stock shall have one vote, and, except as otherwise provided in respect of any class of stock hereafter classified or reclassified, the exclusive voting power for all purposes shall be vested in the holders of the Common Stock.
(b) Subject to the provisions of law and any preferences of any class of stock hereafter classified or reclassified, dividends may be paid on the Common Stock of the Corporation at such time and in such amounts as the Board of Directors may deem advisable.
(c) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Common Stock shall be entitled, after payment or provision for payment of the debts and other liabilities of the Corporation and the amount to which the holders of any class of stock hereafter classified or reclassified having a preference on distributions in the liquidation, dissolution or winding up of the Corporation shall be entitled, together with the holders of any other class of stock hereafter classified or reclassified not having a preference on distributions in the liquidation, dissolution or winding up of the Corporation, to share ratably in the remaining net assets of the Corporation.
3. Subject to the foregoing, the power of the Board of Directors to classify and reclassify any of the shares of capital stock shall include, without limitation, subject to the provisions of the Articles of Incorporation and the By-Laws authority to classify or reclassify any unissued shares of such stock into a class or classes of preferred stock, preference stock, special stock or other stock, and to divide and classify shares of any class into one or more series of such class, by determining, fixing, or altering one or more of the following:
(a) The distinctive designation of such class or series and the number of shares to constitute such class or series; provided that, unless otherwise prohibited by the terms of such or any other class or series, the number of shares of any class or series may be decreased by the Board of Directors in connection with any classification or reclassification of unissued shares and the number of shares of such class or series may be increased by the Board of Directors in connection with any such classification or reclassification, and any shares of any class or series which have been redeemed,
purchased, otherwise acquired or converted into shares of Common Stock or any other class or series shall become part of the authorized capital stock and be subject to classification and reclassification as provided in this Section.
(b) Whether or not and, if so, the rates, amounts and times at which, and the conditions under which, dividends shall be payable on shares of such class or series, whether any such dividends shall rank senior or junior to or on a parity with dividends payable on any other class or series of stock, and the status of any such dividends as cumulative, cumulative to a limited extent or non-cumulative and as participating or non-participating.
(c) Whether or not shares of such class or series shall have voting rights, in addition to any voting rights provided by law and, if so, the terms of such voting rights.
(d) Whether or not shares of such class or series shall have conversion or exchange privileges and, if so, the terms and conditions thereof, including provision for adjustment of the conversion or exchange rate in such events or at such times as the Board of Directors shall determine.
(e) Whether or not shares of such class or series shall be subject to redemption and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; and whether or not there shall be any sinking fund or purchase account in respect thereof, and if so, the terms thereof.
(f) The rights of the holders of shares of such class or series upon the liquidation, dissolution or winding up of the affairs of, or upon any distribution of the assets of, the Corporation, which rights may vary depending upon whether such liquidation, dissolution or winding up is voluntary or involuntary and, if voluntary, may vary at different dates, and whether such rights shall rank senior or junior to or on a parity with such rights of any other class or series of stock.
(g) Whether or not there shall be any limitations applicable, while shares of such class or series are outstanding, upon the payment of dividends or making of distributions on, or the acquisition of, or the use of moneys for purchase or redemption of, any stock of the Corporation, or upon any other action of the Corporation, including action under this Section, and, if so, the terms and conditions thereof.
(h) Any other preferences, rights, restrictions, including restrictions on transferability, and qualifications of shares of such class or series, not inconsistent with law and the Articles of Incorporation of the Corporation.
4. For the purposes hereof and of any articles supplementary to the Articles of Incorporation providing for the classification or reclassification of any shares of capital stock or
of any other charter document of the Corporation (unless otherwise provided in any such articles or document), any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to another class or series either as to dividends or upon liquidation, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable on liquidation, dissolution or winding up, as the case may be, in preference or priority to holders of such other class or series;
(b) on a parity with another class or series either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates or redemption or liquidation price per share thereof be different from those of such others, if the holders of such class or series of stock shall be entitled to receipt of dividends or amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend rates or redemption or liquidation prices, without preference or priority over the holders of such other class or series; and
(c) junior to another class or series either as to dividends or upon liquidation, if the rights of the holders of such class or series shall be subject or subordinate to the rights of the holders of such other class or series in respect of the receipt of dividends or the amounts distributable upon liquidation, dissolution or winding up, as the case may be.
5. The Corporation shall not issue fractional shares of its stock. All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of these Articles of Incorporation and the By-Laws of the Corporation.
ARTICLE VI
DIRECTORS
The number of directors of the Corporation shall be nine, which number may be increased or decreased pursuant to the By-Laws of the Corporation, but shall never be less than the minimum permitted by the General Laws of the State of Maryland now or hereafter in force. The names of the directors who shall serve until the first annual meeting or until their successors are duly elected and qualify are as follows:
John H. Dalton Ted Enloe David G. Fox Jess Hay Kay Bailey Hutchison Paul M. Low Lewis T. Sweet, Jr.
Martin Tycher
James M. Wooten
ARTICLE VII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS
OF THE CORPORATION AND OF THE DIRECTORS AND STOCKHOLDERS
The following provisions are hereby adopted for the purpose of defining, limiting and regulating the powers of the Corporation and of the directors and stockholders:
1. The Board of Directors of the Corporation is hereby empowered to authorize the issuance from time to time of shares of its stock of any class, whether now or hereafter authorized, or securities convertible into shares of its stock of any class or classes, whether now or hereafter authorized, for such consideration as may be deemed advisable by the Board of Directors and without any action by the stockholders.
2. No holder of any stock or any other securities of the Corporation, whether now or hereafter authorized, shall have any preemptive right to subscribe for or purchase any stock or any other securities of the Corporation other than such, if any, as the Board of Directors, in its sole discretion, may determine and at such price or prices and upon such other terms as the Board of Directors, in its sole discretion, may fix; and any stock or other securities which the Board of Directors may determine to offer for subscription may, as the Board of Directors in its sole discretion shall determine, be offered to the holders of any class, series or type of stock or other securities at the time outstanding to the exclusion of the holders of any or all other classes, series or types of stock or other securities at the time outstanding.
3. The Board of Directors of the Corporation shall have the power to make, adopt, alter, amend and repeal any of the By-Laws of the Corporation except any particular By-Law which is specified as not subject to alteration or repeal by the Board of Directors; provided that the stockholders may make, adopt, alter, amend or repeal any of the By-Laws of the Corporation.
4. The Board of Directors is hereby empowered to cause the redemption by the Corporation of shares of its Common Stock and to restrict the transfer of shares of Common Stock, in the manner provided for herein or the By-Laws.
5. The Board of Directors of the Corporation shall have the power from time to time and in its sole discretion to determine in accordance with sound accounting practice, what constitutes annual or other net profits, earnings, surplus, or net assets in excess of capital; to fix and vary from time to time the amount to be reserved as working capital, or determine that retained earnings or surplus shall remain in the hands of the Corporation; to set apart out of any funds of the Corporation such reserve or reserves in such amount or amounts and for such proper purpose or purposes as it shall determine and to abolish any such reserve or any part thereof; to distribute and pay distributions or dividends in stock, cash or other securities or property, out of surplus or any other funds or amounts legally available therefor, at such times and to the stockholders of record on such dates as it may, from time to time, determine; and to determine whether and to what extent and at what times and places and under what conditions and regulations the books, accounts and documents of the Corporation, or any of them, shall be open to the inspection of stockholders, except as otherwise provided by statute or by the By-Laws, and, except as so provided, no stockholder shall have any right to inspect any book, account or document of the Corporation unless authorized to do so by resolution of the Board of Directors.
6. The Board of Directors of the Corporation is hereby empowered to authorize, subject to such conditions, if any, as may be required by an applicable statute, rule, regulation or By-Law of the Corporation, the execution and performance by the Corporation of one or more agreements with any person, corporation, firm, association, company, trust, partnership (limited or general) or other organization whereby, subject to the supervision and control of the Board of Directors, any such other person, corporation, firm, association, company, trust, partnership (limited or general), or other organization shall render or make available to the Corporation managerial, administrative and/or related services, office space and other services and facilities (including, if deemed advisable by the Board of Directors, the management or supervision of any or all of the assets or investments of the Corporation) upon such terms and conditions as may be provided in such agreement or agreements (including, if deemed fair and equitable by the Board of Directors, the compensation payable thereunder by the Corporation).
7. The Board of Directors of the Corporation shall have the power to authorize any agreement of the character described in Section 6 of this Article VII or other agreement or transaction with any person, corporation, firm, association, company, trust, partnership (limited or general), or other organization, although one or more members of the Board of Directors or officers of the Corporation may be the other party to any such agreement or transaction or an officer, director, stockholder, or member of such other party, and no such agreement or transaction shall be invalidated or rendered voidable solely by reason of the existence of any such relationship if:
(a) the existence of the relationship is disclosed or known to: the Board of Directors and the Board authorizes, approves, or ratifies the agreement or transaction by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum; or the stockholders entitled to vote, and the agreement or transaction is authorized, approved, or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by any interested person, corporation, firm, association, company, trust, partnership (limited or general) or other organization; or
(b) the agreement or transaction is fair and reasonable to the Corporation.
Common or interested directors or the stock owned by them or by an
interested person, corporation, firm, association, company, trust, partnership
(limited or general) or other organization may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or at a meeting of
the stockholders, as the case may be, at which the agreement or transaction is
authorized, approved, or ratified. If an agreement or transaction is not
authorized, approved, or ratified in one of the ways provided for in clause (a)
of the first sentence of this Section, the person asserting the validity of the
agreement or transaction bears the burden of proving that the agreement or
transaction was fair and reasonable to the Corporation at the time it was
authorized, approved, or ratified. If such a common or interested director votes
at or attends a meeting to approve or disapprove an agreement or transaction as
described in Section 6 or this Section 7 of this Article VII, such vote shall
not affect the validity of such an agreement or transaction provided the
provisions of this Section are otherwise satisfied. The procedures in this
Section do not apply to the fixing by the Board of Directors of reasonable
compensation for a director, whether as a director or in any other capacity.
8. Except for agreements, transactions or acts required to be approved under the provisions of Section 6 of this Article, any contract, transaction, or act of the Corporation or of the Board of Directors which shall be ratified by a majority of a quorum of the stockholders having voting powers at any annual meeting, or at any special meeting called for such purpose, shall so far as permitted by law be as valid and as binding as though ratified by every stockholder of the Corporation.
9. Unless the By-Laws otherwise provide, any officer or employee of the Corporation (other than a director) may be removed at any time with or without cause by the Board of Directors or by any committee or superior officer upon whom such power of removal may be conferred by the By-Laws or by authority of the Board of Directors.
10. Notwithstanding any provision of law requiring the authorization of any action by a greater proportion than a majority of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon, except as otherwise provided in the Articles of Incorporation.
11. Each holder of stock of the Corporation shall upon demand disclose to the Board of Directors in writing such information with respect to direct and indirect ownership of securities of the Corporation as the Board of Directors deems necessary to comply with provisions of the Internal Revenue Code of 1954, as amended, applicable to the Corporation, or to comply with the requirements of any taxing authority.
12. The Corporation shall indemnify (a) its directors to the full
extent provided by the general laws of the State of Maryland now or hereafter in
force, including the advance of expenses under the procedures provided by such
laws; (b) its officers to the same extent it shall indemnify its directors; and
(c) its officers who are not directors to such further extent as shall be
authorized by the Board of Directors and be consistent with law. The foregoing
shall not limit the authority of the Corporation to indemnify other employees
and agents consistent with law.
13. The Corporation reserves the right from time to time to make any amendments of its Articles of Incorporation which may now or hereafter be authorized by law, including any amendments changing the terms or contract rights, as expressly set forth in its Articles of Incorporation, of any of its outstanding stock by classification, reclassification or otherwise but no such amendment which changes such terms or contract rights of any of its outstanding stock shall be valid unless such amendment shall have been authorized by not less than a majority of the aggregate number of the votes entitled to be cast thereon, by a vote at a meeting or in writing with or without a meeting.
The enumeration and definition of particular powers of the Board of Directors included in the foregoing shall in no way be limited or restricted by reference to or inference from the terms of any other clause of this or any other Article of the Articles of Incorporation of the Corporation, or construed as or deemed by inference or otherwise in any manner to exclude or limit any powers conferred upon the Board of Directors under the General Laws of the State of Maryland as now or hereafter in force.
ARTICLE VIII
REDEMPTION
If at any time the Board of Directors shall in good faith be of the opinion that direct or indirect ownership of shares of stock of the Corporation has or may become concentrated to an extent which would cause the Corporation to fail to qualify or be disqualified as a real estate investment trust by virtue of Sections 856(a)(5) or (6) of the Internal Revenue Code of 1954, as amended, or similar provisions of successor statutes, pertaining to the qualification of the Corporation as a real estate investment trust, the Board of Directors shall have the power (i) by lot or other means deemed equitable by them to call for purchase from any stockholder of the Corporation a number of shares sufficient in the opinion of the Board of Directors to maintain or bring the direct or indirect ownership of shares of stock of the Corporation into conformity with the requirements of Sections 856 (a)(5) and (6) pertaining to the Corporation, and (ii) to refuse to transfer or issue shares of the Corporation to any person whose acquisition of such shares would, in the opinion of the Board of Directors, result in the Corporation being unable to conform to the requirements of Sections 856(a)(5) and (6). The purchase price for any shares of stock purchased pursuant hereto shall be equal to the fair market value of the shares as reflected in the closing sale price for the shares, if then listed on a national securities exchange, or the average of the closing sales prices for the shares if then listed on more than one national securities exchange, or if the shares are not then listed on a national securities exchange, the latest bid quotation for the shares if then traded over-the-counter, on the last business day for which closing prices are available immediately preceding the day on which notices of such acquisitions are sent, or, if no such closing sales prices or quotations are available, then the purchase price shall be equal to the net asset value of such stock as determined by the Board of Directors in accordance with the provisions of applicable law. Payment of the purchase price shall be made in cash by the Corporation to such stockholder for any shares of stock so called for purchase. From and after the date fixed for purchase by the Board of Directors, the holder of any shares of stock so called for purchase shall cease to be entitled to distributions, voting rights and other benefits with respect to such shares, excepting only the right to payment of the purchase price fixed as aforesaid. Any transfer of shares that would prevent the Corporation from continuing to be qualified as a real estate investment trust by virtue of the application of Sections 856(a) (5) and (6) shall be deemed void ab initio and the intended transferee shall be deemed never to have had an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of such shares shall be deemed, at the option of the Corporation, to have acted as agent on behalf of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation.
ARTICLE IX
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and acknowledge the same to be my act on this 11th day of April, 1985.
By: /s/ William G.Strench
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William G. Strench
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WITNESS:
By: /s/ Jeanette S. Powell
---------------------------------
Jeannette S. Powell
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CERTIFICATE OF CHANGE OF
RESIDENT AGENT AND ADDRESS
OF
CAPSTEAD MORTGAGE CORPORATION
The Board of Directors of:
CAPSTEAD MORTGAGE CORPORATION
a corporation organized in Maryland on April 15, 1985 duly approved a resolution as follows:
Resolved: That the resident agent and address are changed to:
CSC-Lawyers Incorporating Service Company 11 East Chase Street, Suite 9E Baltimore, MD 21202
I, Andrew F. Jacobs certify under the penalties of perjury that to the best of my knowledge, information, and belief the foregoing resolution is true in all material respects.
By: /s/ Andrew F. Jacobs
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Title: Sr. V.P. Treasurer and Secretary
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LOMAS MORTGAGE CORPORATION
ARTICLES OF AMENDMENT AND RESTATEMENT
Under Section 2-609 of Corporations and Associations Article
LOMAS MORTGAGE CORPORATION, a Maryland corporation having its principal office at 32 South Street, Baltimore, Maryland 21202 and having THE CORPORATION TRUST INCORPORATED as its resident agent located at 32 South Street, Baltimore, Maryland 21202, (hereinafter called the Corporation), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by adding to the articles of incorporation a new Section to Article VIII which shall be as follows:
2. (a) Whenever it is deemed by the Board of Directors to be
prudent in avoiding the imposition of a penalty on the
Corporation, the Board of Directors may require to be filed
with the Corporation a statement or affidavit from any holder
or proposed transferee of shares of capital stock stating
whether the holder or proposed transferee is a "Disqualified
Person." For purposes of this Section 2 of this Article, a
"Disqualified Person" means (i) the United States, any State
or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality
of any of the foregoing, (ii) any person (other than a
cooperative described in section 521 of the Internal Revenue
Code, as amended ("Code")) which is exempt from tax imposed by
chapter 1 of the Code unless such person is subject to the tax
imposed by section 511 of the Code on its unrelated business
taxable income, (iii) any person that is a rural electrical or
telephone cooperative described in Code section 1381 (a) (2)
(C), and (iv) any other person that may cause the Corporation
to incur a penalty tax if that person were a holder of shares
of capital stock. For purposes of clause (i) of
the previous sentence of this section 2(a) of this Article, a corporation shall not be treated as an instrumentality of the United States or of any State or political subdivision thereof, if (i) all of the activities of such corporation are subject to the tax imposed by Chapter 1 of the Code, and (ii) a majority of the board of directors of such corporation is not selected by the United States or any State or political subdivision thereof (except that this clause (ii) shall not apply to the Federal Home Loan Mortgage Corporation). Any contract for the sale or other transfer of shares of capital stock shall be subject to this provision. Furthermore, the Board of Directors shall have the right, but shall not be required, to refuse to transfer any shares of capital stock purportedly transferred if a statement or affidavit requested pursuant to this Section 2(a) of this Article has not been received.
(b) A Disqualified Person may not hold shares of capital stock of the Corporation. Any acquisition or purported acquisition of shares of capital stock by a Disqualified Person or that could or would result in the imposition of a penalty tax on the Corporation shall be void ab initio to the fullest extent permitted under applicable law and the intended transferee of the subject shares of capital stock shall be deemed never to have had an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of those shares of capital stock shall be deemed, at the option of the Corporation, to have acted as agent on behalf of the Corporation in acquiring those shares and to hold those shares on behalf of the Corporation.
(c) Whenever it is deemed by the Board of Directors to be prudent in avoiding the imposition of a penalty tax on the Corporation, the Corporation may redeem those shares of capital stock as may be specified by the Board of Directors. The purchase price for any shares of capital stock purchased pursuant hereto shall be equal to the fair market value of the shares as reflected in the closing sales price for the shares, if then listed on a national securities exchange, or the average of the closing sales prices for the shares if then listed on more than one national securities exchange, or if the shares are not then listed on a national securities exchange, the latest bid quotation for the shares if then traded over--the--counter, on the last business day for which closing prices are available immediately preceding the day on which notices of such acquisitions are sent, or, if no such closing sales prices or quotations are available, then the purchase price shall be equal to the net asset value of such capital stock as determined by the Board of Directors in accordance with the provisions of applicable law, Payment of the purchase price shall be made in cash by the Corporation to such stockholder for any shares of capital stock so called for purchase. From and after the date fixed for purchase by the Board of Directors, the holder of any shares of capital stock so called for purchase shall cease to be
entitled to distributions, voting rights and other benefits with respect to such shares, excepting only the right to payment of the purchase price fixed as aforesaid.
(d) Nothing contained in this Section 2 of this Article or in any other provision hereof shall limit the authority of the Board of Directors to take any and all other action as it, in its sole discretion, deems necessary or advisable to protect the Corporation or the interest of its stockholders by avoiding the imposition of a penalty tax on the Corporation.
(e) For purposes of this Section 2 of this Article only, the term "person" shall include, but not be limited to, individuals, corporations, limited partnerships, general partnerships, joint stock companies or associations, joint ventures, associations, consortia, companies, trusts, banks, trust companies, land trusts, common law trusts, business trusts, or other entities and governments and agencies and political subdivisions thereof.
(f) If any provision of this Section 2 of this Article or any application of any such provision is determined to be invalid by any federal or State court having jurisdiction over the issue, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of that court.
and the charter of the corporation is hereby restated to read as follows:
ARTICLE II
NAME
The name of the corporation (which is hereinafter called the "Corporation") is:
LOMAS MORTGAGE CORPORATION
ARTICLE III
PURPOSE
The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the General Laws of the State of Maryland as now or hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post-office address of the principal office of the Corporation in the State of Maryland is c/o THE CORPORATION TRUST INCORPORATED, 32 South Street, Baltimore, Maryland 21202. The name and post-office address of the resident agent of the Corporation in the
State of Maryland are THE CORPORATION TRUST INCORPORATED, 32 South Street, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
ARTICLE V
CAPITAL STOCK
1. The total number of shares of stock of all classes which the Corporation has authority to issue is Fifty Five Million (55,000,000) shares, having an aggregate par value of One Million Dollars ($1,000,000.00) of which Fifty Million (50,000,000) shares of the par value of one cent ($0.01) per share, amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000.00) shall be Common Stock and Five Million (5,000,000) shares of the par value of ten cents ($0.10) per share, amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000.00) shall be Preferred Stock. The Board of Directors may classify and reclassify any unissued shares of capital stock by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares of stock.
2. The following is a description of the preferences, conversion and other rights, voting powers and limitations as to dividends of the Common Stock of the Corporation.
(a) Each share of Common Stock shall have one vote, and, except as otherwise provided in respect of any class of stock hereafter classified or reclassified, the exclusive voting power for all purposes shall be vested in the holders of the Common Stock.
(b) Subject to the provisions of law and any preferences of any class of stock hereafter classified or reclassified, dividends may be paid on the Common Stock of the Corporation at such time and in such amounts as the Board of Directors may deem advisable.
(c) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Common Stock shall be entitled, after payment or provision for payment of the debts and other liabilities of the Corporation and the amount to which the holders of any class of stock hereafter classified or reclassified having a preference on distributions in the liquidation, dissolution or winding up of the Corporation shall be entitled, together with the holders of any other class of stock hereafter classified or reclassified not having a preference on distributions in the liquidation, dissolution or winding up of the Corporation, to share ratably in the remaining net assets of the Corporation.
3. Subject to the foregoing, the power of the Board of Directors to classify and reclassify any of the shares of capital stock shall include, without limitation, subject to the provisions of the Articles of Incorporation and the By-Laws authority to classify or reclassify any
unissued shares of such stock into a class or classes of preferred stock, preference stock, special stock or other stock, and to divide and classify shares of any class into one or more series of such class, by determining, fixing, or altering one or more of the following:
(a) The distinctive designation of such class or series and the number of shares to constitute such class or series; provided that, unless otherwise prohibited by the terms of such or any class or series, the number of shares of any class or series may be decreased by the Board of Directors in connection with any classification or reclassification of unissued shares and the number of shares of such class or series may be increased by the Board of Directors in connection with any such classification or reclassification, and any shares of any class or series which have been redeemed, purchased, otherwise acquired or converted into shares of Common Stock or any other class or series shall become part of the authorized capital stock and be subject to classification and reclassification as provided in this Section.
(b) Whether or not and, if so, the rates, amounts and times at which, and the conditions under which, dividends shall be payable on shares of such class or series, whether any such dividends shall rank senior or junior to or on a parity with dividends payable on any other class or series of stock, and the status of any such dividends as cumulative, cumulative to a limited extent or non-cumulative and as participating or non-participating.
(c) Whether or not shares of such class or series shall have voting rights, in addition to any voting rights provided by law and, if so, the terms of such voting rights.
(d) Whether or not shares of such class or series shall have conversion or exchange privileges and, if so, the terms and conditions thereof, including provision for adjustment of the conversion or exchange rate in such events or at such times as the Board of Directors shall determine.
(e) Whether or not shares of such class or series shall be subject to redemption and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; and whether or not there shall be any sinking fund or purchase account in respect thereof, and if so, the terms thereof.
(f) The rights of the holders of shares of such class or series upon the liquidation, dissolution or winding up of the affairs of, or upon any distribution of the assets of, the Corporation, which rights may vary depending upon whether such liquidation, dissolution or winding up is voluntary or involuntary and, if
voluntary, may vary at different dates, and whether such rights shall rank senior or junior to or on a parity with such rights of any other class or series of stock.
(g) Whether or not there shall be any limitations applicable, while shares of such class or series are outstanding, upon the payment of dividends or making of distributions on, or the acquisition of, or the use of moneys for purchase or redemption of, any stock of the Corporation, or upon any other action of the Corporation, including action under this Section, and, if so, the terms and conditions thereof.
