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CMC SECURITIES CORPORATION IV
COLLATERALIZED MORTGAGE OBLIGATIONS
(Issuable in Series)
UNDERWRITING AGREEMENT
September 24, 1997
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
CMC Securities Corporation IV (the "Company"), a Delaware corporation
and wholly-owned subsidiary of Capstead Mortgage Corporation, a Maryland
corporation ("Capstead"), proposes to issue its Collateralized Mortgage
Obligations of the series (each, a "Series") and classes designated at the time
of sale (the "Bonds"). The Bonds shall be issued under an indenture, dated as
of September 1, 1997 (the "Original Indenture"), between the Company and The
First National Bank of Chicago, as trustee (the "Trustee"), as supplemented
from time to time by one or more supplemental indentures, each providing for
the issuance of a Series of Bonds (the "Series Supplements") between the
Company and the Trustee. Such Original Indenture, as supplemented from time to
time hereafter, and as supplemented by the Series Supplements, with any changes
therein made with your consent, and, with your consent any other indenture is
herein referred to as the "Indenture." Capstead joins this agreement for the
purposes set forth herein.
Underwritten Offerings of Bonds may be made through you or through an
underwriting syndicate managed by you. The Company proposes to sell one or
more Series of the Bonds or certain Classes of Bonds of one or more Series to
you and to each of the other several underwriters, if any, participating in an
underwriting syndicate managed by you. It is understood, however, that the
Company may elect to retain, through the execution of one or more underwriting
agreements in addition to this Agreement, one or more additional underwriters
other than you to underwrite, or manage the underwriting syndicate with respect
to, any offering of one or more Series of its Bonds.
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Whenever the Company determines to make such an offering of Bonds
through you, it will enter into an agreement (the "Terms Agreement") providing
for the sale of such Bonds to, and the purchase and offering thereof by, you
and such other underwriters, if any, selected by you as have authorized you to
enter into such Terms Agreement on their behalf (the underwriters designated in
any such Terms Agreement being referred to herein as "Underwriters," which term
shall include you whether acting alone in the sale of any Series of Bonds or as
a member of the underwriting syndicate). The Terms Agreement relating to each
offering of Bonds shall specify the principal amount of Bonds to be issued and
their terms not otherwise specified in the Indenture, a brief description of
the Conventional Certificates (as defined below) to be pledged as security
therefor, the names of the Underwriters participating in such offering (subject
to substitution as provided in Section 11 hereof) and the principal amount of
the Bonds which each severally agrees to purchase, the names of such other
Underwriters, if any, acting as co-managers with you in connection with such
offering, the price at which the Bonds are to be purchased by the Underwriters
from the Company, the initial public offering price (or the manner in which
such prices shall be determined), the time and place of delivery of and payment
for the Bonds, and such other information as may be agreed upon. The Terms
Agreement, which shall be substantially in the form of Exhibit A hereto, may
take the form of an exchange of any standard form of written telecommunication
between you and the Company. Each offering of Bonds through you will be
governed by this Agreement, as supplemented by the applicable Terms Agreement,
and this Agreement and such Terms Agreement shall inure to the benefit of and
be binding upon each Underwriter participating in the offering of such Bonds.
At their date of issuance, the Bonds of each Series underwritten by
you will be secured by a pledge to the Trustee of, among other things,
Conventional Certificates (as defined in the Indenture) (collectively, the
"Conventional Certificates"). The Bonds are more fully described in the
Registration Statement (as defined below). Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-47912), a related
preliminary prospectus and related preliminary prospectus supplements for the
registration of the Bonds under the Securities Act of 1933 (the "1933 Act"),
which registration statement, as most recently amended, was declared effective
on August 18, 1994. Such registration statement, as from time to time amended
through the date of the Terms Agreement, including all exhibits thereto and all
documents therein incorporated by reference from time to time pursuant to Item
12 of Form S-3 under the 1933 Act that were filed under the Securities Exchange
Act of 1934 (the "1934 Act"), on or before the effective date of such
registration statement, but excluding the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939 (the "1939
Act"), is hereinafter referred to as the "Registration Statement." The
prospectus in the form in which it appears in the Registration Statement,
including all documents therein incorporated by reference from time to time
pursuant to the 1934 Act, is hereinafter referred to as the "Basic Prospectus".