(h) Any other preferences, rights, restrictions, including restrictions on transferability, and qualifications of shares of such class or series, not inconsistent with law and the Articles of Incorporation of the Corporation.
4. For the purposes hereof and of any articles supplementary to the Articles of Incorporation providing for the classification or reclassification of any shares of capital stock or of any other charter document of the Corporation (unless otherwise provided in any such articles of document), any class or series of stock of the Corporation shall be deemed to rank:
(a) prior to another class or series either as to dividends or upon liquidation, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable on liquidation, dissolution or winding up, as the case may be, in preference or priority to holders of such other class or series;
(b) on a parity with another class or series either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates or redemption or liquidation price per share thereof be different from those of such others, if the holders of such class or series of stock shall be entitled to receipt of dividends or amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend rates or redemption or liquidation prices, without preference or priority over the holders of such other class or series; and
(c) junior to another class or series either as to dividends or upon liquidation, if the rights of the holders of such class or series shall be subject or subordinate to the rights of the holders of such other class or series in respect of the receipt of dividends or the amounts distributable upon liquidation, dissolution or winding up, as the case may be.
5. The Corporation shall not issue fractional shares of its stock. All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of these Articles of Incorporation and the By-Laws of the Corporation.
ARTICLE VI
DIRECTORS
The number of directors of the Corporation shall be eleven
(11), which number may be increased or decreased pursuant to the By-Laws of the
Corporation, but shall never be less than the minimum permitted by the General
Laws of the State of Maryland now or hereafter in force. The names of the
directors who shall serve until the first annual meeting or until their
successors are duly elected and qualify are as follows:
John H. Dalton Ted Enloe David G. Fox Jess Hay Kay Bailey Hutchison Paul M. Low Ronn K. Lytle Dr. Charles B. Mullins Lewis T. Sweet, Jr.
Martin Tycher
James M. Wooten
ARTICLE VII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN
POWERS OF THE CORPORATION
AND OF THE DIRECTORS AND STOCKHOLDERS
The following provisions are hereby adopted for the purpose of defining, limiting and regulating the powers of the Corporation and of the directors and stockholders:
1. The Board of Directors of the Corporation is hereby empowered to authorize the issuance from time to time of shares of its stock of any class, whether now or hereafter authorized, or securities convertible into shares of its stock of any class or classes, whether now or hereafter authorized, for such consideration as may be deemed advisable by the Board of Directors and without any action by the stockholders.
2. No holder of any stock or any other securities of the Corporation, whether now or hereafter authorized, shall have any preemptive right to subscribe for or purchase any stock or any other securities of the Corporation other than such, if any, as the Board of Directors, in its sole discretion, may determine and at such price or prices and upon such other terms as the Board of Directors, in its sole discretion, may fix; and any stock or other securities which the Board of Directors may determine to offer for subscription may, as the Board of Directors in its sole discretion shall determine, be offered to the holders of any class, series or type of stock or other securities at the time outstanding to the exclusion of the holders of any or all other classes, series or types of stock or other securities at the time outstanding.
3. The Board of Directors of the Corporation shall have the power to make, adopt, alter, amend and repeal any of the By-Laws of the Corporation except any particular By-Law which is specified as not subject to alteration or repeal by the Board of Directors; provided that the stockholders may make, adopt, alter, amend or repeal any of the By-Laws of the Corporation.
4. The Board of Directors is hereby empowered to cause the redemption by the Corporation of shares of its Common Stock and to restrict the transfer of shares of Common Stock, in the manner provided for herein or the By-Laws.
5. The Board of Directors of the Corporation shall have the power from time to time and in its sole discretion to determine in accordance with sound accounting practice, what constitutes annual or other net profits, earnings, surplus, or net assets in excess of capital; to fix and vary from time to time the amount to be reserved as working capital, or determine that retained earnings or surplus shall remain in the hands of the Corporation; to set apart out of any funds of the Corporation such reserve or reserves in such amount or amounts and for such proper purpose or purposes as it shall determine and to abolish any such reserve or any part thereof; to distribute and pay distributions or dividends in stock, cash or other securities or property, out of
surplus or any other funds or amounts legally available therefor, at such times and to the stockholders of record on such dates as it may, from time to time, determine; and to determine whether and to what extent and at what times and places and under what conditions and regulations the books, accounts and documents of the Corporation, or any of them, shall be open to the inspection of stockholders, except as otherwise provided by statute or by the By-Laws, and, except as so provided, no stockholder shall have any right to inspect any book, account or document of the Corporation unless authorized to do so by resolution of the Board of Directors.
6. The Board of Directors of the Corporation is hereby empowered to authorize, subject to such conditions, if any, as may be required by an applicable statute, rule, regulation or By-Law of the Corporation, the execution and performance by the Corporation of one or more agreements with any person, corporation, firm, association, company, trust, partnership (limited or general) or other organization whereby, subject to the supervision and control of the Board of Directors, any such other person, corporation, firm, association, company, trust, partnership (limited or general), or other organization shall render or make available to the Corporation managerial, administrative and/or related services, office space and other services and facilities (including, if deemed advisable by the Board of Directors, the management or supervision of any or all of the assets or investments of the Corporation) upon such terms and conditions as may be provided in such agreement or agreements (including, if deemed fair and equitable by the Board of Directors, the compensation payable thereunder by the Corporation).
7. The Board of Directors of the Corporation shall have the power to authorize any agreement of the character described in Section 6 of this Article VII or other agreement or transaction with any person, corporation, firm, association, company, trust, partnership (limited or general), or other organization, although one or more members of the Board of Directors or officers of the Corporation may be the other party to any such agreement or transaction or an officer, director, stockholder, or member of such other party, and no such agreement or transaction shall be invalidated or rendered voidable solely by reason of the existence of any such relationship if:
(a) the existence of the relationship is disclosed or known to: the Board of Directors and the Board authorizes, approves, or ratifies the agreement or transaction by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum; or the stockholders entitled to vote, and the agreement or transaction is authorized, approved, or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by any interested person, corporation, firm, association, company, trust, partnership (limited or general) or other organization; or
(b) the agreement or transaction is fair and reasonable to the Corporation.
Common or interested directors or the stock owned by them or by an interested person, corporation, firm, association, company, trust, partnership (limited or general) or other organization may be counted in determining the presence of a quorum at a meeting of the Board of Directors or at a meeting of the stockholders, as the case may be, at which the agreement or transaction is authorized, approved, or ratified. If an agreement or transaction is not authorized, approved, or ratified in one of the ways provided for in clause (a) of the first sentence of this Section, the person asserting the validity of the agreement or transaction bears the burden of proving that the agreement or transaction was fair and reasonable to the Corporation at the time it was authorized, approved, or ratified. If such a common or interested director votes at or attends a meeting to approve or disapprove an agreement or transaction as described in Section 6 or this Section 7 of this Article VII, such vote shall not affect the validity of such an agreement or transaction provided the provisions of this Section are otherwise satisfied. The procedures in this Section do not apply to the fixing by the Board of Directors of reasonable compensation for a director, whether as a director or in any other capacity.
8. Except for agreements, transactions or acts required to be approved under the provisions of Section 6 of this Article, any contract, transaction, or act of the Corporation or of the Board of Directors which shall be ratified by a majority of a quorum of the stockholders having voting powers at any annual meeting, or at any special meeting called for such purpose, shall so far as permitted by law be as valid and as binding as though ratified by every stockholder of the Corporation.
9. Unless the By-Laws otherwise provide, any officer or employee of the Corporation (other than a director) may be removed at any time with or without cause by the Board of Directors or by any committee or superior officer upon whom such power of removal may be conferred by the By-Laws or by authority of the Board of Directors.
10. Notwithstanding any provision of law requiring the authorization of any action by a greater proportion than a majority of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon, except as otherwise provided in the Articles of Incorporation.
11. Each holder of stock of the Corporation shall upon demand disclose to the Board of Directors in writing such information with respect to direct and indirect ownership of securities of the Corporation as the Board of Directors deems necessary to comply with provisions of the Internal Revenue Code of 1954, as amended, applicable to the Corporation, or to comply with the requirements of any taxing authority.
12. The Corporation shall indemnify (a) its directors to the full extent provided by the general laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures provided by such laws; (b) its officers to the same extent it shall indemnify its directors; and (c) its officers who are not directors to such further extent as shall be
authorized by the Board of Directors and be consistent with law. The foregoing shall not limit the authority of the Corporation to indemnify other employees and agents consistent with law.
13. The Corporation reserves the right from time to time to make any amendments of its Articles of Incorporation which may now or hereafter be authorized by law, including any amendments changing the terms or contract rights, as expressly set forth in its Articles of Incorporation, of any of its outstanding stock by classification, reclassification or otherwise but not such amendment which changes such terms or contract rights of any of its outstanding stock shall be valid unless such amendment shall have been authorized by not less than a majority of the aggregate number of the votes entitled to be cast thereon, by a vote at a meeting or in writing with or without a meeting.
The enumeration and definition of particular powers of the Board of Directors included in the foregoing shall in no way be limited or restricted by reference to or inference from the terms of any other clause of this or any other Article of the Articles of Incorporation of the Corporation, or construed as or deemed by inference or otherwise in any manner to exclude or limit any powers conferred upon the Board of Directors under the General Laws of the State of Maryland as now or hereafter in force.
ARTICLE VIII
REDEMPTION
1. If at any time the Board of Directors shall in good faith be of the opinion that direct or indirect ownership of shares of stock of the Corporation has or may become concentrated to an extent which would cause the Corporation to fail to qualify or be disqualified as a real estate investment trust by virtue of Sections 856 (a)(5) or (6) of the Internal Revenue Code of 1954, as amended, or similar provisions of successor statutes, pertaining to the qualification of the Corporation as a real estate investment trust, the Board of Directors shall have the power (i) by lot or other means deemed equitable by them to call for purchase from any stockholder of the Corporation a number of shares sufficient in the opinion of the Board of Directors to maintain or bring the direct or indirect ownership of shares of stock of the Corporation into conformity with the requirements of Sections 856 (a)(5) and (6) pertaining to the Corporation, and (ii) to refuse to transfer or issue shares of the Corporation to any person whose acquisition of such shares would, in the opinion of the Board of Directors, result in the Corporation being unable to conform to the requirements of Sections 856 (a)(5) and (6). The purchase price for any shares of stock purchased pursuant hereto shall be equal to the fair market value of the shares as reflected in the closing sale price for the shares, if then listed on a national securities exchange, or the average of the closing sales prices for the shares if then listed on more than one national securities exchange, or if the shares are not then listed on a national securities exchange, the latest bid quotation for the shares if then traded over-the- counter, on the last business day for which closing prices are available immediately preceding the day on which notices of such acquisitions are sent, or, if no such closing sales prices or quotations are available, then the purchase price shall be equal to the net asset value of such stock as
determined by the Board of Directors in accordance with the provisions of applicable law. Payment of the purchase price shall be made in cash by the Corporation to such stockholder for any shares of stock so called for purchase. From and after the date fixed for purchase by the Board of Directors, the holder of any shares of stock so called for purchase shall cease to be entitled to distributions, voting rights and other benefits with respect to such shares, excepting only the right to payment of the purchase price fixed as aforesaid. Any transfer of shares that would prevent the Corporation from continuing to be qualified as a real estate investment trust by virtue of the application of Sections 856 (a)(5) and (6) shall be deemed void ab initio and the intended transferee shall be deemed never to have had an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of such shares shall be deemed, at the option of the Corporation, to have acted as agent on behalf of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation.
2. (a) Whenever it is deemed by the Board of Directors to be
prudent in avoiding the imposition of a penalty on the
Corporation, the Board of Directors may require to be filed
with the Corporation a statement or affidavit from any holder
or proposed transferee of shares of capital stock stating
whether the holder or proposed transferee is a "Disqualified
Person." For purposes of this Section 2 of this Article, a
"Disqualified Person" means (i) the United States, any State
or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality
of any of the foregoing, (ii) any person (other than a
cooperative described in section 521 of the Internal Revenue
Code, as amended ("Code")) which is exempt from tax imposed by
chapter 1 of the Code unless such person is subject to the tax
imposed by section 511 of the Code on its unrelated business
taxable income, (iii) any person that is a rural electrical or
telephone cooperative described in Code section 1381 (a) (2)
(C), and (iv) any other person that may cause the Corporation
to incur a penalty tax if that person were a holder of shares
of capital stock. For purposes of clause (i) of the previous
sentence of this section 2(a) of this Article, a corporation
shall not be treated as an instrumentality of the United
States or of any State or political subdivision thereof, if
(i) all of the activities of such corporation are subject to
the tax imposed by Chapter 1 of the Code, and (ii) a majority
of the board of directors of such corporation is not selected
by the United States or any State or political subdivision
thereof (except that this clause (ii) shall not apply to the
Federal Home Loan Mortgage Corporation). Any contract for the
sale or other transfer of shares of capital stock shall be
subject to this provision. Furthermore, the Board of Directors
shall have the right, but shall not be required, to refuse to
transfer any shares of capital stock purportedly transferred
if a statement or affidavit requested pursuant to this Section
2(a) of this Article has not been received.
(b) A Disqualified Person may not hold shares of capital stock of the Corporation. Any acquisition or purported acquisition of shares of capital stock by a Disqualified Person or that could or would result in the imposition of a penalty tax on the Corporation shall be void ab initio to the fullest extent permitted under applicable law and the intended transferee of the subject shares of capital stock shall be deemed never to have had an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of those shares of capital stock shall be deemed, at the option of the Corporation, to have acted as agent on behalf of the Corporation in acquiring those shares and to hold those shares on behalf of the Corporation.
(c) Whenever it is deemed by the Board of Directors to be prudent in avoiding the imposition of a penalty tax on the Corporation, the Corporation may redeem those shares of capital stock as may be specified by the Board of Directors. The purchase price for any shares of capital stock purchased pursuant hereto shall be equal to the fair market value of the shares as reflected in the closing sales price for the shares, if then listed on a national securities exchange, or the average of the closing sales prices for the shares if then listed on more than one national securities exchange, or if the shares are not then listed on a national securities exchange, the latest bid quotation for the shares if then traded over-the-counter, on the last business day for which closing prices are available immediately preceding the day on which notices of such acquisitions are sent, or, if no such closing sales prices or quotations are available, then the purchase price shall be equal to the net asset value of such capital stock as determined by the Board of Directors in accordance with the provisions of applicable law. Payment of the purchase price shall be made in cash by the Corporation to such stockholder for any shares of capital stock so called for purchase. From and after the date fixed for purchase by the Board of Directors, the holder of any shares of capital stock so called for purchase shall cease to be entitled to distributions, voting rights and other benefits with respect to such shares, excepting only the right to payment of the purchase price fixed as aforesaid.
(d) Nothing contained in this Section 2 of this Article or in any other provision hereof shall limit the authority of the Board of Directors to take any and all other action as it, in its sole discretion, deems necessary or advisable to protect the Corporation or the interest of its stockholders by avoiding the imposition of a penalty tax on the Corporation.
(e) For purposes of this Section 2 of this Article only, the term "person" shall include, but not be limited to, individuals, corporations, limited partnerships, general partnerships, joint stock companies or associations, joint ventures, associations, consortia, companies, trusts, banks, trust companies, land trusts, common law trusts, business trusts, or other entities and governments and agencies and political subdivisions thereof.
(f) If any provision of this Section 2 of this Article or any application of any such provision is determined to be invalid by any federal or State court having jurisdiction over the issue, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of that court.
ARTICLE IX
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
SECOND: The number of directors of the corporation is eleven
(11). The names of the directors are:
John H. Dalton Ted Enloe David G. Fox Jess Hay Kay Bailey Hutchison Paul M. Low Ronn K. Lytle Dr. Charles B. Mullins Lewis T. Sweet, Jr.
Martin Tycher
James M. Wooten
The board of directors of the corporation, at a meeting duly convened and held on April 25, 1989, adopted a resolution in which was set forth the foregoing amendment to the charter, declaring that the said amendment and restatement of the charter was advisable and directing that it be submitted for action thereon by the stockholders at the annual meeting to be held on April 25, 1989.
THIRD: Notice setting forth the said amendment of the charter and that a restatement of the charter was advisable and stating that a purpose of the meeting of the stockholders would be to take action thereon, was given, as required by law, to all stockholders entitled to vote thereon; and like notice was given to all stockholders of the corporation not entitled to vote thereon, whose contract rights as expressly set forth in the charter would be altered by the amendment.
FOURTH: The amendment of the charter of the Corporation as hereinabove set forth and the restatement of the charter were approved by the stockholders of the Corporation at said meeting by the affirmative vote of two-thirds of the one class of stock entitled to vote thereon.
IN WITNESS WHEREOF, LOMAS MORTGAGE CORPORATION has caused these presents to be signed in its name and on its behalf by its Vice President, attested by its Assistant Secretary, on April 25, 1989.
LOMAS MORTGAGE CORPORATION
By: /s/ James N. Sabin
---------------------------------
James N. Sabin
Vice President
Attest:
By: /s/ Angela Marrs
---------------------------------
Angela Marrs
Assistant Secretary
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THE UNDERSIGNED, Vice President of LOMAS MORTGAGE CORPORATION, who executed on behalf of said corporation the foregoing Articles of Amendment and Restatement of Charter, of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said corporation, the foregoing Articles of Amendment and Restatement of Charter to be the corporate act of said corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under the penalties of perjury.
By: /s/ James N. Sabin
---------------------------------
James N. Sabin
Vice President
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ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
* * * * *
LOMAS MORTGAGE CORPORATION (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Maryland, DOES HEREBY CERTIFY to the State Department of Assessments and Taxation of Maryland that:
FIRST: Article II of the Charter of the Corporation is amended to read in its entirety as follows:
NAME
The name of the corporation (which is hereinafter called the "Corporation") is
CAPSTEAD MORTGAGE CORPORATION
SECOND: Article V. Section 1 of the Charter of the Corporation is amended to read in its entirety as follows:
1. The total number of shares of capital stock which the Corporation
shall have authority to issue is Seventy Million (70,000,000), having an
aggregate par value of Two Million Five Hundred Thousand Dollars
($2,500,000.00), of which Fifty Million (50,000,000) shall be common stock
with a par value of One Cent ($.01) per share, amounting in the aggregate
to Five Hundred Thousand Dollars ($500,000.00), and Twenty Million
(20,000,000) shall be preferred stock with a par value of Ten Cents ($.10)
per share, amounting in the aggregate to Two Million Dollars
($2,000,000.00).
THIRD: (a) The total number of shares of capital stock which the Corporation had authority to issue immediately before the Amendment was Fifty Five Million (55,000,000) shares, having an aggregate par value of One Million dollars ($1,000,000.00), of which Fifty Million (50,000,000) shares of the par value of One Cent ($.01) per share, amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000.00), was common stock and Five Million (5,000,000) shares of the par value of Ten Cents ($.10) per share, amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000.00), was preferred stock.
(b) The total number of shares of capital stock which the Corporation has authority to issue as amended is Seventy Million (70,000,000) shares, having an aggregate par value of Two Million Five Hundred Thousand Dollars ($2,500,000.00) of which Fifty Million (50,000,000) shares of par value of One Cent ($.01) per share, amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000.00) is common stock and Twenty Million (20,000,000) shares of the par value of Ten Cents ($.10) per share, amounting in aggregate par value to Two Million Dollars ($2,000,000.00) is preferred stock.
(c) The descriptions of each class of stock of the Corporation are not changed by the Amendment.
FOURTH: The foregoing Amendments to the Charter of the Corporation have been advised by the Board of Directors and approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, LOMAS MORTGAGE CORPORATION has caused this certificate to be signed in its name and on its behalf by its President, and witnessed by its Secretary on November 6, 1989.
WITNESS LOMAS MORTGAGE CORPORATION
/s/ Patricia S. Koening By: /s/ Ronn K. Lytle
---------------------------------- ----------------------------------
Secretary President
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THE UNDERSIGNED, President of LOMAS MORTGAGE CORPORATION who executed on behalf of the Corporation the foregoing Articles of Amendment of which this certificate is a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles of Amendment to be the corporate act of said Corporation and hereby certifies that to the best of his knowledge, information, and belief the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.
/s/ Ronn K. Lytle
----------------------------------
President
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ARTICLES SUPPLEMENTARY
$1.60 CUMULATIVE
PREFERRED STOCK, SERIES A
(CONVERTIBLE AFTER NOVEMBER 6, 1991)
OF CAPSTEAD MORTGAGE CORPORATION
THE COMPANY, a Maryland corporation, having its principal office in Baltimore City, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the Charter, as amended, of the Corporation, the Board of Directors on June 26, 1989 adopted a resolution, creating and authorizing the issuance of a series of 5,465,000 shares of $1.60 Cumulative Convertible Preferred Stock, Series A, and that the powers, designations. preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of the shares of such series are as follows:
1. Designation and Number of Shares. 5,465,000 shares of Preferred Stock of the Corporation, par value $.10 per share, are hereby designated as the "$1.60 Cumulative Preferred Stock, Series A (Convertible after November 6, 1991)" (hereinafter called the "Series A Preferred Stock").
2. Dividends. Holders of shares of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds of the Corporation legally available for payment thereof, cumulative preferential cash dividends at the annual rate of $1.60 per share, and no more (the "Preference Dividend"), payable in equal quarterly installments on each March 31, June 30, September 30 and December 31 (each a "Dividend Payment Date") (unless such day is not a business day, in which event on the next preceding business day), to holders of record as they appear on the register for the Series A Preferred Stock of the Corporation on such record dates, not more than 30 days (or in the case of the Initial Dividend (as defined below), not more than 20 days) preceding the payment dates thereof (each, a "Preferred Record Date"), as may be fixed by the Board of Directors, provided that the first Preference Dividend payable per share of Series A Preferred Stock (the "Initial Dividend") after the Effective Date (as defined below) shall be as follows:
(i) if the Effective Date occurs on or prior to September 30, 1989, the first Dividend Payment Date shall be December 31, 1989 and the Initial Dividend shall be $.40, increased by an amount equal to 5.40 minus that number that results from multiplying 5.40 by a fraction, the numerator of which is the number of days between July 1, 1989 and the Effective Date and the denominator of which is 92;
(ii) if the Effective Date occurs after September 30, 1989 but on or prior to December 10, 1989, the first Dividend Payment Date shall be December 31, 1989 and the Initial Dividend shall be $.40, minus that number that results from multiplying $.40 by a fraction, the numerator of which is the number of days between October 1,1989 and the Effective Date and the denominator of which is 92;
(iii) if the Effective Date occurs after December 10, 1989 but on or prior to December 31, 1989, the first Dividend Payment Date shall be March 31, 1990 and the Initial Dividend shall be $.40, increased by an amount equal $.40 minus that number that results from multiplying $.40 by a fraction, the numerator of which is the number of days between October 1,1989 and the Effective Date and the denominator of which is 92; and
(iv) if the Effective Date occurs after December 31,1989 but on or prior to February 28, 1990, the first Dividend Payment Date shall be March 31, 1990 and the Initial Dividend shall be $.40, minus that number that results from multiplying $.40 by a fraction, the numerator of which is the number of days between January 1, 1990 and the Effective Date and the denominator of which is 90.
Dividends shall be cumulative from the effective date of the merger (the "Merger") of a wholly-owned subsidiary of the Corporation with and into Strategic Mortgage Investments, Inc., a Maryland corporation (the "Effective Date"). So long as any Series A Preferred Stock shall remain outstanding, no dividend shall be declared or paid upon or set apart for payment for the Common Stock of the Corporation, par value $.01 per share (the "Common Stock"), or any other class or series of capital stock of the Corporation ranking junior the Series A Preferred Stock in respect of dividends ("Junior Stock"), nor may any Common Stock or any to other Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any payment made to or available for a sinking fund for the redemption of any shares of such stock), unless in each instance full Preference Dividends on all outstanding shares of Series A Preferred Stock for all past dividend periods required to be paid shall have been paid at the rate fixed therefor and the then current quarterly dividend shall have been paid or declared and sufficient funds set aside for payment thereof. No dividends shall be declared on any other series or class or classes of stock ranking on a parity with the Series A Preferred Stock as to dividends in respect of any dividend period thereof unless there shall likewise be or have been declared and sufficient funds set aside for payment thereof on all shares of Series A Preferred Stock to the time outstanding dividends for all quarter-yearly periods coinciding with or ending before the end of such other period, ratably in proportion to the respective annual dividend rates per annum fixed thereof. Accumulated and unpaid Preference Dividends required to be paid on any shares of Series A Preferred Stock shall not bear interest.
3. Liquidation. The shares of Series A Preferred Stock shall rank prior to the shares of Common Stock and any other class of stock of the Corporation ranking junior to the Series A Preferred Stock upon liquidation, so that in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series A Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any distribution is made to holders of shares of Common Stock or any other such junior stock, an amount equal to $16.40 per share (the "Liquidation Preference") of Series A Preferred Stock plus an amount equal to all Preference Dividends (whether or not declared) accumulated and unpaid on the shares of Series A Preferred Stock to the date of final distribution. If upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation or proceeds thereof, distributable among the holders of shares of Series A Preferred Stock and holders of any other class or series of stock of the Corporation ranking on a parity with shares of Series A Preferred Stock as to payments upon liquidation, shall be insufficient pay in full the respective preferential amounts of shares of Series A Preferred Stock and any other such class or series, then such assets, or the proceeds thereof, shall be distributed among such holders ratably in accordance with the respective amounts which would be payable on such shares if all amounts thereon were paid in full. For the purposes hereof, neither a consolidation or merger of the Corporation with or to any other corporation, nor transfer of all or any part of the Corporation's assets for cash, property or securities shall be considered a liquidation, dissolution or winding-up of the Corporation.
4. Voting Rights. Except as hereinafter expressly provided in this Section 4 and as otherwise required under the laws of the State of Maryland, the holders of shares of Series A Preferred Stock shall have no voting rights.
(A) If and when ever at any time or times all or any portion of the Preference Dividend on Series A Preferred Stock for any two or more quarterly dividends (whether or not consecutive) shall be in arrears and unpaid then, and in any such event, the number of directors constituting the Board of Directors shall be increased by two, and the holders of Series A Preferred Stock, voting separately as a class, shall be entitled at the next annual meeting of stockholders, or at a special meeting of holders of Series A Preferred Stock called as hereinafter provided, to elect two directors to fill such newly created directorships. Each holder shall be entitled to one vote in such election for each share of Series A Preferred Stock held. At such time as all arrears in Preference Dividends on the Series A Preferred Stock shall have been paid in full and Preference Dividends thereon for the current quarterly period shall have been paid or declared and a sum sufficient for the payment thereof set aside, then (i) the voting rights of holders of Series A Preferred Stock described in this paragraph 4(A) shall cease (subject always to revesting of such voting rights in the event of each and every similar future arrearages in Preference Dividends), (ii) the term of the directors then in office as a result of the voting rights described in this paragraph 4(A) shall terminate and (iii) the number of directors shall be such number as may be provided for in the bylaws respective of any increase made pursuant to this paragraph 4(A).
(B) At any time when the voting right described in paragraph 4(A) shall have vested and remained in the holders of Series A Preferred Stock, such voting right may be exercised initially either at a special meeting of holders of Series A Preferred Stock or at any annual or special stockholders' meeting called for the purpose of electing directors, but thereafter it shall be exercised only at annual stockholders' meetings. If such right shall no already have been initially exercised, the Secretary of the Corporation may, and upon the written request of the holders of record of at least 10% of the shares of Series A Preferred Stock then outstanding shall, call a special meeting of the holders of Series A Preferred Stock for the purpose of electing a director. Such meeting shall be held at the earliest practicable date upon the notice required for special meetings of stockholders of the Corporation, or, if none, at a time and place designated by the Secretary of the Corporation.
(C) At any meeting held for the purpose of electing directors at which the holders of Series A Preferred Stock shall have the right to elect directors as provided in paragraph 4(A) above, the presence in person or by proxy of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock shall be required and be sufficient to constitute a quorum of Series A Preferred Stock for the election of directors by Series A Preferred Stock. At any such meeting or adjournment thereof, (i) the absence of a quorum of the holders of Series A Preferred Stock shall not prevent the election of directors other than the directors to be elected by the holders of Series A Preferred Stock and (ii) in the case of Series A Preferred stock entitled to vote for the election of directors, a majority of the holders present in person or by proxy of such class shall have the power to adjourn the meeting for the election of the directors that the holders of such class are entitled to elect, from time to time, until a quorum shall be present, and notice of such adjourned meeting need not be given unless otherwise required by law, provided that nothing herein shall affect the conduct of the meeting with respect to stockholders of any other class.
(D) Any director who shall have been elected by holders of Series A Preferred Stock as a class shall hold office for a term expiring (subject to the earlier termination of the default in Preference Dividends) at the next annual meeting of stockholders, and during such term may be removed at any time, either with or without cause, only by the affirmative votes of holders of record of a majority of the votes of the shares of Series A Preferred Stock then outstanding at a special meeting of such stockholders called for such purpose. Any vacancy created by such removal may also be filled at such meeting.
(E) Any vacancy caused by the death, resignation, or expiration of the term (except upon a
termination of the default in dividends) of a director who shall have been elected by the holders of Series A Preferred Stock may be filled only by the holders of Series A Preferred Stock at a meeting called for such purpose. Such meeting shall be called by the Secretary of the Corporation at the earliest practicable date after any such death, resignation or expiration of term and in any event within ten days after receipt of a written request therefor, signed by the holders of record of at least 25% of the votes of the then outstanding shares of Series A Preferred Stock.
5. Limitations on Certain Actions. So long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote at a meeting of at least 66 2/3% in number of shares of Preferred Stock then outstanding, directly or indirectly or through merger or consolidation with any other corporation:
(i) create any class or classes of stock ranking prior to Series A Preferred Stock either as to dividends or as to amounts distributable upon liquidation or increase the authorized number of shares of any class or classes of stock ranking prior to Series A Preferred Stock either as to dividends or as to amounts distributable upon liquidation;
(ii) authorize any reclassification of Series A Preferred Stock;
(iii) alter or repeal any of the provisions of the charter (including the provisions of this Paragraph 5) so as to affect adversely the preferences, special rights or powers of the Series A Preferred Stock; or
(iv) from June 26, 1989 to sixty days after the second anniversary of the Effective Date, repurchase or acquire an aggregate of 20% or more of (x) the aggregate number of shares of Common Stock outstanding on June 26, 1989 or (y) any class of Junior Stock that maybe issued on or after June 26, 1989.
Except as otherwise provided herein or otherwise required by law, no consent of the holders of Series A Preferred Stock shall be required for (a) the creation of any indebtedness of any kind of the Corporation, (b) the creation, or increase or decrease in the amount, of any class or series of stock of the Corporation ranking on a parity with the Series A Preferred Stock as to dividends or as to amounts distributable upon liquidation, or any other class or series of stock of the Corporation not ranking prior to the Series A Preferred Stock as to dividends or as to amounts distributable upon liquidation, (c) any increase or decrease in the amount of authorized Common Stock or any increase, decrease or change in the par value thereof or in any other terms thereof or (d) any other action by the Corporation.
6. Redemption. Shares of Series A Preferred Stock will be redeemable at the option of the Corporation by resolution of its Board of Directors, passed by at least a majority of the members of the Board, at any time after the fifth anniversary of the Effective Date, in whole or in part, for cash in an amount per share so redeemed equal to the aggregate Liquidation Preference of such shares plus all Preference Dividends on such shares (whether or not earned or declared) accumulated and unpaid to the date of such redemption (the "Redemption Date"). If less than all shares of Series A Preferred Stock are to be redeemed, the shares of such series to be redeemed shall be determined by lot or in such other equitable manner as the Board of Directors may determine.
The Corporation shall mail to each holder of the Series A Preferred Stock written notice of any redemption not less than 30 nor more than 60 days prior to the Redemption Date. Such notice shall specify the Redemption Date, the place or places where certificates for shares of Series A Preferred Stock are to be
surrendered, the serial number or numbers of the certificates for shares to be redeemed (if less than all shares of Series A Preferred Stock are to be redeemed), the aggregate amount of consideration to be received in exchange for the shares to be redeemed, that shares of Series A Preferred Stock may be convertible into Common Stock, and that dividends on Series A Preferred Stock to be redeemed on the Redemption Date shall cease to accrue on the Redemption Date. Upon surrender of Series A Preferred Stock in accordance with said notice (properly endorsed or assigned for transfer if the Corporation shall so require and the notice shall so state), such Series A Preferred Stock shall be redeemed by the Corporation at the price and in the manner as aforesaid. The Corporation shall not be required to register a transfer of any shares of Series A Preferred Stock that have been redeemed after the Redemption Date in respect thereof.
If, on the Redemption Date, the funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares so called for redemption, then notwithstanding that any certificates for shares of Series A Preferred Stock so called for redemption shall not have been surrendered for redemption, the shares represented thereby shall no longer be deemed outstanding, the right to receive dividends thereon shall cease to accrue from and after the Redemption Date and all rights of holders of the shares of Series A Preferred Stock so called for redemption shall forthwith, after such Redemption Date, cease and terminate excepting only the right of the holders thereof to receive the redemption price therefor but without interest. The redemption price shall be delivered to the persons entitled thereto upon surrender to the Corporation or its agent appointed for that purpose of the certificates for the shares of Series A Preferred Stock being redeemed therefor. Any moneys so set aside by the Corporation and unclaimed at the end of three years from the date designated for such redemption shall revert to the general funds of the Corporation, after which reversion the holders of such shares so called for redemption shall look only to the Corporation for payment of the redemption price. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time.
If, after the giving of notice of redemption but before the Redemption Date specified therein, the Corporation shall deposit with a bank or trust company in The City of New York, having a capital surplus of at least $50,000,000, in trust to be applied to the redemption of the shares of Series A Preferred Stock so called for redemption the funds necessary for such redemption, then from and after the date of such deposit all rights of the holders of the shares of Series A Preferred Stock so called for redemption shall cease and terminate, excepting only the right to receive the redemption price therefor, but without interest, and the right to exercise on or before the Redemption Date privileges of conversion, if any, not theretofore expired, and such shares shall not be deemed to be outstanding. Any funds so deposited which shall not be required for such redemption because of the exercise of any such right of conversion subsequent to the date of such deposit shall be returned to the Corporation. In case the holders of shares of Series A Preferred Stock that shall have been called for redemption shall not, within three years after the date fixed for redemption, claim the amount deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time.
8. Conversion. The holders of shares of Series A Preferred Stock shall have conversion rights as follows:
(A) The shares of Series A Preferred Stock shall be convertible, at the option of the respective
holders thereof, at any time after the second anniversary of the Effective Date, at the office of the corporation or any transfer agent for such shares into fully paid and non-assessable shares of Common Stock of the Corporation, at the conversion raze, determined as hereinafter provided, in effect at the time of conversion. The Corporation shall make no payment or adjustment on account of any dividends accrued on shares of Series A Preferred Stock surrendered for conversion. In case of any call for redemption of any shares of Series A Preferred Stock, such right of conversion shall terminate, as to any shares designated for redemption, at the close of business on the fifth business day preceding the date fixed for redemption, unless default is made in the payment of the redemption price.
(B) Before any holder of Series A Preferred Stock shall be entitled to convert the same into shares of Common Stock, he shall surrender (i) the certificate or certificates therefor, duly endorsed or accompanied by proper instruments of transfer, and (ii) if such surrender is made after a Preferred Record Date and before the next succeeding record date for the payment of quarterly dividends on the Common Stock (any such Preferred Record Date, an "Intervening Preferred Date"), a cashiers check or other guaranteed funds in an amount equal to the aggregate amount of Preference Dividends received or receivable on the shares of Series A Preferred Stock to be converted on the Dividend Payment Date to which such Intervening Preferred Date related, at the office of the Corporation or of any transfer agent for the Series A Preferred Stock, and shall give written notice to the Corporation at such office that he elects to convert the same and shall state in writing therein the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued. The Corporation, as soon as practicable thereafter, shall issue and deliver to such office to such holder or to his nominee or nominees, certificates for the number of full shares of Common Stock to which he shall be entitled as aforesaid, together with cash in lieu of any fraction of a share as hereinafter provided. Such conversion shall be deemed to have been made as of the date of such surrender of the certificate or certificates representing the shares of Series A Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on said date.
(C) The conversion rate shall be .9 share of Common Stock for each share of Series A Preferred Stock converted, such rate being subject to adjustment from time to time as follows:
(i) If the Corporation shall at any time issue additional shares of Common Stock as a dividend upon any outstanding stock of the corporation other than the Series A Preferred Stock, or subdivide the outstanding shares of Common Stock, or combine the outstanding shares of Common Stock, the conversion rate theretofore in effect shall be proportionately increased or decreased, as the case may be, effective immediately after the opening of business on the day following the record date for the determination of stockholders entitled to such dividend, or at the close of business on the date of such subdivision or combination, as the case may be.
(ii) If the Corporation shall at any time issue rights or warrants to all holders of its outstanding Common Stock entitling them (for a period expiring within 45 days after the record date referred to below) to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share of the Common Stock on the record date mentioned below, the conversion rate theretofore in effect immediately prior to such record date shall be adjusted by multiplying such conversion rate by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares of Common Stock so offered would purchase at such current market price, such adjustment to become effective immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such rights or warrants. For the purpose of any computation under this subsection (ii) or subsection (iii) below, the current market price per share of Common Stock at any record date shall be deemed to be the average of the daily closing prices for the thirty (30) consecutive business days preceding the day in question. The closing price per share of Common Stock for each day shall be the last reported sale price regular way, or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way in either case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices as furnished by the National Quotation Bureau, Incorporated or similar organization if the National Quotation Bureau, Incorporated is no longer reporting such information.
(iii) If the Corporation distributes to all holders of its Common Stock evidences of indebtedness or securities or assets (excluding cash dividends payable out of consolidated earnings or earned surplus or dividends payable in shares of Common Stock) or rights or warrants to subscribe or purchase (excluding those referred to in clause (ii) above), the conversion rate in effect immediately prior to the record date mentioned below shall be adjusted by multiplying such conversion rate by a fraction, of which the numerator shall be the current market price per share of Common Stock on the date of such distribution and of which the denominator shall be such current market price per share of the Common Stock, less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive) of the portion of the assets or securities or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock, such adjustment to become effective immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such distribution. For purposes of this clause (iii), consolidated earnings or earned surplus shall be computed by adding thereto all charges against earned surplus on account of dividends paid in shares of Common Stock in respect of which the conversion rate has been adjusted, all as determined by the independent public accountants then regularly auditing the accounts of the Corporation, whose determination shall be conclusive.
(iv) In the event of a declaration of a dividend by the Corporation without the fixing of a record date for the determination of stockholders entitled thereto, the first business day during which the stock transfer books of the corporation shall be closed for the purpose of such determination shall be deemed to be the record date.
(D) No fractional shares of Common Stock shall be issued upon the conversion of shares of Series A Preferred Stock. If any fractional interest in a share of Common Stock would, except for the provisions of this paragraph 8(D), be deliverable upon the conversion of any shares of Series A Preferred Stock, the Corporation, in lieu of delivering a fractional share therefor, shall make a payment to the holder of such surrendered share of Series A Preferred Stock of an amount in cash equal (computed to the nearest cent) to such fraction multiplied by the closing price per share of Common Stock (as such term is defined in the final sentence of Section 8(C)(ii)) on the day of conversion.
(E) Whenever the conversion rate is adjusted, as herein provided, the Corporation shall
forthwith maintain at its office and file with the transfer agent or agents for shares of Series A Preferred Stock and any securities exchange or exchanges on which such shares are listed, a statement signed by the President or Vice President of the Corporation and by its Treasurer or an Assistant Treasurer, showing in detail the facts requiring such adjustment and the conversion rate after such adjustment. Such transfer agent or agents and securities exchange or exchanges shall be under no duty or responsibility with respect to any such statement except to exhibit the same from time to time to any holder of shares of Series A Preferred Stock desiring an inspection thereof.
(F) In case of any capital reorganization or any reclassification of the Common Stock of the Corporation or in case of a consolidation, merger or statutory share exchange of the Corporation with or into another corporation or the conveyance of all or substantially all of the assets of the Corporation to another corporation, each share of Series A Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property (including cash) to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such shares of Series A Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation, merger or conveyance; and, in any such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the shares of Series A Preferred Stock to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the conversion rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the shares of Series A Preferred Stock.
(G) In the event that:
(i) the Corporation shall take a record of the holders of shares of its Common Stock for the purpose of entitling them to receive a dividend, or any other distribution, payable otherwise than in cash out of consolidated earnings or earned surplus; or
(ii) the Corporation shall take a record of the holders of shares of its Common Stock for the purpose of entitling them to subscribe for or purchase any shares of stock of any class or to receive any other rights or warrants; or
(iii) there shall be any capital reorganization of the Corporation, reclassification of the Common Stock of the Corporation (other than a subdivision or combination thereof), consolidation or merger of the Corporation with or into another corporation or the conveyance of all or substantially all of the assets of the Corporation to another corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
transfer agent or agents for Series A Preferred Stock, and to the holders of
record of the outstanding shares of Series A Preferred Stock, at least fifteen
(15) days prior to the date hereinafter specified, or if notice is given to
holders of Common Stock, no later than the date such notice is given, a notice
stating the date on which (x) a record is to be taken for the purpose of such
dividend, distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place and the date, if any, that is to be fixed, as of which holders of
shares of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.
(H) The Corporation shall obtain and keep in force such permits or other authorizations as may be required by law in order to enable the Corporation validly to issue and deliver such number of shares of its Common Stock as shall from time to time be sufficient to effect the conversion of all shares of Series A Preferred Stock from time to time outstanding. The Corporation at all times shall reserve and keep available, out of its authorized but unissued Common Stock, solely for the purposes of effecting the conversion of the shares of Series A Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all shares of Series A Preferred Stock from time to time outstanding.
(I) The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series A Preferred Stock pursuant hereto. The Corporation, however, shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred Stock so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the corporation the amount of any tax or has established, to the satisfaction of the corporation, that such tax has been paid.
9. Parity With Respect to Dividends and Distribution Upon Liquidation. The Series A Preferred Stock shall rank on a parity with any other series of Preferred Stock (not by its terms made junior or senior to the Series A Preferred Stock) with respect to the payment of dividends and shall rank on a parity with any and all series of Preferred Stock (not by its terms made junior or senior to the Series A Preferred Stock) as to distribution of assets in liquidation.
IN WITNESS WHEREOF, the undersigned have caused the Articles to be executed this 6th day of November, 1989.
WITNESS CAPSTEAD MORTGAGE CORPORATION /s/ Patricia S. Koening By: /s/ Ronn Lytle --------------------------- ---------------------------------- Secretary President |
THE UNDERSIGNED, President of the CORPORATION, who executed on behalf of the Corporation Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation of foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.
/s/ Ronn Lytle
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President
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ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
CAPSTEAD MORTGAGE CORPORATION (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Maryland, DOES HEREBY CERTIFY to the State Department of Assessments and Taxation of Maryland that:
FIRST: Article V, Section 1 of the Charter of the Corporation is amended to read in its entirety as follows:
1. The total number of shares of capital stock which the Corporation shall have authority to issue is Two Hundred Million (200,000,000), having an aggregate par value of Eleven Million Dollars ($11,000,000.00), of which One Hundred Million (100,000,000) shall be common stock with a par value of One Cent ($.01) per share, amounting in the aggregate to One Million Dollars ($1,000,000.00), and One Hundred Million (100,000,000) shall be preferred stock with a par value of Ten Cents ($.10) per share, amounting in the aggregate to Ten Million Dollars ($10,000,000.00). The Board of Directors may classify and reclassify any unissued shares of capital stock by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares of stock.
SECOND: (a) The total number of shares of capital stock which the Corporation had authority to issue immediately before the Amendment was Seventy Million (70,000,000) shares, having an aggregate par value of Two Million Five Hundred Thousand Dollars ($2,500,000.00), of which Fifty Million (50,000,000) shares of the par value of One Cent ($.01) per share, amounting in aggregate par value to Five Hundred Thousand Dollars ($500,000.00), was common stock and Twenty Million (20,000,000) shares of the par value of Ten Cents ($.10) per share, amounting in aggregate par value to Two Million Dollars ($2,000,000.00), was preferred stock.
(b) The total number of shares of capital stock which the Corporation has authority to issue as amended is Two Hundred Million (200,000,000) shares, having an aggregate par value of Eleven Million Dollars ($11,000,000.00), of which One Hundred Million (100,000,000) shares of the par value of One Cent ($.01) per share, amounting in aggregate par value to One Million Dollars ($1,000,000.00), is common stock and One Hundred Million (100,000,000) shares of the par value of Ten Cents ($. 10) per share, amounting in aggregate par value to Ten Million Dollars ($10,000,000.00), is preferred stock.
(c) The descriptions of each class of stock of the Corporation are not changed by the Amendment.
THIRD: The foregoing Amendments to the Charter of the Corporation have been advised by the Board of Directors and approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, CAPSTEAD MORTGAGE CORPORATION has caused this certificate to be signed in its name and on its behalf by its President, and witnessed by its Secretary on December 1, 1992.
WITNESS CAPSTEAD MORTGAGE CORPORATION
/s/ Andrew F. Jacobs By: /s/ Ronn K. Lytle
----------------------------------- -----------------------------------
Secretary President
|
THE UNDERSIGNED, President of CAPSTEAD MORTGAGE CORPORATION, who executed on behalf of the Corporation the foregoing Articles of Amendment of which this certificate is a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles of Amendment to be the corporate act of said Corporation and hereby certifies that to the best of his knowledge, information, and belief the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.
/s/ Ronn K. Lytle
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President
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ARTICLES SUPPLEMENTARY
$1.26 CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES B
OF CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION, a Maryland corporation, having its principal office in Baltimore City, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the Charter, as amended, of the Corporation, the Board of Directors on July 8, 1992 adopted a resolution, creating and authorizing the issuance of a series of 31,000,000 shares of $1.26 Cumulative Convertible Preferred Stock, Series B, and that the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of the shares of such series are as follows:
1. Designation and Number of Shares. Thirty-one million (31,000,000) shares of Preferred Stock of the Corporation, par value $.10 per share, are hereby designated as the "$1.26 Cumulative Convertible Preferred Stock, Series B" (hereinafter called the "Series B Preferred Stock").
2. Dividends. Holders of shares of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds of the Corporation legally available for payment thereof, cumulative preferential cash dividends at the annual rate of $1.26 per share, and no more (the "Preference Dividend"), payable in equal monthly installments of $.105 in arrears on the last trading day of each calendar month (each a "Dividend Payment Date"), to holders of record as they appear on the register for the Series B Preferred Stock of the Corporation on such record dates, not more than 10 days preceding the payment dates thereof (each, a "Preferred Record Date"), as may be fixed by the Board of Directors, provided that, the first Preference Dividend payable per share of Series B Preferred Stock (the "Initial Dividend") after the Effective Date (as defined below) shall be as follows:
(i) if the Effective Date occurs during the month of October 1992, the first Dividend Payment Date shall be October 30, 1992 or the earliest practicable date thereafter, and the Initial Dividend shall be that amount by which $.105 exceeds the actual amount distributed per share on the common stock (the "TC Stock") of Tyler Cabot Mortgage Securities Fund, Inc. ("Tyler Cabot") during the month of October 1992; and
(ii) if the Effective Date occurs after October 31, 1992, the first Dividend Payment Date shall be the last trading day of the month in which the Effective Date occurs or the earliest practicable date thereafter, and the Initial Dividend shall be that amount equal to the product of $.105 multiplied by a fraction, the numerator of which shall be the number of days in the period commencing with and including the day immediately following the Effective Date up to and including the last day of the month in which the Effective Date occurs and the denominator of which shall be the total number of days in the month in which the Effective Date occurs.
Dividends shall be cumulative from the effective date of the merger (the "Merger") of Tyler Cabot with and into the Corporation (the "Effective Date"). So long as any Series B Preferred Stock shall remain outstanding, no dividend shall be declared or paid upon or set apart for payment for the Common Stock of
the Corporation, par value $.01 per share (the "Common Stock"), or any other class or series of capital stock of the Corporation ranking junior to the Series B Preferred Stock in respect of dividends ("Junior Stock"), nor may any Common Stock or any other Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any payment made to or available for a sinking fund for the redemption of any shares of such stock), unless in each instance full Preference Dividends on all outstanding shares of Series B Preferred Stock for all past dividend periods required to be paid shall have been paid at the rate fixed therefor and the then current monthly dividend shall have been paid or declared and sufficient funds set aside for payment thereof. No dividends shall be declared on any other series or class or classes of stock ranking on a parity with the Series B Preferred Stock as to dividends (including, without limitation, outstanding shares of the Corporation's $1.60 Cumulative Preferred Stock, Series A (the "Series A Preferred Stock")) in respect of any dividend period thereof unless there shall likewise be or have been declared and sufficient funds set aside for payment thereof on all shares of Series B Preferred Stock at the time outstanding dividends for all monthly periods coinciding with or ending before the end of such other period, ratably in proportion to the respective annual dividend rates per annum fixed therefor. Accumulated and unpaid Preference Dividends required to be paid on any shares of Series B Preferred Stock shall not bear interest. As used in these Articles Supplementary, "trading day" shall mean a day that is neither a Saturday nor a Sunday nor a day on which the New York Stock Exchange is closed.
3. Liquidation. The shares of Series B Preferred Stock shall rank prior to the shares of Common Stock and any other class of stock of the Corporation ranking junior to the Series B Preferred Stock upon liquidation, so that in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series B Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any distribution is made to holders of shares of Common Stock or any other such junior stock, an amount equal to $11.38 per share (the "Liquidation Preference") of Series B Preferred Stock plus an amount equal to the Preference Dividends (whether or not declared) accumulated and unpaid on the shares of Series B Preferred Stock to the date of final distribution. If upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation or proceeds thereof, distributable among the holders of shares of Series B Preferred Stock and holders of any other class or series of stock of the Corporation ranking on a parity with shares of Series B Preferred Stock as to payments upon liquidation (including, without limitation, the Series A Preferred Stock), shall be insufficient to pay in full the respective preferential amounts of shares of Series B Preferred Stock and any other such class or series, then such assets, or the proceeds thereof, shall be distributed among such holders ratably in accordance with the respective amounts which would be payable on such shares if all amounts thereon were paid in full. For the purposes hereof, neither a consolidation or merger of the Corporation with or into any other corporation, nor a transfer of all or any part of the Corporation's assets for cash, property or securities shall be considered a liquidation, dissolution or winding-up of the Corporation.
4. Voting Rights. Except as hereinafter expressly provided in this Section 4 and Section 5 and as otherwise required under the laws of the State of Maryland, the holders of shares of Series B Preferred Stock shall have no voting rights.
(A) If and whenever at any time or times all or any portion of the
Preference Dividends on Series B Preferred Stock for any two monthly
dividends, whether or not consecutive, shall be in arrears and unpaid then,
and in any such event, the number of directors constituting the Board of
Directors shall be increased by two, and the holders of Series B Preferred
Stock, voting separately as a class, shall be entitled at the next annual
meeting of stockholders, or at a special meeting of holders of Series B
Preferred Stock called as hereinafter provided, to elect two directors to
fill such newly created directorships. Each holder shall be entitled to one
vote in such election for each share of Series B Preferred Stock held. At
such time as all arrearages in Preference Dividends on the Series B
Preferred
Stock shall have been paid in full and Preference Dividends thereon for the current monthly period shall have been paid or declared and a sum sufficient for the payment thereof set aside, then (i) the voting rights of holders of Series B Preferred Stock described in this paragraph 4(A) shall cease (subject always to revesting of such voting rights in the event of each and every similar future arrearages in Preference Dividends), (ii) the term of the directors then in office as a result of the voting rights described in this paragraph 4(A) shall terminate and (iii) the number of directors shall be reduced by the number of Directors then in office elected pursuant to this paragraph 4(A). A vacancy in the class of directors elected pursuant to this paragraph 4(A) shall be filled by the remaining director of the class, unless such vacancy is filled pursuant to the final sentence of paragraph 4(D).
(B) At any time when the voting right described in paragraph 4(A)
shall have vested and shall remain in the holders of Series B Preferred
Stock, such voting right may be exercised initially either at a special
meeting of holders of Series B Preferred Stock or at any annual or special
stockholders' meeting called for the purpose of electing directors, but
thereafter it shall be exercised only at annual stockholders' meetings. If
such voting right shall not already have been initially exercised, the
Secretary of the Corporation may, and upon the written request of the
holders of record of at least 10% of the shares of Series B Preferred Stock
then outstanding shall, call a special meeting of the holders of Series B
Preferred Stock for the purpose of electing two directors pursuant to
paragraph 4(A), and notice thereof shall be given to the holders of Series
B Preferred Stock in the same manner as that required to be given to
holders of Common Stock for the annual meeting of stockholders. Such
meeting shall be held at the earliest practicable date upon the notice
required for special meetings of stockholders of the Corporation, or, if
none, at a time and place designated by the Secretary of the Corporation.
(C) At any meeting held for the purpose of electing directors at which the holders of Series B Preferred Stock shall have the right to elect directors as provided in paragraph 4(A) above, the presence in person or by proxy of the holders of at least thirty-five percent (35%) of the then outstanding shares of Series B Preferred Stock shall be required and be sufficient to constitute a quorum of Series B Preferred Stock for the election of directors by Series B Preferred Stock, and the vote of the holders of a majority of such shares so present in person or by proxy at any such meeting at which there shall be such a quorum shall be required and be sufficient to elect the members of the Board of Directors which the holders of Series B Preferred Stock are entitled to elect as hereinabove provided. At any such meeting or adjournment thereof, (i) the absence of a quorum of the holders of Series B Preferred Stock shall not prevent the election of directors other than the directors to be elected by the holders of Series B Preferred Stock and (ii) in the case of Series B Preferred Stock entitled to vote for the election of directors, a majority of the holders present in person or by proxy of such class, if constituting less than a quorum as hereinabove provided, shall have the power to adjourn the meeting for the election of the directors that the holders of such class are entitled to elect, from time to time, until a quorum shall be present, and notice of such adjourned meeting need not be given unless otherwise required by law, provided that nothing herein shall affect the conduct of the meeting with respect to stockholders of any other class.
(D) Any director who shall have been elected or appointed pursuant to this Section 4 shall hold office for a term expiring (subject to the earlier termination of the default in Preference Dividends) at the next annual meeting of stockholders, and during such term may be removed at any time, either with or without cause, only by the affirmative vote of the holders of record of a majority of the shares of Series B Preferred Stock then outstanding at a special meeting of such stockholders called for such purpose. Any vacancy created by such removal may also be filled at such meeting.
5. Limitations on Certain Actions. (A) So long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote of the holders of at least 66 2/3% of the shares of Series B Preferred Stock then outstanding, given in person or by proxy at a meeting called for the purpose at which the holders of Series B Preferred Stock shall vote separately as a class, directly or indirectly or through merger or consolidation with any other corporation:
(i) create any class or classes of stock ranking prior to Series B Preferred Stock either as to dividends or as to amounts distributable upon liquidation or increase the authorized number of shares of any class or classes of stock ranking prior to Series B Preferred Stock either as to dividends or as to amounts distributable upon liquidation;
(ii) authorize any reclassification of Series B Preferred Stock; or
(iii) amend, alter or repeal any of the provisions of the Charter of the Corporation (including the provisions of this paragraph 5) so as to affect adversely the preferences, special rights or voting powers of the Series B Preferred Stock.
(B) So long as 5,900,000 or more shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote of the holders of at least a majority of the shares of Series B Preferred Stock then outstanding, given in person or by proxy at a meeting called for the purpose at which the holders of Series B Preferred Stock shall vote separately as a class, directly or indirectly effect the sale, lease or conveyance by the Corporation of all or substantially all of its property or business, or its consolidation or merger with any other corporation unless the corporation resulting from such consolidation or merger will have after such consolidation or merger no class of shares either authorized or outstanding ranking prior to or on a parity with the Series B Preferred Stock except the same number of shares ranking prior to or on a parity with the Series B Preferred Stock and having the same rights and preferences as the shares of the Corporation authorized and outstanding immediately preceding such consolidation or merger, and each holder of Series B Preferred Stock immediately preceding such consolidation or merger shall receive the same number of shares, with the same rights and preferences, of the resulting corporation.
Except as otherwise provided herein or otherwise required by law, no consent of the holders of Series B Preferred Stock shall be required for (a) the creation of any indebtedness of any kind of the Corporation, (b) the creation, or increase or decrease in the amount, of any class or series of stock of the Corporation ranking on a parity with the Series B Preferred Stock as to dividends or as to amounts distributable upon liquidation, or any other class or series of stock of the Corporation not ranking prior to the Series B Preferred Stock as to dividends or as to amounts distributable upon liquidation, or (c) any increase or decrease in the amount of authorized Common Stock or any increase, decrease or change in the par value thereof.
6. Redemption. Shares of Series B Preferred Stock will be redeemable at the option of the Corporation by resolution of its Board of Directors, passed by at least a majority of the members of the Board, at any time after the fifth anniversary of the Effective Date, in whole or in part, for cash in an amount per share so redeemed equal to $12.50 per share plus all Preference Dividends on such shares (whether or not earned or declared) accumulated and unpaid to the date of such redemption (the "Redemption Price"). If less than all shares of Series B Preferred Stock are to be redeemed, (i) all arrearages in Preference Dividends on all outstanding shares of Series B Preferred Stock must be paid in full prior to any such partial redemption and (ii) the shares of such series to be redeemed shall be determined by lot or in such other equitable manner as the Board of Directors may determine.
The Corporation shall mail to each holder of the Series B Preferred Stock written notice of any redemption not less than 30 nor more than 60 days prior to the date fixed for such Redemption (the "Redemption Date"). Such notice shall specify the Redemption Date, the place or places where certificates for shares of Series B Preferred Stock are to be surrendered, the serial number or numbers of the certificates for shares to be redeemed (if less than all shares of Series B Preferred Stock are to be redeemed), the Redemption Price, that shares of Series B Preferred Stock may be convertible into Common Stock, and that dividends on Series B Preferred Stock to be redeemed on the Redemption Date shall cease to accrue on the Redemption Date. Upon surrender of Series B Preferred Stock in accordance with said notice (properly
endorsed or assigned for transfer if the Corporation shall so require and the notice shall so state), such Series B Preferred Stock shall be redeemed by the Corporation at the Redemption Price and in the manner as aforesaid. The Corporation shall not be required to register a transfer of any shares of Series B Preferred Stock that have been redeemed after the Redemption Date in respect thereof.
If, at any time after the giving of notice of redemption but before the Redemption Date specified therein, the Corporation shall deposit with a bank or trust company in the United States, having a capital surplus of at least $50,000,000, in trust to be applied to the redemption of the shares of Series B Preferred Stock called for redemption the funds necessary for such redemption, then from and after the date of such deposit all rights of the holders of the shares of Series B Preferred Stock so called for redemption shall cease and terminate, excepting only (i) the right to receive the Redemption Price therefor, but without interest, and (ii) the right to exercise on or before the Redemption Date privileges of conversion set forth in paragraph 7, and such shares shall not be deemed to be outstanding. Any funds so deposited which shall not be required for such redemption because of the exercise of any such right of conversion subsequent to the date of such deposit shall be returned to the Corporation. In case the holders of shares of Series B Preferred Stock that shall have been called for redemption shall not, within five years after the date fixed for redemption, claim the amount deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time.
7. Conversion. The holders of shares of Series B Preferred Stock shall have conversion rights as follows:
(A) The shares of Series B Preferred Stock shall be convertible, at the option of the respective holders thereof, at any time at the office of the Corporation or the transfer agent for such shares into fully paid and non-assessable shares of Common Stock of the Corporation, at the conversion rate, determined as hereinafter provided, in effect at the time of conversion. In case of any call for redemption of any shares of Series B Preferred Stock, such right of conversion shall terminate, as to any shares designated for redemption, at the close of business on the fifth trading day preceding the Redemption Date unless default is made in the payment of the Redemption Price
(B) Before any holder of Series B Preferred Stock shall be entitled to convert the same into shares of Common Stock, he shall surrender (i) the certificate or certificates therefor, duly endorsed or accompanied by proper instruments of transfer, and (ii) if such surrender is made after one or more Preferred Record Dates and on or before the record date for the payment of quarterly dividends on the Common Stock for the quarter in which such Preferred Record Date (or Dates) falls (or fall) (any such Preferred Record Date, an "Intervening Preferred Date"), a cashier's check or other guaranteed funds in an amount equal to the aggregate amount of Preference Dividends declared or received on the shares of Series B Preferred Stock on the Dividend Payment Date or Dates to which such Intervening Preferred Date or Dates related, at the office of the Corporation or of the transfer agent for the Series B Preferred Stock, and shall give written notice to the Corporation at such office that he elects to convert the same and shall state in writing therein the name or names in which he wishes the certificate or certificates for shares of Common Stock to be issued. The Corporation, as soon as practicable thereafter, shall issue and deliver at such office to such holder or to his nominee or nominees, certificates for the number of full shares of Common Stock to which he shall be entitled as aforesaid, together with cash in lieu of any fraction of a share as hereinafter provided. Such conversion shall be deemed to have been made as of the date of such surrender of the certificate or certificates representing the shares of Series B Preferred Stock to be converted and, if applicable, the cashier's check or other guaranteed funds, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on said date.
(C) The conversion rate shall be .3196 share of Common Stock for each share of Series B Preferred Stock converted, such rate being subject to adjustment from time to time as follows
(i) If the Corporation shall at any time issue additional shares of Common Stock as a dividend upon any outstanding stock of the Corporation other than the Series B Preferred Stock, or subdivide the outstanding shares of Common Stock, or combine the outstanding shares of Common Stock, the conversion rate in effect immediately prior thereto shall be adjusted so that each share of Series B Preferred Stock shall thereafter be convertible into the total number of shares of Common Stock which the holder of a share of Series B Preferred Stock would have held immediately after the happening of any of the aforesaid events had such share been converted immediately prior to the happening of such event. Such adjustment shall become effective immediately after the opening of business on the record date for the determination of stockholders entitled to such dividend, or on the effective date of such subdivision or combination, as the case may be.
(ii) If the Corporation shall at any time issue rights or warrants to all holders of its outstanding Common Stock entitling them (for a period expiring within 45 days after the record date referred to below) to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share of the Common Stock on the record date mentioned below, the conversion rate theretofore in effect immediately prior to such record date shall be adjusted by multiplying such conversion rate by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the record date referred to below plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares of Common Stock so offered would purchase at such current market price, such adjustment to become effective immediately after the opening of business on the record date for the determination of stockholders entitled to receive such rights or warrants. For the purpose of any computation under this subsection (ii) or subsection (iii) below, the current market price per share of Common Stock at any record date shall be deemed to be the average of the daily closing prices for the 30 consecutive trading days commencing 45 trading days prior to the day in question. The closing price per share of Common Stock for each day shall be the last reported sale price regular way, or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way in either case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or if not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices as furnished by the National Quotation Bureau, Incorporated or similar organization if the National Quotation Bureau, Incorporated is no longer reporting such information.
(iii) If the Corporation distributes to holders of its Common Stock
(i) any rights or warrants to subscribe for or purchase any security of
the Corporation (other than those referred to in Section 7(C) (ii) above)
or evidences of indebtedness or securities or (ii) cash or other assets
(excluding regular quarterly cash dividends payable out of consolidated
earnings or earned surplus or dividends payable in shares of Common Stock)
or rights or warrants to subscribe or purchase, the conversion rate in
effect immediately prior to the record date mentioned below shall be
adjusted by multiplying such conversion rate by a fraction, of which the
numerator shall be the current market price per share of Common Stock on
such record date and of which the denominator shall be such current market
price per share of the Common Stock, less the cash or the then fair market
value (as determined by the Board of Directors, whose determination shall
be conclusive) of the portion of the assets or securities or evidences of
indebtedness so distributed or of such rights or warrants applicable to
one share of Common Stock,
such adjustment to become effective immediately on the record date for the determination of stockholders entitled to receive such distribution. For purposes of this clause (iii), consolidated earnings or earned surplus shall be computed by adding thereto all charges against earned surplus on account of dividends paid in shares of Common Stock in respect of which the conversion rate has been adjusted, all as determined by the independent public accountants then regularly auditing the accounts of the Corporation, whose determination shall be conclusive. The reclassification (including any reclassification, upon a merger in which the Corporation is the continuing corporation) of Common Stock into securities which include both Common Stock and other securities shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the record date for the determination" above), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter.
(iv) In the event of a declaration of a dividend by the Corporation without the fixing of a record date for the determination of stockholders entitled thereto, the first business day during which the stock transfer books of the Corporation shall be closed for the purpose of such determination shall be deemed to be the record date.
(D) No fractional shares of Common Stock shall be issued upon the conversion of shares of Series B Preferred Stock. If any fractional interest in a share of Common Stock would, except for the provisions of this paragraph 7(D), be deliverable upon the conversion of any shares of Series B Preferred Stock, the Corporation, in lieu of delivering a fractional share therefor, shall make a payment to the holder of such surrendered share of Series B Preferred Stock of an amount in cash equal (computed to the nearest cent) to such fraction multiplied by the closing price per share of Common Stock (as such term is defined in the final sentence of Section 7(C) (ii)) on the day of conversion.
(E) Whenever the conversion rate is adjusted, as herein provided, the Corporation shall forthwith maintain at its office and file with the transfer agent or agents for shares of Series B Preferred Stock and any securities exchange or exchanges on which such shares are listed, a statement signed by the President or Vice President of the Corporation and by its Treasurer or an Assistant Treasurer, showing in detail the facts requiring such adjustment and the conversion rate after such adjustment. Such transfer agent or agents and securities exchange or exchanges shall be under no duty or responsibility with respect to any such statement except to exhibit the same from time to time to any holder of shares of Series B Preferred Stock desiring an inspection thereof.
(F) In case of any capital reorganization or any reclassification of the Common Stock of the Corporation or in case of a consolidation, merger or statutory share exchange of the Corporation with or into another corporation or the conveyance of all or substantially all of the assets of the Corporation to another corporation, each share of Series B Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property (including cash) to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such shares of Series B Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation, merger or conveyance; and, in any such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the shares of Series B Preferred Stock to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the conversion rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the shares of Series B Preferred Stock.
(G) In the event that:
(i) the Corporation shall take a record of the holders of shares of its Common Stock for the purpose of entitling them to receive a dividend, or any other distribution, payable otherwise than in cash out of consolidated earnings or earned surplus; or
(ii) the Corporation shall take a record of the holders of shares of its Common Stock for the purpose of entitling them to subscribe for or purchase any shares of stock of any class or to receive any other rights or warrants; or
(iii) there shall be any capital reorganization of the Corporation, reclassification of the Common Stock of the corporation (other than a subdivision or combination thereof), consolidation or merger of the Corporation with or into another corporation or the conveyance of all or substantially all of the assets of the Corporation to another corporation, or
(iv) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
transfer agent or agents for Series B Preferred Stock, and to the holders of
record of the outstanding shares of Series B Preferred Stock, at least fifteen
(15) days prior to the date hereinafter specified, or if notice is given to
holders of Common Stock, no later than the date such notice is given, a notice
stating the date on which (x) a record is to be taken for the purpose of such
dividend, distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place and the date, if any, that is to be fixed, as of which holders of
shares of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(H) The Corporation shall obtain and keep in force such permits or other authorizations as may be required by law in order to enable the Corporation validly to issue and deliver such number of shares of its Common Stock as shall from time to time be sufficient to effect the conversion of all shares of Series B Preferred Stock from time to time outstanding. The Corporation at all times shall reserve and keep available, out of its authorized but unissued Common Stock, solely for the purposes of effecting the conversion of the shares of Series B Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all shares of Series B Preferred Stock from time to time outstanding.
(I) The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series B Preferred Stock pursuant hereto. The Corporation, however, shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series B Preferred Stock so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any tax or has established, to the satisfaction of the Corporation, that such tax has been paid.
8. Parity With Respect to Dividends and Distribution Upon Liquidation. The Series B Preferred Stock shall rank on a parity with any other series of Preferred Stock, including the Series A Preferred Stock, (not by its terms made junior or senior to the Series B Preferred Stock) with respect to the payment of dividends and shall rank on a parity with any other series of Preferred Stock, including the Series A Preferred Stock, (not by its terms made junior or senior to the Series B Preferred Stock) as to distribution of assets in liquidation.
IN WITNESS WHEREOF, the undersigned has caused the Articles Supplementary to be executed this first day of December, 1992.
CAPSTEAD MORTGAGE CORPORATION
By: /s/ Ronn K.Lytle
------------------------------
PRESIDENT
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THE UNDERSIGNED, President of THE CORPORATION, who executed on behalf of the Corpora tion Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval therefor are true in all material respects under the penalties of perjury.
/s/ Ronn K. Lytle
---------------------------------------
PRESIDENT
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ARTICLES OF MERGER BETWEEN
CAPSTEAD MORTGAGE CORPORATION
AND TYLER CABOT MORTGAGE SECURITIES FUND, INC.
Pursuant to the provisions of Section 3-109 of the General Corporation Law of the State of Maryland, the undersigned corporations hereby certify that:
ARTICLE I.
CONSENT
1.01. Capstead Mortgage Corporation, a Maryland corporation ("Acquiror"), and Tyler Cabot Mortgage Securities Fund, Inc., a Maryland corporation ("Acquiree"), each agree to the merger of Acquiree with and into Acquiror (the "Merger"), subject to the terms and conditions set forth in the Amended and Restated Agreement and Plan of Merger dated September 18, 1992 entered into by and between Acquiror and Acquiree (the "Merger Agreement"). At the Effective Time (as hereinafter defined) of the Merger, Acquiree will be merged with and into Acquiror in accordance with the provisions of the General Corporation Law of the State of Maryland. Acquiror shall be the surviving corporation, and the separate existence of Acquiree shall cease. The terms and conditions of the Merger hereby agreed upon and the manner of carrying the name into effect shall be hereinafter set forth. From and after the Effective Time, the Acquiror shall possess all the rights, privileges, powers and franchises and be subject to all of the restrictions, liabilities, obligations, disabilities and duties of Acquiree.
ARTICLE II.
PLACE OF INCORPORATION; PRINCIPAL OFFICES
2.01. The name and place of incorporation of each party is as follows:
NAME PLACE
Capstead Mortgage Corporation Maryland
Tyler Cabot Mortgage Securities Maryland
Fund, Inc.
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2.02. The name and place of incorporation of the surviving corporation is as follows:
NAME PLACE
Capstead Mortgage Corporation Maryland
2.03. The principal office of Acquiror is located in Baltimore City, Maryland. Acquiror owns no interest in land in the State of Maryland.
2.04. The principal office of Acquiree is located in Baltimore City, Maryland. Acquiree owns no interest in land in the State of Maryland.
ARTICLE III.
APPROVALS
3.01. The terms and conditions of the transaction set forth in these Articles were advised, authorized and approved by each corporation party to the Articles in the manner and by the vote required by the charter and the laws of the State of Maryland. The manner of approval was as follows:
(a) The Board of Directors of Acquiree, at a meeting held on July 8, 1992, adopted a resolution which declared that the proposed merger was advisable on substantially the terms and conditions set forth or referred to in the resolution and directed that the proposed merger be submitted for consideration at a special meeting on the stockholders of Acquiree.
(b) Notice, which stated that a propose of the special meeting of stockholders was to act on the proposed merger, was given by Acquiree to its stockholders as required by law.
(c) The proposed merger was approved by the stockholders of Acquiree at a special meeting of stockholders held on December 1, 1992, by the affirmative vote of a majority of all the votes entitled to be cast on the matter.
(d) The Board of Directors of Acquiror, at a meeting held on July 8, 1992, adopted a resolution which declared that the proposed merger was advisable on substantially the terms and conditions set forth or referred to in the resolution and directed that the proposed merger be submitted for consideration at a special meeting of the stockholders of Acquiree.
(e) Notice, which stated that a purpose of the special meeting of stockholders was to act on the proposed merger, was given by Acquiror to be stockholders entitled to vote thereon at required by law.
(f) The proposed merger was approved by the stockholders of Acquiror at a special meeting of stockholders held on December 1, 1992, by the affirmative vote of a majority of all the votes entitled to be cast on the matter.
ARTICLE IV.
CAPITALIZATION
4.01. The total number of shares of all classes and the total number of shares and par value, if any, of each class, and the aggregate par value of all the shares of all classes of which each party to the Articles has the authority to issue are as follows:
with Par Value w/o Par Value
------------------------------------------------------ -------------
Class of Number of Number of
Name Shares Shares Par Value Amount Shares
---- -------- --------- --------- ------ ---------
Common
Acquiror Stock 100,000,000 $.01 $ 1,000,000 None
Preferred
Acquiror Stock 100,000,000 $.10 $10,000,000 None
----------- ------------
TOTAL 200,000,000 $11,000,000 None
ACQUIROR
Common
Acquiree Stock 200,000,000 $.01 $ 2,000,000 None
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ARTICLE V.
AMENDMENT OF CHARTER OF ACQUIROR
5.01. The vote by the stockholders of Acquiror at the special meeting held on December 1, 1992 approving the Merger of Acquiree with and into Acquiror also constituted approval by the stockholders of Acquiror of an amendment of the Charter of Acquiror increasing the total number of shares which Acquiror has authority to issue from 70,000,000 shares having an aggregate par value of $2,500,000 to 200,000,000 shares having an aggregate par value of $11,000,000 as follows:
(a) the total number of shares of common stock, par value $.01 per share, which Acquiror has authority to issue was increased from 50,000,000 shares having an aggregate par value of $500,000 to 100,000,000 shares having an aggregate par value of $1,000,000; and
(b) the total number of shares of preferred stock, par value $.10 per share, which Acquiror has authority to issue was increased from 50,000,000 shares having an aggregate par value of $2,000,000 to 100,000,000 shares having an aggregate par value of $10,000,000.
5.02. The descriptions of each class of stock of Acquiror were not changed by such amendment.
5.03. Articles of Amendment of the Articles of Incorporation of Acquiror were filed with the State Department of Assessments and Taxation of Maryland on December 2, 1992 effectuating the foregoing amendment.
5.04. The vote by the stockholders of Acquiror at the special meeting held on December 1, 1992 approving the Merger also constituted approval on the issuance of shares of the Acquiror's $1.26 Cumulative Convertible Preferred Stock, Series B, par value $.10 per share (the "Series B Preferred Stock") in the Merger. Articles Supplementary creating and authorizing the issuance of a series of 31,000,000 shares of Series B Preferred Stock were filed with the State Department of Assessments and Taxation of Maryland on December 2, 1992.
ARTICLE VI.
MANNER OF EFFECTUATING THE MERGER AND CONVERTING
STOCK
6.01. The manner and basis of converting or exchanging issued stock of the merging corporations into different stock of a corporation or for other consideration and the treatment of any issued stock of the merging corporations not to be converted or exchanged are as follows:
Each share of common stock, par value $.01 per share, of the Acquiree ("Common Stock") outstanding immediately prior to the Effective Time shall be converted (the "Conversion") into one share of $1.26 Cumulative Convertible Preferred Stock, Series B, par value $.10 per share, of Acquiror ("Preferred Stock"); provided, however, that the Acquiror shall not be required to issue or deliver any fractional shares of Preferred Stock in connection with the Conversion and, in lieu thereof, Acquiror shall pay to each person who would otherwise be entitled to receive a fractional share of Preferred Stock pursuant to the Conversion an amount in cash (the "Cash Amount") equal to the greater of (i) the product of such fraction times the composite transactions closing price of Acquiree's Common Stock on the New York Stock Exchange for the last trading date prior to the Effective Time, and (ii) the pro rata liquidation preference of the fractional share of Preferred Stock which such person would be otherwise entitled to receive (the Preferred Stock plus the Cash Amount being collectively referred to as the "Merger Consideration").
6.02. The Merger Agreement provides that, prior to the Effective Time, Acquiror shall appoint an agent reasonably acceptable to the Acquiree (the "Exchange Agent") for the purpose of exchanging certificates representing shares of Common Stock for the Merger Consideration. Acquiror will make available to the Exchange Agent, as needed, the Merger Consideration to be delivered in respect of the shares of Common Stock. The Merger Agreement provides that, at the Effective Time, Acquiror shall send, or shall cause the Exchange Agent to send, to each holder of shares of Common Stock at the Effective Time a letter of transmittal, in form and substance acceptable to the Acquiree, for use in such exchange (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper deliver of the certificates representing shares of Common Stock to the Exchange Agent). The Merger Agreement provides that, from and after the Effective Time, each holder of shares of Common Stock that have been converted has a right to receive the Merger Consideration, upon surrender to the Exchange Agent of a certificate of certificates representing such shares of Common Stock, together with a properly completed letter of transmittal covering such shares of Common stock, shall be entitled to receive the Merger Consideration payable in respect of such shares of Common Stock. Until so surrendered, each such certificate shall, after the Effective Time represent for all purposes only the right to receive such Merger Consideration.
6.03. No dividends then have been declared in respect of the Preferred Stock shall be paid to persons entitled to receive the Preferred Stock until such persons have surrendered their certificates for shares of Common Stock, together with a properly completed letter of transmittal, at which time all dividends therefore declared and which were paid or payable prior to such surrender and exchange shall be paid to the persons to whom the Preferred Stock is delivered pursuant to the letter of transmittal accompanying such shares of Common Stock. In no event shall the persons entitled to receive such dividends be entitled to receive interest on such dividends, and in no event shall any dividends be payable with respect to the Cash Amount.
6.04. If any portion of the Merger Consideration is to be paid to a person other than the registered holder of the shares of Common Stock represented by the certificate or certificates surrendered in exchange therefor, it shall be a condition to such delivery that the certificate or certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a person other than the registered holder of such shares of Common Stock or establish to the satisfaction of the Acquiror that such has been paid or is not payable.
6.05. After the Effective Time, there shall be no further registration of transfers of shares of Common Stock. If, after the Effective Time, certificates representing shares of Common Stock are presented to the Acquirer, they shall be cancelled and exchanged for the Merger Consideration in accordance with the procedures set forth in this Article VI.
6.06. Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 6.02 that remains unclaimed as the holders of shares of Common Stock six
months after the effective Time shall be returned to Acquiror, upon demand, and any such holder who has not exchanged his or her shares of Common Stock for the Merger Consideration in accordance with these provisions prior to the time that such Merger Consideration is returned to Acquiror shall thereafter look only to Acquiror for payment of the Merger Consideration in respect of his or her shares of Common Stock. The Merger Agreement provides that, notwithstanding the foregoing, Acquiror shall not be liable to any holder of shares of Common Stock for any amount required to be paid to a public official pursuant to applicable abandoned property laws. Any amounts remaining unclaimed by holders of shares of Common Stock five years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become property of any governmental entity) shall, to the extent permitted by applicable law, become the property of Acquiror free and clear of any claims or interest of any persons previously entitled thereto.
ARTICLE VII.
EFFECTIVE TIME OF MERGER
7.01. The Merger shall become effective upon acceptance of these Articles, together with any necessary certificates, by the Department of Assessments and Taxation of the State of Maryland (the "Effective Time").
IN WITNESS WHEREOF, CAPSTEAD MORTGAGE CORPORATION and TYLER CABOT MORTGAGE SECURITIES FUND, INC. have caused these presents to be signed in their respective names and on their respective behaves by their President and Chairman, respectively, and witnessed by their respective secretaries on December 2, 1992.
WITNESS: CAPSTEAD MORTGAGE CORPORATION
(a Maryland Corporation)
/s/ Andrew F. Jacobs By: /s/ Ronn K. Lytle
------------------------------------ ---------------------------------
Andrew F. Jacobs Ronn K. Lytle
Secretary President
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WITNESS: TYLER CABOT MORTGAGE SECURITIES
FUND, INC.
(a Maryland Corporation)
/s/ David Barbour By: /s/ Ronn Lytle
------------------------------------ ---------------------------------
David Barbour Ronn Lytle
Asst Secretary Chairman
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THE UNDERSIGNED, President of Capstead Mortgage Corporation, who executed on behalf of the Corporation the foregoing articles of which this certificate us made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles of Merger to be the corporate act of said Corporation and hereby certifies that to the best of his knowledge, information and belief the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.
/s/ Ronn Lytle ---------------------------- Ronn Lytle President |
THE UNDERSIGNED, Chairman of Tyler Cabot Mortgage Securities Fund, Inc., who executed on behalf of the Corporation the foregoing articles of which this certificate us made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles of Merger to be the corporate act of said Corporation and hereby certifies that to the best of his knowledge, information and belief the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.
/s/ Ronn Lytle ---------------------------- Ronn Lytle Chairman |
ARTICLES SUPPLEMENTARY
$1.26 CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES B
OF CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION, a Maryland corporation, having its principal office in Baltimore City, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the Charter, as amended, of the Corporation, the Board of Directors on April 19, 1996 adopted a resolution, authorizing the classification and issuance of an additional 1,500,000 shares of $1.26 Cumulative Convertible Preferred Stock, Series B (the "Series B Preferred Stock") and that the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of the shares of such series are the same as set forth in the Articles Supplementary creating the Series B Preferred Stock (which Articles Supplementary were filed by the Corporation with the State Department of Assessments and Taxation of Maryland on December 2, 1992 and are hereby incorporated herein by reference) (the "Original Articles Supplementary").
1. Designation and Number of Shares. One million five hundred thousand (1,500,000) shares of Preferred Stock of the Corporation, par value $.10 per share, are hereby designated as the "$1.26 Cumulative Convertible Preferred Stock, Series B".
2. Dividends. As set forth in the Original Articles Supplementary.
3. Liquidation. As set forth in the Original Articles Supplementary.
4. Voting Rights. As set forth in the Original Articles Supplementary.
5. Limitations on Certain Actions. As set forth in the Original Articles Supplementary.
6. Redemption. As set forth in the Original Articles Supplementary.
7. Conversion. As set forth in the Original Articles Supplementary.
8. Parity With Respect to Dividends and Distribution Upon Liquidation. As set forth in the Original Articles Supplementary.
IN WITNESS WHEREOF, the undersigned has caused these additional Articles Supplementary to be executed this second day of May, 1996.
CAPSTEAD MORTGAGE CORPORATION
BY: /s/ ANDREW F. JACOBS
--------------------------------------
ANDREW F. JACOBS,
VICE PRESIDENT - CONTROL AND TREASURER
ATTEST:
/s/ DAVID BARBOUR
-----------------------------------
DAVID BARBOUR,
ASSISTANT SECRETARY
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THE UNDERSIGNED, Vice President - Control and Treasurer of THE CORPORATION, who executed on behalf of the Corporation Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval therefor are true in all material respects under the penalties of perjury.
/s/ ANDREW F. JACOBS
--------------------------------------
ANDREW F. JACOBS,
VICE PRESIDENT - CONTROL AND TREASURER
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DOMESTIC CORPORATION
NOTICE OF CHANGE OF PRINCIPAL OFFICE AND RESIDENT AGENT
State Department of Assessments
and Taxation
Baltimore, Maryland
Pursuant to the provisions of Section 2-108 of the Maryland General Corporation Law, the undersigned Maryland corporation hereby notifies the State Department of Assessments and Taxation of Maryland:
(1) That under resolution adopted by the Board of Directors of the corporation on April 19, 1996, a certified copy of which is filed herewith, the resident agent of the corporation in the State of Maryland has been changed to National Registered Agents, Inc. of MD, whose post office address is 11 East Chase Street, Baltimore, Maryland 21202. The resident agent so designated is a corporation of the State of Maryland.
(2) That under resolution adopted by the Board of Directors of the corporation on April 19, 1996, a certified copy of which is filed herewith, the principal office of the corporation in the State of Maryland has been changed from 11 E. Chase St. Suite 9E, Baltimore, MD 21202 to 11 East Chase Street, c/o National Registered Agents, Inc. of MD, Baltimore, Maryland 21202.
Capstead Mortgage Corporation
By: /s/ Andrew F. Jacobs -------------------------------------- Senior (Vice) President |
Dated May 6, 1996
The undersigned, being the duly elected and acting Secretary of Capstead Mortgage Corporation, hereby certifies that at a meeting of the Board of Directors duly called and held on April 19, 1996, the following resolutions were duly adopted and are now in full force and effect:
"RESOLVED, that National Registered Agents, Inc. of MD, 11 East Chase Street, Baltimore Maryland 21202 be and hereby is designated as Resident Agent of the corporation in lieu of CSC - Lawyers Incorporating Service Company and that the proper officer of the corporation is authorized to file a Notice to that effect.
"FURTHER RESOLVED, that the principal office of the corporation in the State of Maryland be and it is hereby changed from 11 E. Chase St., Suite 9E, Baltimore MD 21202 to 11 East Chase, c/o National Registered Agents, Inc. of MD, Baltimore, MD 21202 and that the proper officer of the corporation is authorized to file a Notice to that effect."
WITNESS my hand and the seal of the corporation on May 6, 1996.
(CORPORATE SEAL)
/s/ Andrew F. Jacobs ------------------------------------------ Secretary of Capstead Mortgage Corporation Andrew F. Jacobs |
ARTICLES SUPPLEMENTARY
$1.26 CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES B
OF CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION, a Maryland corporation, having its principal office in Baltimore City, Maryland (hereinafter called the "Corporation") hereby certifies to the State Department of Assessments and Taxation of Maryland (the "Maryland SDAT") that:
Pursuant to authority conferred upon the Board of Directors by the Charter, as amended, of the Corporation, the Board of Directors on September 9, 1996 adopted a resolution, authorizing the classification and issuance of an additional 4,500,000 shares of $1.26 Cumulative Convertible Preferred Stock, Series B (the "Series B Preferred Stock") and that the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of the shares of such series are the same as set forth in the Articles Supplementary creating the Series B Preferred Stock (the "Original Articles Supplementary") (which Original Articles Supplementary were filed by the Corporation with the Maryland SDAT on December 2, 1992 and are hereby incorporated herein by reference).
1. Designation and Number of Shares. Four million five hundred thousand (4,500,000) shares of Preferred Stock of the Corporation, par value $.10 per share, are hereby designated as the "$1.26 Cumulative Convertible Preferred Stock, Series B".
2. Dividends. As set forth in the Original Articles Supplementary.
3. Liquidation. As set forth in the Original Articles Supplementary
4. Voting Rights. As set forth in the Original Articles Supplementary.
5. Limitations on Certain Actions. As set forth in the Original Articles Supplementary.
6. Redemption. As set forth in the Original Articles Supplementary.
7. Conversion. As set forth in the Original Articles Supplementary.
8. Party with Respect to Dividends and Distribution Upon Liquidation. As set forth in the Original Articles Supplementary.
IN WITNESS WHEREOF, the undersigned has caused these additional Articles Supplementary to be executed this 9th day of September, 1996.
CAPSTEAD MORTGAGE CORPORATION
By: /s/ Andrew F. Jacobs
---------------------------------------------
Andrew F. Jacobs
Senior Vice President - Control and Treasurer
ATTEST:
/s/ David Barbour
-------------------------
David Barbour,
Assistant Secretary
|
THE UNDERSIGNED, Senior Vice President - Control and Treasurer of the Corporation, who executed on behalf of the Corporation Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of the Corporation the foregoing Articles Supplementary to be the corporate set of said Corporation and hereby certifies that the matters and facts set forth herein with respect the authorization and approval therefor are true in all material respects under the penalties of perjury.
/s/ Andrew F. Jacobs --------------------------------------------- Andrew F. Jacobs Senior Vice President - Control and Treasurer |
ARTICLES SUPPLEMENTARY
$0.56 CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES C
OF CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION, a Maryland corporation, having its principal office in Baltimore City, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the charter, as amended, of the Corporation (the "Charter"), the Board of Directors on November 30, 1999 adopted a resolution, creating and authorizing the issuance of a series of 5,378,000 shares of $0.56 Cumulative Convertible Preferred Stock, Series C, and that the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of the shares of such series are as follows:
1. Designation and Number of Shares. Five million three hundred seventy-eight thousand (5,378,000) shares of Preferred Stock of the Corporation, par value $.10 per share, are hereby designated as the "$0.56 Cumulative Convertible Preferred Stock, Series C" (hereinafter called the "Series C Preferred Stock").
2. Dividends. Holders of shares of Series C Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds of the Corporation legally available for payment thereof, cumulative preferential cash dividends at the annual rate of fifty-six cents ($0.56) per share of Series C Preferred Stock (the "Preference Dividend"), payable in equal quarterly installments of fourteen cents $0.14 per share of Series C Preferred Stock in arrears on the last business day of each calendar quarter (each, a "Dividend Payment Date"), to holders of record as they appear on the register for the Series C Preferred Stock of the Corporation on such record dates, not more than 10 days preceding the payment dates thereof (each, a "Preferred Record Date"), as may be fixed by the Board of Directors. The amount of any distribution payable for any distribution period greater or less than a full calendar quarter shall be prorated and computed on the basis of a 360-day year of twelve 30-day months. The first Preference Dividend payable per share of Series C Preferred Stock (the "Initial Dividend") payable on December 31, 1999 shall be an amount calculated as $0.00156 times the number of days having elapsed from and including the date of issuance of the Series C Preferred Stock through and including December 30, 1999. Distributions shall accumulate from the date of original issuance whether or not earned or declared and whether or not there shall be funds legally available for the payment thereof.
So long as any Series C Preferred Stock shall remain outstanding, no dividend shall be declared or paid upon or set apart for payment for the Common Stock of the Corporation, par value $.01 per share (the "Common Stock"), or any other class or series of stock of the Corporation ranking junior to the Series C Preferred Stock in respect of dividends ("Junior Stock"), nor may any Common Stock or any other Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any payment made to or available for a sinking fund for the redemption of any shares of such stock), unless in each instance full Preference Dividends on all outstanding shares of Series C Preferred Stock for all past dividend periods required to be paid shall have been paid at the rate fixed therefor and the then current quarterly dividend shall have been paid or declared and sufficient funds set aside for
payment thereof. No dividends shall be declared on any other series or class or classes of stock ranking on a parity with the Series C Preferred Stock as to dividends (including, without limitation, outstanding shares of the Corporation's $1.60 Cumulative Preferred Stock, Series A, the Corporation's $1.26 Cumulative Convertible Preferred Stock, Series B and the Corporation's $0.40 Cumulative Convertible Preferred Stock, Series D (collectively, the "Pari Passu Stock")) in respect of any dividend period thereof unless there shall likewise be or have been declared and sufficient funds set aside for payment thereof on all shares of Series C Preferred Stock at the time outstanding dividends for all quarterly periods coinciding with or ending before the end of such other period, ratably in proportion to the respective annual dividend rates per annum fixed therefor. Accumulated and unpaid Preference Dividends required to be paid on any shares of Series C Preferred Stock shall not bear interest. As used in these Articles Supplementary, "business day" shall mean a day that is neither a Saturday nor a Sunday nor a day on which the New York Stock Exchange is closed.
3. Liquidation. The shares of Series C Preferred Stock shall rank prior to the shares of Common Stock and any other class of stock of the Corporation ranking junior to the Series C Preferred Stock upon liquidation, so that in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series C Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any distribution is made to holders of shares of Common Stock or any other such Junior Stock, an amount equal to $6.89 per share (the "Liquidation Preference") of Series C Preferred Stock plus an amount equal to the Preference Dividends (whether or not declared) accumulated and unpaid on the shares of Series C Preferred Stock to the date of final distribution. If upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation or proceeds thereof, distributable among the holders of shares of Series C Preferred Stock and holders of any other class or series of stock of the Corporation ranking on a parity with shares of Series C Preferred Stock as to payments upon liquidation (including, without limitation, the Pari Passu Stock), shall be insufficient to pay in full the respective preferential amounts of shares of Series C Preferred Stock and any other such class or series, then such assets, or the proceeds thereof, shall be distributed among such holders ratably in accordance with the respective amounts which would be payable on such shares if all amounts thereon were paid in full. For the purposes hereof, neither a consolidation or merger of the Corporation with or into any other entity, nor a transfer of all or any part of the Corporation's assets for cash, property or securities shall be considered a liquidation, dissolution or winding up of the Corporation.
4. Voting Rights. Without limiting the rights of the holders of the Series C Preferred Stock to vote separately as a class as provided in Section 5 below, the holders of shares of Series C Preferred Stock shall be entitled to vote, together as a single group with the holders of the Common Stock and the holders of any other class or series of stock entitled to vote together with the holders of the Common Stock, on all matters as to which the holders of the Common Stock vote. When the Series C Preferred Stock votes together with the Common Stock and any other such class or series of stock, each share of Series C Preferred Stock shall entitle its holders to one vote for each share of Common Stock into which such share of Series C Preferred Stock is convertible immediately prior to the time of such vote.
5. Limitations on Certain Actions. (A) The Corporation shall not, without the affirmative vote of the holders of a majority of the shares of Series C Preferred Stock then outstanding, given in person or by proxy at a meeting called for the purpose of such vote at which the holders of Series C Preferred Stock shall vote separately as a class, directly or indirectly:
(i) create any class or classes of stock ranking prior to Series C Preferred Stock either as to dividends or as to amounts distributable upon liquidation or increase the authorized number of shares of any class or classes of stock ranking prior to Series C Preferred Stock either as to dividends or as to amounts distributable upon liquidation;
(ii) authorize any reclassification of Series C Preferred Stock;
(iii) amend, alter or repeal any of the provisions of the Charter of the Corporation (including the provisions of this Section 5) so as to affect adversely the preferences, special rights or voting powers of the Series C Preferred Stock; or
(iv) merge or consolidate with or into any other entity unless after such transaction the holders of the Series C Preferred Stock either (A) continue to hold such Series C Preferred Stock without any adverse change thereto and there is no class of stock outstanding ranking prior to the Series C Preferred Stock with respect to payment of dividends or upon liquidation or (B) hold a substantially identical security and there is no class of stock outstanding ranking prior to such security with respect to payment of dividends or upon liquidation.
(B) Except as otherwise provided herein or otherwise required by law, no consent of the holders of Series C Preferred Stock shall be required for (a) the creation of any indebtedness of any kind of the Corporation, (b) the creation, or increase or decrease in the amount, of any class or series of stock of the Corporation ranking on a parity with the Series C Preferred Stock as to dividends or as to amounts distributable upon liquidation, or any other class or series of stock of the Corporation not ranking prior to the Series C Preferred Stock as to dividends or as to amounts distributable upon liquidation, or (c) any increase or decrease in the amount of authorized Common Stock or any increase, decrease or change in the par value thereof.
6. Redemption. Shares of Series C Preferred Stock will be redeemable at the option of the Corporation by resolution of its Board of Directors, passed by at least a majority of the members of the Board, at any time after December 9, 2004, in whole or in part, for cash in an amount per share so redeemed equal to $6.56 per share plus all Preference Dividends on such shares (whether or not earned or declared) accumulated and unpaid to the date of such redemption (the "Redemption Price"). If less than all shares of Series C Preferred Stock are to be redeemed, (i) all arrearages in Preference Dividends on all outstanding shares of Series C Preferred Stock must be paid in full prior to any such partial redemption and (ii) the shares of such series to be redeemed shall be determined by lot or in such other equitable manner as the Board of Directors may determine.
The Corporation shall mail to each record holder of the Series C Preferred Stock notice of any redemption not less than 30 nor more than 60 days prior to the date fixed for such Redemption (the "Redemption Date"). Such notice shall specify the Redemption Date, the place or places where certificates for shares of Series C Preferred Stock are to be surrendered, the serial number or numbers of the certificates for shares to be redeemed (if less than all shares of Series C Preferred Stock are to be redeemed), the Redemption Price, that shares of Series C Preferred Stock may be convertible into Common Stock at any time prior to the close of business on the fifth business day preceding the Redemption Date, and that dividends on Series C Preferred Stock to be redeemed on the Redemption Date shall cease to accrue on the Redemption Date. Upon surrender of Series C Preferred Stock in accordance with said notice (properly endorsed or assigned for transfer if the Corporation shall so require and the notice shall so state), such Series C Preferred Stock shall be redeemed by the Corporation at the Redemption Price and in the manner as aforesaid. The Corporation shall not be required to register a transfer of any shares of Series C Preferred Stock that have been redeemed after the Redemption Date in respect thereof.
If, at any time after the giving of notice of redemption but before the Redemption Date specified therein, the Corporation shall deposit with a bank or trust company in the United States, having a capital surplus of at least $50,000,000, in trust to be applied to the redemption of the shares of Series C Preferred Stock called for redemption the funds necessary for such redemption, then from and after the date of such deposit all rights of the holders of the shares of Series C Preferred Stock so called for redemption shall cease and terminate, excepting only (i) the right to receive the Redemption Price therefor, but without interest, and (ii) the right to exercise on or before the fifth business day preceding the Redemption Date privileges of conversion set forth in Section 7, and such shares shall not be deemed to be outstanding. Any funds so deposited which shall not be required for such redemption because of the exercise of any such right of conversion subsequent to the date of such deposit shall be returned to the Corporation. In case the holders of shares of Series C Preferred Stock that shall have been called for redemption shall not, within five years after the date fixed for redemption, claim the amount deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time.
7. Conversion. The holders of shares of Series C Preferred Stock shall have conversion rights as follows:
(A) The shares of Series C Preferred Stock shall be convertible, at the option of the respective holders thereof, at any time into fully paid and non-assessable shares of Common Stock of the Corporation, at the conversion rate, determined as hereinafter provided, in effect at the time of conversion. In case of any call for redemption of any shares of Series C Preferred Stock, such right of conversion shall terminate, as to any shares designated for redemption, at the close of business on the fifth business day preceding the Redemption Date unless default is made in the payment of the Redemption Price.
(B) Before any holder of Series C Preferred Stock shall be entitled to convert the same into shares of Common Stock, such holder shall surrender (i) the certificate or certificates therefor, duly endorsed or accompanied by proper instruments of transfer, and (ii) if such surrender is made after a Preferred Record Date and on or before the record date for the payment of quarterly dividends on the Common Stock for the quarter in which such Preferred Record Date (or Dates) falls (or fall) (any such Preferred Record Date, an "Intervening Preferred Date"), a cashier's check or other guaranteed funds in an amount equal to the aggregate amount of Preference Dividends declared or received on the shares of Series C Preferred Stock on the Dividend Payment Date or Dates to which such Intervening Preferred Date or Dates related, at the office of the corporation, and shall give written notice to the Corporation at such office that such holder elects to convert the same. The Corporation, as soon as practicable thereafter, shall issue and deliver to such holder, certificates for the number of full shares of Common Stock to which such holder shall be entitled as aforesaid, together with cash in lieu of any fraction of a share as hereinafter provided. Such conversion shall be deemed to have been made as of the date of such surrender of the certificate or certificates representing the shares of Series C Preferred Stock to be converted and, if applicable, the cashier's check or other guaranteed funds, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on said date.
(C) Notwithstanding any of the foregoing, all shares of Series C Preferred Stock outstanding on December 31, 2009 (the "Conversion Date") shall automatically convert into fully paid and non-assessable shares of Common Stock, at the conversion rate, determined as hereinafter provided, in effect at the time of such conversion; provided, however, that if funds are not legally available for the payment (in whole or in part) of any accrued but unpaid dividends as of the Conversion Date, the amount of such dividends which cannot be legally paid by the Corporation as of the Conversion Date ("Unpaid Dividends") shall be payable in shares of Common Stock. The number of shares of Common Stock to be issued in payment of any Unpaid Dividends on each share of Series C Preferred Stock outstanding as of the Conversion Date shall be determined by dividing the Unpaid Dividends payable on each outstanding share of Series C Preferred Stock by the Fair Market Value of a share of Common Stock as of the Conversion Date. For purposes of this Section 7(C), "Fair Market Value" shall mean the average of the daily closing prices of the Common Stock for the 30 consecutive business days commencing 45 business days prior to the Conversion Date. The Closing price per share of Common Stock for each day shall be the last reported sale price regular way, or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way in either case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to business on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to business, or if not listed or admitted to business on any national securities exchange, the average of the closing bid and asked prices as furnished by the National Quotation Bureau, Incorporated or similar organization if the National Quotation Bureau, Incorporated is no longer reporting such information. The aggregate number of shares of
Common Stock to be issued to each holder of Series C Preferred Stock shall be determined and any fractional shares issuable to such holder after such aggregation shall be eliminated.
(D) The conversion rate shall be one (1) share of Common Stock for each share of Series C Preferred Stock converted, such rate being subject to adjustment from time to time as follows:
(i) If the Corporation shall at any time issue additional shares of Common Stock as a dividend upon any outstanding stock of the Corporation other than the Series C Preferred Stock (which stock is convertible into Common Stock) or subdivide the outstanding shares of Common Stock, or combine the outstanding shares of Common Stock, the conversion rate in effect immediately prior thereto shall be adjusted so that each share of Series C Preferred Stock shall thereafter be convertible into the total number of shares of Common Stock which the holder of a share of Series C Preferred Stock would have held immediately after the happening of any of the aforesaid events had such share been converted immediately prior to the happening of such event. Such adjustment shall become effective immediately after the opening of business on the record date for the determination of stockholders entitled to such dividend, or on the effective date of such subdivision or combination, as the case may be.
(ii) If the Corporation shall at any time issue rights or warrants to all holders of its outstanding Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share of the Common Stock on the record date mentioned below, the conversion rate theretofore in effect immediately prior to such record date shall be adjusted by multiplying such conversion rate by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the record date referred to below plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares of Common Stock so offered would purchase at such current market price, such adjustment to become effective immediately after the opening of business on the record date for the determination of stockholders entitled to receive such rights or warrants. For the purpose of any computation under this subsection (ii) or subsection (iii) below, the current market price per share of Common Stock at any record date shall be deemed to be the average of the daily closing prices for the 30 consecutive business days commencing 45 business days prior to the day in question. The closing price per share of Common Stock for each day shall be the last reported sale price regular way, or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way in either case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to business on such Exchange, on the principal national securities exchange on which the Common Stock is listed or
admitted to business, or if not listed or admitted to business on any national securities exchange, the average of the closing bid and asked prices as furnished by the National Quotation Bureau, Incorporated or similar organization if the National Quotation Bureau, Incorporated is no longer reporting such information.
(iii) If the Corporation distributes to holders of its Common Stock evidences of indebtedness or securities or cash or other assets (excluding regular quarterly cash dividends or dividends payable in shares of Common Stock), the conversion rate in effect immediately prior to the record date mentioned below shall be adjusted by multiplying such conversion rate by a fraction, of which the numerator shall be the current market price per share of Common Stock on such record date and of which the denominator shall be such current market price per share of the Common Stock, less the cash or the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive) of the portion of the assets or securities or evidences of indebtedness so distributed applicable to one share of Common Stock, such adjustment to become effective immediately on the record date for the determination of stockholders entitled to receive such distribution. The reclassification (including any reclassification upon a merger in which the Corporation is the continuing corporation) of Common Stock into securities which include both Common Stock and other securities shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the record date for the determination" above), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter.
(iv) In the event of a declaration of a dividend by the Corporation without the fixing of a record date for the determination of stockholders entitled thereto, the first business day during which the stock transfer books of the Corporation shall be closed for the purpose of such determination shall be deemed to be the record date.
(E) No fractional shares of Common Stock shall be issued upon the conversion of shares of Series C Preferred Stock. If any fractional interest in a share of Common Stock would, except for the provisions of this Section 7(E), be deliverable upon the conversion of any shares of Series C Preferred Stock, the Corporation, in lieu of delivering a fractional share therefor, shall make a payment to the holder of such surrendered share of Series C Preferred Stock of an amount in cash equal (computed to the nearest cent) to such fraction multiplied by the closing price per share of Common Stock (as such term is defined in the final sentence of Section 7(D)(ii)) on the day of conversion.
(F) Whenever the conversion rate is adjusted, as herein provided, the Corporation shall forthwith deliver to each record holder of the Series C Preferred Stock a statement signed by the President or Vice President of the Corporation and by its Treasurer or an
Assistant Treasurer, showing in detail the facts requiring such adjustment and the conversion rate after such adjustment.
(G) In case of any capital reorganization or any reclassification of the Common Stock or in case of a consolidation, merger or statutory share exchange of the Corporation with or into another corporation or the conveyance of all or substantially all of the assets of the Corporation to another corporation, each share of Series C Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property (including cash) to which a holder of the number of shares of Common Stock deliverable upon conversion of such shares of Series C Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation, merger or conveyance; and, in any such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the shares of Series C Preferred Stock to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the conversion rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the shares of Series C Preferred Stock.
(H) In the event that:
(i) the Corporation shall take a record of the holders of shares of its Common Stock for the purpose of entitling them to receive a dividend, or any other distribution, other than regular quarterly cash dividends; or
(ii) the Corporation shall take a record of the holders of shares of its Common Stock for the purpose of entitling them to subscribe for or purchase any shares of stock of any class or to receive any other rights or warrants; or
(iii) there shall be any capital reorganization of the Corporation, reclassification of the Common Stock (other than a subdivision or combination thereof), consolidation or merger of the Corporation with or into another corporation or the conveyance of all or substantially all of the assets of the Corporation to another corporation; or
(iv) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be given to each record holder of Series C Preferred Stock, at least fifteen (15) days prior to the date hereinafter specified, or if notice is given to holders of Common Stock, no later than the date such notice is given, a notice stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up is to take place and the date, if any, that is to be fixed, as of which holders of shares of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.
(I) The Corporation shall obtain and keep in force such permits or other authorizations as may be required by law in order to enable the Corporation validly to issue and deliver such number of shares of its Common Stock as shall from time to time be sufficient to effect the conversion of all shares of Series C Preferred Stock from time to time outstanding. The Corporation at all times shall reserve and keep available, out of its authorized but unissued Common Stock, solely for the purposes of effecting the conversion of the shares of Series C Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all shares of Series C Preferred Stock from time to time outstanding.
(J) The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series C Preferred Stock pursuant hereto.
8. Parity With Respect to Dividends and Distribution Upon Liquidation. The Series C Preferred Stock shall rank on a parity with any other series of Preferred Stock, including the Pari Passu Stock, not by its terms made junior or senior to the Series C Preferred Stock, with respect to the payment of dividends and shall rank on a parity with any other series of Preferred Stock, including the Pari Passu Stock, not by its terms made junior or senior to the Series C Preferred Stock, as to distribution of assets in liquidation.
9. Transfer of Series C Preferred Stock. The shares of the Series C Preferred Stock shall not be transferable, either in whole or in part, unless such shares have been publicly registered, subject to any agreement between any holder of the Series C Preferred Stock and the Corporation to the contrary, or the Corporation receives an opinion (or affirmatively waives its right to receive such opinion) of transferee's or transferor's counsel stating that such transfer is exempt from the registration and prospectus delivery requirements of applicable securities laws.
10. Notice to Holders. Any notice required to be given to any holder of Series C Preferred Stock shall be mailed, postage prepaid, to such holder at such holder's address last shown on the records of the Corporation.
IN WITNESS WHEREOF, the undersigned has caused the Articles Supplementary to be executed by its Executive Vice President - Finance and witnessed by its Assistant Secretary this 9th day of December, 1999.
CAPSTEAD MORTGAGE CORPORATION
Witness By: /s/ David Barbour By: /s/ Andrew F. Jacobs ----------------------------------- ----------------------------------- David Barbour, Assistant Secretary Executive Vice President - Finance |
THE UNDERSIGNED, Executive Vice President - Finance of THE CORPORATION, who executed on behalf of the Corporation Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval therefor are true in all material respects under the penalties of perjury.
/s/ Andrew F. Jacobs ---------------------------------------- Executive Vice President - Finance |
ARTICLES SUPPLEMENTARY
$0.40 CUMULATIVE CONVERTIBLE
PREFERRED STOCK, SERIES D
OF CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION, a Maryland corporation, having its principal office in Baltimore City, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the charter, as amended, of the Corporation (the "Charter"), the Board of Directors on November 30, 1999 adopted a resolution, creating and authorizing the issuance of a series of 5,378,000 shares of $0.40 Cumulative Convertible Preferred Stock, Series D, and that the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, of the shares of such series are as follows:
1. Designation and Number of Shares. Five million three hundred seventy-eight thousand (5,378,000) shares of Preferred Stock of the Corporation, par value $.10 per share, are hereby designated as the "$0.40 Cumulative Convertible Preferred Stock, Series D" (hereinafter called the "Series D Preferred Stock").
2. Dividends. Holders of shares of Series D Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds of the Corporation legally available for payment thereof, cumulative preferential cash dividends at the annual rate of forty cents ($0.40) per share of Series D Preferred Stock (the "Preference Dividend"), payable in equal quarterly installments of ten cents ($0.10) per share of Series D Preferred Stock in arrears on the last business day of each calendar quarter (each, a "Dividend Payment Date"), to holders of record as they appear on the register for the Series D Preferred Stock of the Corporation on such record dates, not more than 10 days preceding the payment dates thereof (each, a "Preferred Record Date"), as may be fixed by the Board of Directors. The amount of any distribution payable for any distribution period greater or less than a full calendar quarter shall be prorated and computed on the basis of a 360-day year of twelve 30-day months. The first Preference Dividend payable per share of Series D Preferred Stock (the "Initial Dividend") payable on December 31, 1999 shall be an amount calculated as $0.00111 times the number of days having elapsed from and including the date of issuance of the Series D Preferred Stock through and including December 30, 1999. Distributions shall accumulate from the date of original issuance whether or not earned or declared and whether or not there shall be funds legally available for the payment thereof.
So long as any Series D Preferred Stock shall remain outstanding, no dividend shall be declared or paid upon or set apart for payment for the Common Stock of the Corporation, par value $.01 per share (the "Common Stock"), or any other class or series of stock of the Corporation ranking junior to the Series D Preferred Stock in respect of dividends ("Junior Stock"), nor may any Common Stock or any other Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any payment made to or available for a sinking fund for the redemption of any shares of such stock), unless in each instance full Preference Dividends on all outstanding shares of Series D
Preferred Stock for all past dividend periods required to be paid shall have been paid at the rate fixed therefor and the then current quarterly dividend shall have been paid or declared and sufficient funds set aside for payment thereof. No dividends shall be declared on any other series or class or classes of stock ranking on a parity with the Series D Preferred Stock as to dividends (including, without limitation, outstanding shares of the Corporation's $1.60 Cumulative Preferred Stock, Series A, the Corporation's $1.26 Cumulative Convertible Preferred Stock, Series B and the Corporation's $0.56 Cumulative Convertible Preferred Stock, Series C (collectively, the "Pari Passu Stock")) in respect of any dividend period thereof unless there shall likewise be or have been declared and sufficient funds set aside for payment thereof on all shares of Series D Preferred Stock at the time outstanding dividends for all quarterly periods coinciding with or ending before the end of such other period, ratably in proportion to the respective annual dividend rates per annum fixed therefor. Accumulated and unpaid Preference Dividends required to be paid on any shares of Series D Preferred Stock shall not bear interest. As used in these Articles Supplementary, "business day" shall mean a day that is neither a Saturday nor a Sunday nor a day on which the New York Stock Exchange is closed.
3. Liquidation. The shares of Series D Preferred Stock shall rank prior to the shares of Common Stock and any other class of stock of the Corporation ranking junior to the Series D Preferred Stock upon liquidation, so that in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series D Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any distribution is made to holders of shares of Common Stock or any other such Junior Stock, an amount equal to $4.76 per share (the "Liquidation Preference") of Series D Preferred Stock plus an amount equal to the Preference Dividends (whether or not declared) accumulated and unpaid on the shares of Series D Preferred Stock to the date of final distribution. If upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation or proceeds thereof, distributable among the holders of shares of Series D Preferred Stock and holders of any other class or series of stock of the Corporation ranking on a parity with shares of Series D Preferred Stock as to payments upon liquidation (including, without limitation, the Pari Passu Stock), shall be insufficient to pay in full the respective preferential amounts of shares of Series D Preferred Stock and any other such class or series, then such assets, or the proceeds thereof, shall be distributed among such holders ratably in accordance with the respective amounts which would be payable on such shares if all amounts thereon were paid in full. For the purposes hereof, neither a consolidation or merger of the Corporation with or into any other entity, nor a transfer of all or any part of the Corporation's assets for cash, property or securities shall be considered a liquidation, dissolution or winding up of the Corporation.
4. Voting Rights. Without limiting the rights of the holders of the Series D Preferred Stock to vote separately as a class as provided in Section 5 below, the holders of shares of Series D Preferred Stock shall be entitled to vote, together as a single group with the holders of the Common Stock and the holders of any other class or series of stock entitled to vote together with the holders of the Common Stock, on all matters as to which the holders of the Common Stock vote. When the Series D Preferred Stock votes together with the Common Stock and any other such class or series of stock, each share of Series D Preferred Stock shall entitle its holder to one vote for each share of Common Stock into which such share of Series D Preferred Stock is convertible immediately prior to the time of such vote.
5. Limitations on Certain Actions. (A) The Corporation shall not, without the affirmative vote of the holders of a majority of the shares of Series D Preferred Stock then outstanding, given in person or by proxy at a meeting called for the purpose of such vote at which the holders of Series D Preferred Stock shall vote separately as a class, directly or indirectly:
(i) create any class or classes of stock ranking prior to Series D Preferred Stock either as to dividends or as to amounts distributable upon liquidation or increase the authorized number of shares of any class or classes of stock ranking prior to Series D Preferred Stock either as to dividends or as to amounts distributable upon liquidation;
(ii) authorize any reclassification of Series D Preferred Stock;
(iii) amend, alter or repeal any of the provisions of the Charter of the Corporation (including the provisions of this Section 5) so as to affect adversely the preferences, special rights or voting powers of the Series D Preferred Stock; or
(iv) merge or consolidate with or into any other entity unless after such transaction the holders of the Series D Preferred Stock either (A) continue to hold such Series D Preferred Stock without any adverse change thereto and there is no class of stock outstanding ranking prior to the Series D Preferred Stock with respect to payment of dividends or upon liquidation or (B) hold a substantially identical security and there is no class of stock outstanding ranking prior to such security with respect to payment of dividends or upon liquidation.
(B) Except as otherwise provided herein or otherwise required by law, no consent of the holders of Series D Preferred Stock shall be required for (a) the creation of any indebtedness of any kind of the Corporation, (b) the creation, or increase or decrease in the amount, of any class or series of stock of the Corporation ranking on a parity with the Series D Preferred Stock as to dividends or as to amounts distributable upon liquidation, or any other class or series of stock of the Corporation not ranking prior to the Series D Preferred Stock as to dividends or as to amounts distributable upon liquidation, or (c) any increase or decrease in the amount of authorized Common Stock or any increase, decrease or change in the par value thereof.
6. Redemption. Shares of Series D Preferred Stock will be redeemable at the option of the Corporation by resolution of its Board of Directors, passed by at least a majority of the members of the Board, at any time after December 9, 2004, in whole or in part, for cash in an amount per share so redeemed equal to $4.76 per share plus all Preference Dividends on such shares (whether or not earned or declared) accumulated and unpaid to the date of such redemption (the "Redemption Price"). If less than all shares of Series D Preferred Stock are to be redeemed, (i) all arrearages in Preference Dividends on all outstanding shares of Series D Preferred Stock must be paid in full prior to any such partial redemption and (ii) the shares of such series to be redeemed shall be determined by lot or in such other equitable manner as the Board of Directors may determine.
The Corporation shall mail to each record holder of the Series D Preferred Stock notice of any redemption not less than 30 nor more than 60 days prior to the date fixed for such Redemption (the "Redemption Date"). Such notice shall specify the Redemption Date, the place or places where certificates for shares of Series D Preferred Stock are to be surrendered, the serial number or numbers of the certificates for shares to be redeemed (if less than all shares of Series D Preferred Stock are to be redeemed), the Redemption Price, that shares of Series D Preferred Stock may be convertible into Common Stock at any time prior to the close of business on the fifth business day preceding the Redemption Date, and that dividends on Series D Preferred Stock to be redeemed on the Redemption Date shall cease to accrue on the Redemption Date. Upon surrender of Series D Preferred Stock in accordance with said notice (properly endorsed or assigned for transfer if the Corporation shall so require and the notice shall so state), such Series D Preferred Stock shall be redeemed by the Corporation at the Redemption Price and in the manner as aforesaid. The Corporation shall not be required to register a transfer of any shares of Series D Preferred Stock that have been redeemed after the Redemption Date in respect thereof.
If, at any time after the giving of notice of redemption but before the Redemption Date specified therein, the Corporation shall deposit with a bank or trust company in the United States, having a capital surplus of at least $50,000,000, in trust to be applied to the redemption of the shares of Series D Preferred Stock called for redemption the funds necessary for such redemption, then from and after the date of such deposit all rights of the holders of the shares of Series D Preferred Stock so called for redemption shall cease and terminate, excepting only (i) the right to receive the Redemption Price therefor, but without interest, and (ii) the right to exercise on or before the fifth business day preceding the Redemption Date privileges of conversion set forth in Section 7, and such shares shall not be deemed to be outstanding. Any funds so deposited which shall not be required for such redemption because of the exercise of any such right of conversion subsequent to the date of such deposit shall be returned to the Corporation. In case the holders of shares of Series D Preferred Stock that shall have been called for redemption shall not, within five years after the date fixed for redemption, claim the amount deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time.
7. Conversion. The holders of shares of Series D Preferred Stock shall have conversion rights as follows:
(A) The shares of Series D Preferred Stock shall be convertible, at the option of the respective holders thereof, at any time into fully paid and non-assessable shares of Common Stock of the Corporation, at the conversion rate, determined as hereinafter provided, in effect at the time of conversion. In case of any call for redemption of any shares of Series D Preferred Stock, such right of conversion shall terminate, as to any shares designated for redemption, at the close of business on the fifth business day preceding the Redemption Date unless default is made in the payment of the Redemption Price.
(B) Before any holder of Series D Preferred Stock shall be entitled to convert the same into shares of Common Stock, such holder shall surrender (i) the certificate or certificates therefor, duly endorsed or accompanied by proper instruments of transfer, and (ii) if such surrender is made after a Preferred Record Date and on or before the record date for the payment of quarterly dividends on the Common Stock for the quarter in which such Preferred Record Date (or Dates) falls (or fall) (any such Preferred Record Date, an "Intervening Preferred Date"), a cashier's check or other guaranteed funds in an amount equal to the aggregate amount of Preference Dividends declared or received on the shares of Series D Preferred Stock on the Dividend Payment Date or Dates to which such Intervening Preferred Date or Dates related, at the office of the corporation, and shall give written notice to the Corporation at such office that such holder elects to convert the same. The Corporation, as soon as practicable thereafter, shall issue and deliver to such holder, certificates for the number of full shares of Common Stock to which such holder shall be entitled as aforesaid, together with cash in lieu of any fraction of a share as hereinafter provided. Such conversion shall be deemed to have been made as of the date of such surrender of the certificate or certificates representing the shares of Series D Preferred Stock to be converted and, if applicable, the cashier's check or other guaranteed funds, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on said date.
(C) Notwithstanding any of the foregoing, all shares of Series D Preferred Stock outstanding on December 31, 2005 (the "Conversion Date") shall automatically convert into fully paid and non-assessable shares of Common Stock, at the conversion rate, determined as hereinafter provided, in effect at the time of such conversion; provided, however, that if funds are not legally available for the payment (in whole or in part) of any accrued but unpaid dividends as of the Conversion Date, the amount of such dividends which cannot be legally paid by the Corporation as of the Conversion Date ("Unpaid Dividends") shall be payable in shares of Common Stock. The number of shares of Common Stock to be issued in payment of any Unpaid Dividends on each share of Series D Preferred Stock outstanding as of the Conversion Date shall be determined by dividing the Unpaid Dividends payable on each outstanding share of Series D Preferred Stock by the Fair Market Value of a share of Common Stock as of the Conversion Date. For purposes of this Section 7(C), "Fair Market Value" shall mean the average of the daily closing prices of the Common Stock for the 30 consecutive business days commencing 45 business days prior to the Conversion Date. The Closing price per share of Common Stock for each day shall be the last reported sale price regular way, or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way in either case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to business on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to business, or if not listed or admitted to business on any national securities exchange, the average of the closing bid and asked prices as furnished by the National Quotation Bureau, Incorporated or similar organization if the National Quotation Bureau, Incorporated is no longer reporting such information. The aggregate number of shares of
Common Stock to be issued to each holder of Series D Preferred Stock shall be determined and any fractional shares issuable to such holder after such aggregation shall be eliminated.
(D) The conversion rate shall be one (1) share of Common Stock for each share of Series D Preferred Stock converted, such rate being subject to adjustment from time to time as follows:
(i) If the Corporation shall at any time issue additional shares of Common Stock as a dividend upon any outstanding stock of the Corporation other than the Series D Preferred Stock (which stock is convertible into Common Stock) or subdivide the outstanding shares of Common Stock, or combine the outstanding shares of Common Stock, the conversion rate in effect immediately prior thereto shall be adjusted so that each share of Series D Preferred Stock shall thereafter be convertible into the total number of shares of Common Stock which the holder of a share of Series D Preferred Stock would have held immediately after the happening of any of the aforesaid events had such share been converted immediately prior to the happening of such event. Such adjustment shall become effective immediately after the opening of business on the record date for the determination of stockholders entitled to such dividend, or on the effective date of such subdivision or combination, as the case may be.
(ii) If the Corporation shall at any time issue rights or warrants to all holders of its outstanding Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share of the Common Stock on the record date mentioned below, the conversion rate theretofore in effect immediately prior to such record date shall be adjusted by multiplying such conversion rate by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the record date referred to below plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares of Common Stock so offered would purchase at such current market price, such adjustment to become effective immediately after the opening of business on the record date for the determination of stockholders entitled to receive such rights or warrants. For the purpose of any computation under this subsection (ii) or subsection (iii) below, the current market price per share of Common Stock at any record date shall be deemed to be the average of the daily closing prices for the 30 consecutive business days commencing 45 business days prior to the day in question. The closing price per share of Common Stock for each day shall be the last reported sale price regular way, or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way in either case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to business on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to business, or if not listed or admitted to business on any national securities
exchange, the average of the closing bid and asked prices as furnished by the National Quotation Bureau, Incorporated or similar organization if the National Quotation Bureau, Incorporated is no longer reporting such information.
(iii) If the Corporation distributes to holders of its Common Stock evidences of indebtedness or securities or cash or other assets (excluding regular quarterly cash dividends or dividends payable in shares of Common Stock), the conversion rate in effect immediately prior to the record date mentioned below shall be adjusted by multiplying such conversion rate by a fraction, of which the numerator shall be the current market price per share of Common Stock on such record date and of which the denominator shall be such current market price per share of the Common Stock, less the cash or the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive) of the portion of the assets or securities or evidences of indebtedness so distributed applicable to one share of Common Stock, such adjustment to become effective immediately on the record date for the determination of stockholders entitled to receive such distribution. The reclassification (including any reclassification upon a merger in which the Corporation is the continuing corporation) of Common Stock into securities which include both Common Stock and other securities shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the record date for the determination" above), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter.
(iv) In the event of a declaration of a dividend by the Corporation without the fixing of a record date for the determination of stockholders entitled thereto, the first business day during which the stock transfer books of the Corporation shall be closed for the purpose of such determination shall be deemed to be the record date.
(E) No fractional shares of Common Stock shall be issued upon the conversion of shares of Series D Preferred Stock. If any fractional interest in a share of Common Stock would, except for the provisions of this Section 7(E), be deliverable upon the conversion of any shares of Series D Preferred Stock, the Corporation, in lieu of delivering a fractional share therefor, shall make a payment to the holder of such surrendered share of Series D Preferred Stock of an amount in cash equal (computed to the nearest cent) to such fraction multiplied by the closing price per share of Common Stock (as such term is defined in the final sentence of Section 7(D)(ii)) on the day of conversion.
(F) Whenever the conversion rate is adjusted, as herein provided, the Corporation shall forthwith deliver to each record holder of the Series D Preferred Stock a statement signed by the President or Vice President of the Corporation and by its Treasurer or an Assistant Treasurer, showing in detail the facts requiring such adjustment and the conversion rate after such adjustment.
(G) In case of any capital reorganization or any reclassification of the Common Stock or in case of a consolidation, merger or statutory share exchange of the Corporation with or into another corporation or the conveyance of all or substantially all of the assets of the Corporation to another corporation, each share of Series D Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property (including cash) to which a holder of the number of shares of Common Stock deliverable upon conversion of such shares of Series D Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation, merger or conveyance; and, in any such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the shares of Series D Preferred Stock to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the conversion rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the shares of Series D Preferred Stock.
(H) In the event that:
(i) the Corporation shall take a record of the holders of shares of its Common Stock for the purpose of entitling them to receive a dividend, or any other distribution, other than regular quarterly cash dividends; or
(ii) the Corporation shall take a record of the holders of shares of its Common Stock for the purpose of entitling them to subscribe for or purchase any shares of stock of any class or to receive any other rights or warrants; or
(iii) there shall be any capital reorganization of the Corporation, reclassification of the Common Stock (other than a subdivision or combination thereof), consolidation or merger of the Corporation with or into another corporation or the conveyance of all or substantially all of the assets of the Corporation to another corporation; or
(iv) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be given to each record holder of Series D Preferred Stock, at least fifteen (15) days prior to the date hereinafter specified, or if notice is given to holders of Common Stock, no later than the date such notice is given, a notice stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up is to take place and the date, if any, that is to be fixed, as of which holders of shares of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon
such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.
(I) The Corporation shall obtain and keep in force such permits or other authorizations as may be required by law in order to enable the Corporation validly to issue and deliver such number of shares of its Common Stock as shall from time to time be sufficient to effect the conversion of all shares of Series D Preferred Stock from time to time outstanding. The Corporation at all times shall reserve and keep available, out of its authorized but unissued Common Stock, solely for the purposes of effecting the conversion of the shares of Series D Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all shares of Series D Preferred Stock from time to time outstanding.
(J) The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series D Preferred Stock pursuant hereto.
8. Parity With Respect to Dividends and Distribution Upon Liquidation. The Series D Preferred Stock shall rank on a parity with any other series of Preferred Stock, including the Pari Passu Stock, not by its terms made junior or senior to the Series D Preferred Stock, with respect to the payment of dividends and shall rank on a parity with any other series of Preferred Stock, including the Pari Passu Stock, not by its terms made junior or senior to the Series D Preferred Stock, as to distribution of assets in liquidation.
9. Transfer of Series D Preferred Stock. The shares of the Series D Preferred Stock shall not be transferable, either in whole or in part, unless such shares have been publicly registered, subject to any agreement between any holder of the Series D Preferred Stock and the Corporation to the contrary, or the Corporation receives an opinion (or affirmatively waives its right to receive such opinion) of transferee's or transferor's counsel stating that such transfer is exempt from the registration and prospectus delivery requirements of applicable securities laws.
10. Notice to Holders. Any notice required to be given to any holder of Series D Preferred Stock shall be mailed, postage prepaid, to such holder at such holder's address last shown on the records of the Corporation.
IN WITNESS WHEREOF, the undersigned has caused the Articles Supplementary to be executed by its Executive Vice President - Finance and witnessed by its Assistant Secretary this 9th day of December, 1999.
CAPSTEAD MORTGAGE CORPORATION
Witness
By: /s/ David Barbour By: /s/ Andrew F. Jacobs ------------------------------------ ---------------------------------- David Barbour, Assistant Secretary Executive Vice President - Finance |
THE UNDERSIGNED, Executive Vice President - Finance of THE CORPORATION, who executed on behalf of the Corporation Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval therefor are true in all material respects under the penalties of perjury.
/s/ Andrew F. Jacobs --------------------------------------- Executive Vice President - Finance |
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Capstead Mortgage Corporation (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Maryland, does hereby certify to the State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by:
Changing and reclassifying each of the shares of common stock (par value of one cent ($.01) per share) of the Corporation, which is issued at the close of business of the effective date of this amendment, into one-half of a share of such common stock (par value of one cent ($.01) per share) and by transferring from the common stock account to the account designated "capital in excess of par value" one cent ($.01) for each share of common stock outstanding immediately after the change and reclassification. This change and reclassification shall effect a one-for-two reverse stock split but shall not alter the number of shares of common stock authorized by the Corporation's charter. Any fractional share of common stock resulting from the foregoing reclassification shall be settled by a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the last sale price of a share of common stock of the Corporation as reported on the New York Stock Exchange Composite Tape on the last trading day prior to the effective time of these Articles of Amendment.
SECOND: The foregoing Amendment to the Charter of the Corporation has been advised by the Board of Directors and approved by the stockholders of the Corporation.
THIRD: The foregoing Amendment to the Charter of the Corporation shall become effective at 4:30 p.m. on May 8, 2000.
IN WITNESS WHEREOF, Capstead Mortgage Corporation has caused this certificate to be signed in its name on its behalf by its Executive Vice President - Finance, and witnessed by its Secretary on May 4, 2000.
WITNESS: CAPSTEAD MORTGAGE CORPORATION
/s/ David Barbour /s/ Andrew F. Jacobs
------------------------------------- ------------------------------------
David Barbour, Assistant Secretary Andrew F. Jacobs, Executive Vice
President - Finance
|
The Undersigned, Executive Vice President - Finance of Capstead Mortgage Corporation, who executed on behalf of the Corporation the foregoing Articles of Amendment on which this certificate is a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles of Amendment to be the corporate act of said Corporation and hereby certifies that to the best of his knowledge, information and belief the matters and facts set forth therein with respect to the authorization and approval thereof and true in all material respects under the penalties of perjury.
/s/ Andrew F. Jacobs ---------------------------------------------------- Andrew F. Jacobs, Executive Vice President - Finance |
EXHIBIT 3.2
CAPSTEAD MORTGAGE CORPORATION
AMENDED AND RESTATED BYLAWS
AS OF APRIL 22, 1994
TABLE OF CONTENTS
Page
----
ARTICLE I. - STOCKHOLDERS.........................................................................................1
1.1. Annual Meeting.....................................................................................1
1.2. Special Meeting....................................................................................1
1.3. Place of Meetings..................................................................................2
1.4. Notice of Meetings; Waiver of Notice...............................................................2
1.5. Quorum; Voting.....................................................................................2
1.6. Adjournments.......................................................................................3
1.7. General Right to Vote; Proxies.....................................................................3
1.8. List of Stockholders................................................................................3
1.9. Fixing of Record Date...............................................................................3
1.10. Organization and Order of Business................................................................4
1.11. Conduct of Voting.................................................................................4
ARTICLE II. - BOARD OF DIRECTORS..................................................................................5
2.1. Function of Directors..............................................................................5
2.2. Number of Directors................................................................................5
2.3. Election and Tenure of Directors...................................................................5
2.4. Removal of Director................................................................................5
2.5. Vacancy on Board...................................................................................5
2.6. Regular Meetings...................................................................................6
2.7. Special Meetings...................................................................................6
2.8. Notice of Meeting..................................................................................6
2.9. Quorum and Voting..................................................................................7
2.10. Organization......................................................................................7
2.11. Action by Directors...............................................................................7
2.12. Meeting by Conference Telephone...................................................................8
2.13. Compensation......................................................................................8
2.14. Interested Director Transactions...................................................................8
3.1. Number; Tenure and Qualification..................................................................10
3.2. Delegation of Power...............................................................................10
3.3. Quorum and Voting.................................................................................11
3.4. Conduct of Meetings...............................................................................11
3.5. Action by Committees..............................................................................11
3.6. Interested Committee Member Transactions..........................................................12
ARTICLE IV. - OFFICERS...........................................................................................13
4.1. Executive Officers................................................................................13
4.2. Chairman of the Board.............................................................................14
4.3. President.........................................................................................14
4.4. Vice Presidents...................................................................................15
4.5. Secretary.........................................................................................15
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4.6. Treasurer.........................................................................................15
4.7. Assistant and Subordinate Officers................................................................16
4.8. Compensation......................................................................................16
4.9. Election, Tenure and Removal of Officers..........................................................16
ARTICLE V. - STOCK...............................................................................................17
5.1. Certificates for Stock............................................................................17
5.2. Transfers.........................................................................................18
5.3. Legends...........................................................................................18
5.4. Record Date and Closing of Transfer Books.........................................................18
5.5. Stock Ledger......................................................................................19
5.6. Lost Stock Certificates...........................................................................19
ARTICLE VI. - FINANCE............................................................................................19
6.1. Checks, Drafts. Etc...............................................................................19
6.2. Annual Statement of Affairs......................................................................20
6.3. Dividends.........................................................................................20
6.4. Fiscal Year......................................................................................20
ARTICLE VII. - MISCELLANEOUS.....................................................................................20
7.1. Books and Records.................................................................................20
7.2. Corporate Seal....................................................................................21
7.3. Bonds.............................................................................................21
7.4. Voting Upon Shares in Other Corporations..........................................................21
7.5. Mail..............................................................................................22
7.6. Execution of Documents............................................................................22
7.7. Amendments........................................................................................22
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CAPSTEAD MORTGAGE CORPORATION
AMENDED AND RESTATED BYLAWS
As of April 22, 1994
ARTICLE I.
STOCKHOLDERS
SECTION 1.1. Annual Meeting. The Corporation shall hold an annual meeting of its stockholders to elect directors and transact any other business as properly may come before such meeting, on such date and at such time as shall be designated annually by the Board of Directors and stated in the notice of the meeting. Failure to hold an annual meeting does not invalidate the Corporation's existence or affect any otherwise valid corporate acts.
SECTION 1.2. Special Meeting. At any time in the interval between annual meetings, a special meeting of the stockholders may be called by the Chairman of the Board or the President or by a majority of the Board of Directors by vote at a meeting or in writing (addressed to the Secretary of the Corporation) with or without a meeting, and shall be called by any officer of the Corporation upon the written request of the holders of shares entitled to cast not less than twenty- five percent (25%) of all the votes entitled to be cast at such meeting for the purpose of removing a director or for any other lawful purpose or purposes. If a special meeting is called at the request of stockholders, such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on. Business of the Corporation transacted at any special meeting of stockholders by whomever called shall be limited to the purposes stated in the notice.
SECTION 1.3. Place of Meetings. Meetings of stockholders shall be held at such place in the United States as is set from time to time by the Board of Directors.
SECTION 1.4. Notice of Meetings; Waiver of Notice. Not less than ten
(10) nor more than ninety (90) days before each stockholders' meeting, the
Secretary shall give written notice of the meeting to each stockholder entitled
to vote at the meeting and each other stockholder entitled to notice of the
meeting. The notice shall state the time and place of the meeting and, if the
meeting is a special meeting or notice of the purpose is required by statute,
the purpose of the meeting. Notice is given to a stockholder when it is
personally delivered to him, left at his residence or usual place of business,
or mailed to him at his address as it appears on the records of the Corporation.
If mailed with postage thereon prepaid, such notice shall be deemed to be given
when deposited in the United States mail addressed to the stockholder at his
post-office address as it appears on the records of the Corporation.
Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if he, before or after the meeting, signs a waiver of the notice which is filed with the records of stockholders' meetings, or is present at the meeting in person or by proxy.
SECTION 1.5. Quorum; Voting. Unless a statute or the Articles of Incorporation of the Corporation (the "Charter") provide otherwise, at a meeting of stockholders the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting constitutes a quorum and a majority of all the votes cast at a meeting at which a quorum is present is sufficient to approve any matter which properly comes before the meeting, except that a plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director. In the event that at any meeting a quorum exists for the transaction of some
business but does not exist for the transaction of other business, the business as to which a quorum is present may be transacted by the holders of stock present in person or by proxy who are entitled to vote thereon.
SECTION 1.6. Adjournments. Whether or not a quorum is present, a meeting of stockholders convened on the date for which it was called may be adjourned from time to time by the stockholders present in person or by proxy by a majority vote. Any business which might have been transacted at the meeting as originally notified may be deferred and transacted at such adjourned meeting at which a quorum shall be present. No further notice of an adjourned meeting than by announcement at the meeting.
SECTION 1.7. General Right to Vote; Proxies. Unless otherwise provided in the Charter, each outstanding share of capital stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders. A stockholder may vote only the shares owned by him as shown on the record of stockholders of the Corporation as of the record date determined pursuant to Section 1.9 below or pursuant to applicable law and may vote the stock either in person or by written proxy signed by the stockholder or by his duly authorized attorney in fact. Unless a proxy provides otherwise, it is not valid more than eleven (11) months after its date.
SECTION 1.8. List of Stockholders. At each meeting of stockholders, a full, true and complete list of all stockholders entitled to vote at such meeting, showing the number and class of shares held by each and certified by the transfer agent for such class or by the Secretary, shall be furnished by the Secretary.
SECTION 1.9. Fixing of Record Date. The Board of Directors may fix, in advance, a
record date not more than ninety (90) nor less than ten (10) days before the date then fixed for the holding of any meeting of the stockholders. All persons who were holders of record of shares at such time, and no others, shall be entitled to vote at such meeting and any adjournment thereof
SECTION 1.10. Organization and Order of Business. At each meeting of the stockholders, the Chairman of the Board of Directors, or in his absence or inability to act, the President, or in the absence or inability to act of the Chairman of the Board and the President, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated at the time of their election or, in the absence of any such designation, in the order of their election), shall act as chairman of the meeting. The Secretary, or in his absence or inability to act, any person appointed by the chairman of the meeting, shall act as secretary of the meeting and keep the minutes thereof. The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting.
SECTION 1.11. Conduct of Voting. At all meetings of stockholders, unless the voting is conducted by inspectors, the proxies and ballots shall be received, and all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided, by the chairman of the meeting. The Board of Directors may appoint judges of election to serve at any election of directors and at balloting on any other matter that may properly come before a meeting of stockholders. If no such appointment shall be made, or if any of the judges so appointed shall fail to attend, or refuse or be unable to serve, then such appointment may be made by the presiding officer at the meeting.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.1. Function of Directors. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. All powers of the Corporation may be exercised by or under authority of the Board of Directors, except as conferred on or reserved to the stockholders by statute or by the Charter or these Bylaws.
SECTION 2.2. Number of Directors. The Corporation shall have the number of directors provided in the Charter until changed as herein provided. A majority of the entire Board of Directors may alter the number of directors set by the Charter to not more than twenty-five (25) nor less than the number required by Section 2-402 of the Maryland General Corporation Law, as amended (the "MGCL").
SECTION 2.3. Election and Tenure of Directors. At each annual meeting, the stockholders shall elect directors to hold office until the next annual meeting and until their successors are elected and qualified.
SECTION 2.4. Removal of Director. Unless statute or the Charter provides otherwise, the stockholders may remove any director or directors from office at any time, with or without cause, by the affirmative vote at any meeting of stockholders, duly called and at which a quorum is present, of the holders of a majority of the outstanding shares of the Corporation entitled to be cast for the election of directors and may elect a successor or successors to fill any resulting vacancies for the unexpired terms of removed directors.
SECTION 2.5. Vacancy on Board. The stockholders may elect a successor to fill a vacancy on the Board of Directors which results from the removal of a director. A director elected
by the stockholders to fill a vacancy which results from the removal of a director serves for the balance of the term of the removed director. A majority of the remaining directors, whether or not sufficient to constitute a quorum, may fill a vacancy on the Board of Directors which results from any cause except an increase in the number of directors, and a majority of the entire Board of Directors may fill a vacancy which results from an increase in the number of directors. A director elected by the Board of Directors to fill a vacancy serves until the next annual meeting of stockholders and until his successor is elected and qualifies.
SECTION 2.6. Regular Meetings. Any regular meeting of the Board of Directors shall be held on such date and at any place in or out of the State of Maryland as may be designated from time to time by the Board of Directors.
SECTION 2.7. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President or by a majority of the Board of Directors by vote at a meeting, or in writing with or without a meeting. A special meeting of the Board of Directors shall be held on such date and at any place in or out of the State of Maryland as may be designated from time to time by the Board of Directors or in the call.
SECTION 2.8. Notice of Meeting. The Secretary shall give notice to each
director of each regular and special meeting of the Board of Directors. The
notice shall state the time and place of the meeting. Notice is given to a
director when it is delivered personally to him, left at his residence or usual
place of business, or sent by telegraph or telephone, at least twenty-four (24)
hours before the time of the meeting or, in the alternative by mail to his
address as it appears on the records of the Corporation, at least seventy-two
(72) hours before the time of the meeting. Unless the Bylaws or a resolution of
the Board of Directors provides otherwise, the notice need
not state the business to be transacted at or the purposes of any regular or special meeting. No notice of any meeting of the Board of Directors need be given to any director who attends, or to any director who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. Any meeting of the Board of Directors, regular or special, may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.
SECTION 2.9. Quorum and Voting. At all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business, and the action of a majority of the directors present at any meeting at which a quorum is present shall be the action of the Board of Directors unless the concurrence of a greater proportion is required for such action by statute, the Charter or these Bylaws. If a quorum shall not be present at any meeting of directors, the directors present at the meeting may by a majority vote adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
SECTION 2.10. Organization. The Chairman of the Board shall preside at each meeting of the Board of Directors or, in his absence or inability to act, another director chosen by the Chairman of the Board. The Secretary (or, in his absence or inability to act, any person appointed by the chairman) shall act as secretary of the meeting and keep the minutes thereof.
SECTION 2.11. Action by Directors. Unless statute, the Charter or these Bylaws require a greater proportion, the action of a majority of the directors present at a meeting at which a quorum is present is action of the Board of Directors. A majority of the entire Board of Directors shall constitute a quorum for the transaction of business. In the absence of a quorum, the directors
present by majority vote and without notice other than by announcement may adjourn the meeting from time to time until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting, if a unanimous written consent which sets forth the action is signed by each member of the Board of Directors and filed with the minutes of proceedings of the Board of Directors. Such consents may be signed by different members on separate counterparts.
SECTION 2.12. Meeting by Conference Telephone. Members of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at a meeting.
SECTION 2.13. Compensation. By resolution of the Board of Directors a fixed sum and expenses, if any, for attendance at each regular or special meeting of the Board of Directors or of committees thereof, and other compensation for their services as such or on committees of the Board of Directors, may be paid to directors. A director who serves the Corporation in any other capacity also may receive compensation for such other services, pursuant to a resolution of the directors.
SECTION 2.14. Interested Director Transactions.
(a) Taking into account compliance with the provisions of subsection
(b) of this Section 2.14, a contract or other transaction between the
Corporation and any of its directors or between the Corporation and any other
corporation, firm or other entity in which any of the
Corporation's directors is a director or has a material financial interest (an "Interested Director Transaction") is not void or voidable solely because of any one or more of the following:
(i) the common directorship;
(ii) the presence of the director at the meeting of the Board of Directors which authorizes, approves or ratifies the contract or transaction; or
(iii) the counting of the vote of the director for the authorization, approval or ratification of the contract or transaction.
(b) An Interested Director Transaction is not void or voidable solely because of any one or more of the factors set forth in subsection (a) above if:
(i) the fact of the common directorship or interest is disclosed or known to:
1. the Board of Directors of the Corporation, and the Board of Directors authorizes, approves or ratifies the contract or transaction by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum; or
2. the stockholders entitled to vote, and the contract or transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by the interested director, or corporation, firm or other entity; or
(ii) a contract or transaction is fair and reasonable to the Corporation.
(c) Common or interested directors or the stock owned by them or by an interested corporation, firm or other entity may be counted in determining the presence of a quorum in a
meeting of the Board of Directors of the Corporation or at a meeting of the stockholders, as the case may be, at which the contract or transaction is authorized, approved or ratified.
(d) (i) if a contract or transaction is not authorized, approved or ratified in any one of the ways provided for in subsection (b)(i) of this Section 2.14, the person asserting the validity of the contract or transaction bears the burden of proving that the contract or transaction was fair and reasonable to the Corporation at the time it was authorized, approved or ratified.
(ii) this subsection (d) does not apply to the fixing by the Board of Directors o the Corporation of reasonable compensation, whether as a director or in any other capacity.
ARTICLE III.
COMMITTEES
SECTION 3.1. Number; Tenure and Qualification. The Board of Directors may appoint from among its members an executive committee and other committees, composed of two (2) or more directors, to serve at the pleasure of the Board of Directors. If any committee may take or authorize any act as to any matter in which any director (or affiliate of such director) who is an employee of the Corporation has or may have any interest, a majority of the members of such committee shall be directors who are not employees of the Corporation, except that any such committee consisting of only two (2) directors may have one director who is not an employee of the Corporation and one director who is an employee of the Corporation.
SECTION 3.2. Delegation of Power. The Board of Directors may delegate to those
committees in the intervals between meetings of the Board of Directors any of the powers of the Board of Directors to manage the business and affairs of the Corporation, except those powers which the Board of Directors is specifically prohibited from delegating pursuant to Section 2-411 of the MGCL.
SECTION 3.3. Quorum and Voting. A majority of the members of any committee shall constitute a quorum for the transaction of business by such committee, and the act of a majority of the quorum shall constitute the act of the committee, unless the concurrence of a greater proportion is required for such action by statute, the Charter or these Bylaws. If a quorum shall not be present at any meeting of such committee, the members of the committee present at the meeting may by a majority vote adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
SECTION 3.4. Conduct of Meetings. Each committee shall designate a presiding officer of such committee and, if not present at a particular meeting, the committee shall select a presiding officer for such meeting. Members of any committee may participate in meetings of such committee by conference telephone or similar communications equipment by means of which all directors participating in the meeting can hear each other at the same time, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for all purposes of these Bylaws. Each committee shall keep minutes of its meetings, and report the results of any proceedings at the next succeeding annual or regular meeting of the Board of Directors.
SECTION 3.5. Action by Committees. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a written
consent to such action is signed by all members of the committee and such written consent is filed with the minutes of proceedings of such committee. Such consents may be signed by different members on separate counterparts.
SECTION 3.6. Interested Committee Member Transactions.
(a) Taking into account compliance with the provisions of subsection
(b) of this Section 3.6, an Interested Director Transaction is not void or
voidable solely because of any one or more of the following:
(i) the common directorship;
(ii) the presence of the director at the meeting of a committee of the Board of Directors which authorizes, approves or ratifies the contract or transaction; or
(iii) the counting of the vote of the director at such meeting for the authorization, approval or ratificatio of the contract or transaction.
(b) An Interested Director Transaction is not void or voidable solely because of any one or more of the factors set forth in subsection (a) above if:
(i) the fact of the common directorship or interest is disclosed or known to:
1. a committee of the Board of Directors of the Corporation, and such committee authorizes, approves or ratifies the contract or transaction by the affirmative vote of a majority of disinterested directors on such committee, even if the disinterested directors constitute less than a quorum; or
2. the stockholders entitled to vote, and the contract or transaction is
authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by the interested director, or corporation, firm or other entity; or
(ii) a contract or transaction is fair and reasonable to the Corporation.
(c) Common or interested directors or the stock owned by them or by an interested corporation, firm or other entity may be counted in determining the presence of a quorum in a meeting of a committee of the Board of Directors of the Corporation or at a meeting of the stockholders, as the case may be, at which the contract or transaction is authorized, approved or ratified.
(d) (i) if a contract or transaction is not authorized, approved or ratified in any one of the ways provided for in subsection (b)(i) of this Section 3.6, the person asserting the validity of the contract or transaction bears the burden of proving that the contract or transaction was fair and reasonable to the Corporation at the time it was authorized, approved or ratified.
(ii) this subsection (d) does not apply to the fixing by a committee of the Board of Directors of the Corporation of reasonable compensation, whether as a member of such committee or in any other capacity.
ARTICLE IV.
OFFICERS
SECTION 4.1. Executive Officers. The Corporation shall have a Chairman of the Board
(who shall be a director of the Corporation), a President, a Secretary and a Treasurer. It may also have one or more Vice Presidents, one or more Assistant Vice-Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers. A person may hold more than one office in the Corporation except those of President and Vice-President, but no officer shall execute, acknowledge or verify any instrument in more than one capacity, if such instrument is required by law, the Charter or these Bylaws to be executed, acknowledged or verified by two or more officers.
SECTION 4.2. Chairman of the Board. The Chairman of the Board shall be the chief executive officer of the Corporation and shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board shall have general powers of oversight, supervision and management of the business and affairs of the Corporation and shall perform such other duties as may be prescribed by the Board of Directors. Unless the Board of Directors shall otherwise delegate such duties, the Chairman of the Board shall be ex-officio a member of all standing committees.
SECTION 4.3. President. The President shall serve, under the general direction of the Chairman of the Board, as the Chief Operating Officer of the Company. He shall have general and active management of the business of the Corporation, and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall execute bonds, mortgages and other contracts except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The President shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties as the Board of Directors or the Chairman of the Board may from time to time prescribe.
SECTION 4.4. Vice Presidents. The Vice Presidents, in the order of their seniority, unless otherwise determined by the Board of Directors or the Chairman of the Board, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President and shall perform such other duties as the Board of Directors or the Chairman of the Board or the President may from time to time prescribe.
SECTION 4.5. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the Chairman of the Board or the President, under whose supervision he shall be. He shall keep in safe custody the seal of the Corporation and, when authorized by the Board of Directors, affix the same to any instrument and, when so affixed, it shall be attested by his signature or by the signature of the Treasurer or an Assistant Secretary.
SECTION 4.6. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors taking proper vouchers for such disbursements, and shall render to the Chairman of the
Board and the Board of Directors, at the regular meetings of the Board, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.
SECTION 4.7. Assistant and Subordinate Officers. The Corporation may have such assistant and subordinate officers as the Board of Directors may from time to time deem desirable. Each such officer shall hold office for such period and perform such duties as the Board of Directors, the President or the committee or officer designated pursuant to Section 4.09 may prescribe.
SECTION 4.8. Compensation. The Board of Directors shall have power to fix the salaries and other compensation and remuneration, of whatever kind, of all officers of the Corporation. It may authorize any committee or officer, upon whom the power of appointing assistant and subordinate officers may have been conferred, to fix the salaries, compensation and remuneration of such assistant and subordinate officers.
SECTION 4.9. Election, Tenure and Removal of Officers. The Board of Directors shall elect the officers, except as provided in the following sentence. The Board of Directors may (a) authorize the Chairman of the Board to appoint, promote or remove any other officer of the Corporation (provided that the foregoing shall not be deemed to impair the Chairman's ability to
resign as Chairman of the Board) and (b) authorize the President to appoint, promote or remove any other officer of the Corporation except the Chairman of the Board (provided that the foregoing shall not be deemed to impair the President's ability to resign as President). All officers shall be appointed to hold their offices, respectively, during the pleasure of the Board. Any officer elected or appointed by the Board of Directors may be removed by the Board of Directors (at any meeting of the Board of Directors by affirmative vote of a majority of the directors then in office) whenever in its judgment the best interests of the Corporation would be served thereby. Any officer elected or appointed by the Chairman of the Board or the President may be removed by the Chairman of the Board or the President, as applicable (except with respect to the Chairman of the Board), at any time with or without cause. In either case, such removal shall be without prejudice to such removed officer's contract rights. The Board of Directors, the Chairman of the Board or the President, as the case may be, may fill a vacancy which occurs in an office for the unexpired portion of the term.
ARTICLE V.
STOCK
SECTION 5.1. Certificates for Stock. Each stockholder is entitled to certificates which represent and certify the shares of stock he holds in the Corporation provided, however, that certificates for fractional shares shall not be issued. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or other person to whom it is issued and the class of stock and number of shares it represents. It shall be in such form, not inconsistent with law or with the Charter, as shall be approved by the Board of Directors or any
officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairman of the Board, the President or a Vice President, and countersigned by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A stock certificate may not be issued by the Corporation until the stock represented by it is fully paid by the stockholder.
SECTION 5.2. Transfers. The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock; and may appoint transfer agents and registrars thereof. The duties of transfer agent and registrar may be combined.
SECTION 5.3. Legends. Every stock certificate representing shares of stock which are restricted as to transferability by the Corporation shall contain a full statement of the restriction or state that the Corporation will furnish information about the restriction to the stockholder on request and without charge.
SECTION 5.4. Record Date and Closing of Transfer Books. The Board of Directors may set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record date may not be more than ninety (90) days before the date on which the action requiring the determination will be taken; the transfer books may not be closed
for a period longer than twenty (20) days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten (10) days before the date of the meeting.
SECTION 5.5. Stock Ledger. The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock, within or without the State of Maryland, or, if none, at the principal office or the principal executive offices of the Corporation.
SECTION 5.6. Lost Stock Certificates. The Board of Directors or any officer of the Corporation designated by the Board of Directors may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen, or destroyed. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate except upon the order of some court having jurisdiction in the premises.
ARTICLE VI.
FINANCE
SECTION 6.1. Checks, Drafts. Etc. All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall, unless otherwise provided by resolution of the Board of Directors, be signed by the Chairman of the Board, the President, a Vice President or an Assistant Vice President, and countersigned by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
SECTION 6.2. Annual Statement of Affairs. The Chairman of the Board, the President, a Vice President or the Treasurer shall prepare or cause to be prepared annually a full and correct statement of the affairs of the Corporation, including a balance sheet and a financial statement of operations for the preceding fiscal year, which shall be certified by independent certified public accountants and distributed to shareholders within 120 days after the close of the Corporation's fiscal year and a reasonable period of time prior to the annual meeting of shareholders. Such annual statement shall also be submitted at the annual meeting and shall be filed within twenty (20) days thereafter at the principal office of the Corporation.
SECTION 6.3. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Charter, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in its own shares, subject to the provisions of any statute and of the Charter.
SECTION 6.4. Fiscal Year. The fiscal year of the Corporation for purposes of preparing its tax returns shall be from January 1 to December 31 unless otherwise provided by the Board of Directors.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1. Books and Records. The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any executive or other committee when exercising any
of the powers of the Board of Directors. The books and records of a Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of the Bylaws shall be kept at the principal office of the Corporation.
SECTION 7.2. Corporate Seal. There shall be a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. It shall be in such form, not inconsistent with law or with the Charter, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirement of any law, rule or regulation relating to the corporate seal to place the word "Seal" adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.
SECTION 7.3. Bonds. The Board of Directors may require any officer, agent or employee of the Corporation to give a bond to the Corporation, conditioned upon the faithful discharge of his duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors.
SECTION 7.4. Voting Upon Shares in Other Corporations. Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chairman of the Board, the President, or any Vice President, or a proxy appointed by any of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which
case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.
SECTION 7.5. Mail. Any notice or other document which is required by these Bylaws to be mailed shall be deposited in the United States mails, postage prepaid.
SECTION 7.6. Execution of Documents. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.
SECTION 7.7. Amendments.
(a) The Board of Directors shall have the power, at any annual or regular meeting, or at any special meeting if notice thereof is included in the notice of such special meeting, to alter or repeal any Bylaws of the Corporation and to make new Bylaws.
(b) The stockholders, by affirmative vote of a majority of the
shares of common stock of the Corporation, shall have the
power, at an annual meeting (subject to the requirements of
Section 1.1 of these Bylaws), o at any special meeting if
notice thereof is included in the notice of such special
meeting, to alter or repeal any Bylaws of the Corporation and
to make new Bylaws.
EXHIBIT 4.1
CM
COMMON STOCK
PAR VALUE $.01
INCORPORATED UNDER THE LAWS
OF THE STATE OF MARYLAND
THIS CERTIFICATE IS TRANSFERABLE IN
MINNEAPOLIS, MN OR NEW YORK, NY
The transferability of the shares represented hereby is subject to certain restrictions and such shares are subject to redemption as provided in the Charter of the Corporation to which reference is hereby made, to prevent disqualification of the Corporation from taxation as a real estate investment trust under Sections 856 to 860 of the Internal Revenue Code of 1986, as amended (the "Code"), and to prevent ownership of such shares by certain disqualified organizations, including governmental bodies and tax-exempt entities that are not subject to tax on unrelated business taxable income, as defined in Section 860E(e)(5) of the Code. A copy of the applicable provisions of the Charter will be furnished to any stockholder upon request and without charge. The Corporation will also furnish to any stockholder upon request and without charge a full statement of the designation, preferences, limitations and relative rights of the shares of each class of stock of the Corporation authorized to be issued and the variations in the relative rights and preferences between shares of any series of any authorized preferred or special class so far as they have been fixed and determined and the authority of the Board of Directors to classify unissued shares and to fix and determine the relative rights and preferences thereof and of any subsequent series of preferred or special classes. Any such request or requests should be directed to the Secretary of the Corporation at its principal place of business.
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 14067E 50 6
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Capstead Mortgage Corporation transferable on the books of the Corporation by the holder hereof, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby shall be held subject to all of the provisions of the Articles of Incorporation of the Corporation and all amendments thereto, copies of which are on file with the Corporation and the Transfer Agent, to all of which the holder, by his acceptance hereof, assents. This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:
Chairman of the Board
Secretary
COUNTERSIGNED AND REGISTERED:
WELLS FARGO BANK MINNESOTA, N.A.
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
CAPSTEAD MORTGAGE CORPORATION
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM-D
TEN ENT-D
JT TEN-D
as tenants in common
as tenants by the entireties
as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT- ...........Custodian.........
(Cust) (Minor)
under Uniform Gifts to Minors
Act..........................
(State)
|
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.
Dated,
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
X
(SIGNATURE)
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17-Ad-15.
SIGNATURE(S) GUARANTEED BY:
X
(SIGNATURE)
[LETTERHEAD OF ANDREWS & KURTH APPEARS HERE]
EXHIBIT 5.1
June 19, 2001
Capstead Mortgage Corporation
8401 N. Central Expressway
Suite 800
Dallas, Texas 75225
Re: Capstead Mortgage Corporation Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Capstead Mortgage Corporation, a Maryland corporation (the "Company"), in connection with a Registration Statement on Form S-3 filed by the Company under the Securities Act of 1933 (the "Registration Statement") with respect to the sale by Fortress Investment Group, LLC from time to time of up to 9,298,717 shares of Common Stock, par value $.01 per share (collectively, the "Shares"), of the Company.
In this capacity, we have examined the Registration Statement, the Prospectus, the Charter and By-Laws of the Company, the proceedings of the Board of Directors of the Company or a committee thereof relating to the authorization of the issuance of the Shares, an Officer's Certificate of the Company dated the date hereof, and such other statutes, certificates, instruments, and documents relating to the Company and matters of law as we have deemed necessary to the issuance of this opinion. In such examination, we have assumed, without independent investigation, the genuineness of all signatures, the legal capacity of all individuals who have executed any of the aforesaid documents, the authenticity of all documents submitted to us as originals, the conformity with originals of all documents submitted to us as copies (and the authenticity of the originals of such copies), and that all public records reviewed are accurate and complete. As to factual matters, we have relied on the Officer's Certificate and have not independently verified the matters stated therein.
Based upon the foregoing and having regard for such legal considerations as we deem relevant, we are of the opinion that upon the sale and delivery of the Shares in the manner contemplated by the Prospectus (together with any applicable Prospectus Supplement), the Shares will have been duly and validly authorized and will be validly issued, fully paid, and non-assessable.
To the extent that the opinion set forth herein is governed by the laws of the State of Maryland, we have relied solely on, and our opinion is subject to the limitations and assumptions set forth in, the opinion of Hogan & Hartson L.L.P., dated June 19, 2001 and addressed to the Company
Capstead Mortgage Corporation
June 19, 2001
and upon which we are authorized to rely. We have made no independent examination of the laws of the State of Maryland.
This opinion is solely for the benefit of the addressee hereof, and, without our prior written consent, may not be quoted in whole or in part or otherwise referred to in any legal opinion, document, or other report, and may not be furnished to any person or entity. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm and to our opinion in the Registration Statement and Prospectus which is a part thereof.
This opinion is delivered as of the date hereof and we disclaim any responsibility to update this opinion at any time following the date hereof.
Sincerely yours,
ANDREWS & KURTH L.L.P.
By: /s/ DAVID BARBOUR ---------------------------- David Barbour, Partner |
EXHIBIT 5.2
June 19, 2001
Board of Directors
Capsted Mortgage Corporation
8401 North Central Expressway
Suite 800
Dallas, TX 75225-4410
Ladies and Gentlemen:
We are acting as special counsel to Capsted Mortgage Corporation, a Maryland corporation (the "COMPANY"), in connection with its registration statement on Form S-3, as amended (the "REGISTRATION STATEMENT"), filed with the Securities and Exchange Commission relating to the proposed offering from time to time of up to 9,298,717 shares of the Company's common stock, par value $.01 per share, all of which shares (the "SHARES") are to be sold by a certain stockholder of the Company. This opinion letter is furnished to you at your request to enable you to fulfill the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. Section 229.601(b)(5), in connection with the Registration Statement.
For purposes of this opinion letter, we have examined copies of the following documents:
1. An executed copy of the Registration Statement.
2. The Charter of the Company, as certified by the Maryland State Department of Assessments and Taxation on June 13, 2001 and by the Secretary of the Company on the date hereof as being complete, accurate, and in effect.
3. The Bylaws of the Company, as certified by the Secretary of the Company on the date hereof as being complete, accurate, and in effect.
4. Resolutions of the Board of Directors of the Company adopted at a meeting held on November 30, 1999, as certified by the Secretary of the Company on the date hereof as being complete, accurate, and in effect, relating to the issuance of the Shares to restructure therewith.
Board of Directors
Capsted Mortgage Corporation
June 19, 2001
In our examination of the aforesaid documents, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the accuracy and completeness of all documents submitted to us, the authenticity of all original documents, and the conformity to authentic original documents of all documents submitted to us as copies (including telecopies). This opinion letter is given, and all statements herein are made, in the context of the foregoing.
This opinion letter is based as to matters of law solely on the Maryland General Corporation Law, as amended. We express no opinion herein as to any other laws, statutes, ordinances, rules, or regulations. As used herein, the term "Maryland General Corporation Law, as amended" includes the statutory provisions contained therein, all applicable provisions of the Maryland Constitution and reported judicial decisions interpreting these laws.
Based upon, subject to and limited by the foregoing, we are of
the opinion that following (i) effectiveness of the Registration Statement, and
(ii) receipt by the Company of the consideration for the Shares specified in the
resolutions of the Board of Directors, the Shares will be validly issued, fully
paid, and nonassessable.
This opinion letter has been prepared for your use in connection with the Registration Statement and speaks as of the date hereof. In this regard, Andrews & Kurth, L.L.P. is authorized to rely on the opinions contained herein for purposes of rendering its opinion to be included in the Registration Statement. We assume no obligation to advise you of any changes in the foregoing subsequent to the delivery of this opinion letter.
We hereby consent to the filing of this opinion letter as Exhibit 5.2 to the Registration Statement and to the reference to this firm under the caption "Legal Matters" in the prospectus constituting a part of the Registration Statement. In giving this consent, we do not thereby admit that we are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
HOGAN & HARTSON L.L.P.
[LETTERHEAD OF ANDREWS & KURTH APPEARS HERE]
EXHIBIT 8.1
June 19, 2001
Capstead Mortgage Corporation
8401 N. Central Expressway
Suite 800
Dallas, Texas 75225
Re: Capstead Mortgage Corporation Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Capstead Mortgage Corporation ("Capstead") in connection with the preparation of a Prospectus included in a registration statement on Form S-3, as amended which has been filed with the Securities and Exchange Commission with respect to the sale by Fortress Investment Group, LLC of common stock as described in such registration statement. You have requested our opinion regarding Capstead's qualification as a real estate investment trust ("REIT") pursuant to sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), as set forth below. Capstead has and has had a number of wholly-owned subsidiaries, the income, liabilities, and assets of which are not and were not accounted for separately from Capstead for federal income tax purposes pursuant to applicable provisions of the Code. This letter refers to Capstead, as aggregated with such subsidiaries as were in existence during the period for which reference is made, as "Capstead REIT." In addition, Capstead owned all of the outstanding common stock of Capstead Securities Corporation I ("OLD CSCI") from March 13, 1986 until December 30, 1993, the date of its merger with and into CMC Liquidation Corporation (which corporation changed its name to Capstead Securities Corporation I ("New CSCI")).
For the purpose of rendering our opinion, we have examined and are relying upon the truth and accuracy, at all relevant times, of the statements, covenants, representations and warranties contained in the following documents:
1. The Articles of Incorporation of Capstead and the Certificate of Incorporation of (i) OLD CSCI, (ii) CMF Mortgage Funding Corporation, (iii) Capstead Holdings, Inc., (iv) Capstead Inc. and (v) each wholly owned subsidiary of Capstead, each as amended and supplemented to the date hereof.
Capstead Mortgage Corporation
June 19, 2001
2. The By-Laws of Capstead and the Bylaws of OLD CSCI.
3. Capstead REIT's federal income tax returns for taxable years 1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998 and 1999.
4. OLD CSCI's federal income tax returns for taxable years 1986, 1987, 1988, 1989, 1990, 1991, 1992 and 1993.
5. The registration statement with which this letter is being filed by amendment, as amended to date.
6. Representations made to us by an officer of Capstead in a certificate as of the date hereof and representations made to us by an officer of New CSCI in a certificate as of the date hereof.
In connection with rendering this opinion, we have assumed and are relying upon, without any independent investigation or review thereof, the following:
1. The authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, and authenticity of the originals of such documents.
2. The genuineness of all signatures, the due authorization, execution and delivery of all documents by all parties thereto and the due authority of all persons executing such documents.
3. None of Capstead, its wholly owned subsidiaries, or Capstead Holdings, Inc. will make any amendments to its organizational documents after the date of this opinion that would adversely affect Capstead REIT's qualification as a REIT for any taxable year.
4. No actions will be taken by Capstead REIT after the date hereof that would have the effect of altering the facts upon which the opinion set forth below is based.
Based on the foregoing and subject to the assumptions, exceptions, limitations and qualifications set forth herein, we are of the opinion that:
(i) For all of its taxable years beginning September 5, 1985 and ending December 31, 2000, Capstead REIT has met the requirements for qualification as a 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 Capstead REIT
Capstead Mortgage Corporation
June 19, 2001
continues to be organized and operated after the date of this letter so as to satisfy the applicable REIT requirements under the Code, and
(ii) The statements in the Prospectus set forth under the caption "Taxation" accurately describes the material federal income tax consequences to the holders of Capstead's common stock under existing law and subject to the qualifications and assumptions stated therein.
In addition to the assumptions set forth above, this opinion is subject to the following exceptions, limitations and qualifications:
1. Our opinion expressed herein is based upon our interpretation of the current provisions of the Code and existing judicial decisions, administrative regulations and published rulings and procedures. Our opinion is not binding upon the Internal Revenue Service or courts and there is no assurance that the Internal Revenue Service will not successfully challenge the conclusion set forth herein. The Internal Revenue Service has not yet issued regulations or administrative interpretations with respect to various provisions of the Code relating to REIT qualification. No assurance can be given that future legislative, judicial or administrative changes, on either a prospective or retroactive basis, would not adversely affect the accuracy of the conclusion stated herein.
2. Our opinion is limited to the federal income tax matters addressed herein, and no other opinions are rendered with respect to any other matter not specifically set forth in the foregoing opinion.
3. Our opinion is limited in all respects to the federal law of the United States, and we assume no responsibility as to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction.
4. Except as described in this letter, we have made no efforts to verify the accuracy and genuineness of the documents, assumptions and representations set forth above.
In the event any one of the statements, representations, warranties or assumptions we have relied upon to issue this opinion is incorrect in a material respect, our opinion might be adversely affected and may not be relied upon. This opinion is delivered as of the date hereof and we disclaim any responsibility to update this opinion at any time following the date hereof.
The ability of Capstead REIT to qualify as a REIT for its 2001 taxable year and subsequent taxable years will depend on future events, some of which are not within the control of Capstead REIT. Additionally, it is not possible to predict whether the statements, representations, warranties or assumptions on which we have relied on to issue this opinion will continue to be accurate in the
Capstead Mortgage Corporation
June 19, 2001
future. Thus, the treatment of the Capstead REIT for federal income tax purposes may be altered for the taxable years affected thereby.
We hereby consent to the reference to us under the caption "TAXATION" in the Registration Statement, and to the filing of this opinion as an Exhibit to the Registration Statement, without implying or admitting that we are experts within the meaning of the Securities Act of 1933, as amended, with respect to any part of the Registration Statement.
Very truly yours,
ANDREWS & KURTH L.L.P.
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the Registration Statement on Form S-3 and related Prospectus of Capstead Mortgage Corporation for the registration of 9,298,717 shares of its common stock and to the incorporation by reference therein of our report dated January 30, 2001, except for Notes 11 and 13 as to which the date is February 16, 2001 and February 20, 2001, respectively, with respect to the consolidated financial statements of Capstead Mortgage Corporation incorporated by reference in its Annual Report (Form 10-K) for the year ended December 31, 2001, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
June 13, 2001