The Basic Prospectus as
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supplemented by the prospectus supplement or supplements relating to a
particular Series of the Bonds each in the form first filed after the date of
the related Terms Agreement with the Commission pursuant to Rule 424 under the
1933 Act, including any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the 1933 Act that were filed under the 1934 Act on or
before the date of such prospectus supplement (such prospectus supplement,
including such incorporated documents, in the form first filed after the date
of the related Terms Agreement pursuant to Rule 424(b) being hereinafter termed
the "Prospectus Supplement"), is hereinafter referred to as the "Final
Prospectus". Any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Final Prospectus
or the Prospectus Supplement shall be deemed to refer to and include the filing
of any document under the 1934 Act after the effective date of the Registration
Statement or the issue date of the Final Prospectus or Prospectus Supplement,
as the case may be, deemed to be incorporated therein by reference pursuant to
Item 12 of Form S-3 under the 1933 Act.
SECTION 1. Representations and Warranties. The Company and
Capstead, jointly and severally, represent and warrant to you as of the date
hereof, and to each Underwriter named in a Terms Agreement as of the date
thereof (in each case the "Representation Date"), as follows:
(a) The Registration Statement, at the time it became
effective, complied and, as of the date hereof, does comply, in all
material respects with the requirements of the 1933 Act and the rules
and regulations of the Commission thereunder (the "1933 Act
Regulations") and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Final
Prospectus at the time it is mailed to the Commission for filing
pursuant to Rule 424 under the Act and at the Closing Time referred to
in Section 2 will not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in or
omissions from (i) the Registration Statement or Final Prospectus made
in reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through you expressly for use in
the Registration Statement or Final Prospectus or (ii) the Current
Report (as defined in Section 3(b) below), or in any amendment thereof
or supplement thereto, incorporated by reference in such Registration
Statement or such Final Prospectus (or any amendment thereof or
supplement thereto). There are no material contracts or documents of
the Company which are required to be filed as exhibits to the
Registration Statement by the 1933 Act or the 1933 Act Regulations
which have not been so filed.
(b) At the time the Registration Statement became
effective the Trustee was duly qualified under the requirements of the
1939 Act and the rules and regulations of the Commission thereunder
(the "1939 Act Regulations"), and at the Closing Time the Indenture
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will be so qualified and will conform in all material respects with
the requirements of the 1939 Act and the 1939 Act Regulations.
(c) The documents incorporated by reference in the
Registration Statement and the applicable Final Prospectus, at the
time they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder,
and, when read together and with the other information in the
applicable Final Prospectus, at the time the Registration Statement
and any amendments thereof became effective, and at the time such
Final Prospectus is filed with the Commission, did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to the Current
Report.
(d) The accountants who reported on the balance sheet
included or incorporated by reference in the Registration Statement
are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(e) The balance sheet of the Company included or
incorporated by reference in the Registration Statement presents
fairly the financial position of the Company at the date indicated,
and has been prepared in conformity with generally accepted accounting
principles.
(f) Since the respective dates as of which information is
given in the Registration Statement or, if later, the applicable Final
Prospectus, except as otherwise stated therein, there has been no
material adverse change in the condition, financial or otherwise,
earnings, business affairs, or business prospects of the Company.
(g) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with power and authority (corporate and other) to own,
lease and operate its properties and conduct its business as described
in the Registration Statement, and, at the Closing Time, the Company
will be duly qualified as a foreign corporation to transact business
and will be in good standing in the State of Texas. The Company is
not required to qualify to do business as a foreign corporation under
the laws of any other state. The Company has no subsidiaries.
(h) The authorized, issued and outstanding capital stock
of the Company is as set forth (or incorporated) in the Registration
Statement, and the shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully
paid and non-assessable, and are owned of record and beneficially by
Capstead, free
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and clear of any lien, charge, option, warrant, security interest,
encumbrance, voting trust or similar arrangement.
(i) Neither the Company nor Capstead is in violation of
its charter or bylaws. The Company is not in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or
by which it or its properties may be bound, which violations or
defaults separately or in the aggregate would have a material adverse
effect on the Company.
(j) The Company owns or possesses or has obtained all
material governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to lease, own or license, as the
case may be, and to operate, its properties and to carry on its
business as described in the Registration Statement or, if later, the
applicable Final Prospectus; and the Company has conducted and is
conducting its business so as to comply in all material respects with
all applicable laws, administrative regulations and administrative and
court decrees.
(k) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending against the Company or, to the knowledge of the Company and
Capstead, threatened against the Company (except as set forth in the
Registration Statement or, if later, the applicable Final Prospectus)
which could reasonably be expected to result in any material adverse
change in the condition, financial or otherwise, earnings, business
affairs, or business prospects of the Company which could reasonably
be expected to interfere with or materially and adversely affect the
consummation of the transactions contemplated herein.
(l) The execution and delivery of this Agreement and the
Indenture, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein and therein have
been, and the execution and delivery of each Terms Agreement and the
consummation of the transactions contemplated therein will have been
(before the issuance of the related Bonds), duly authorized by the
Company and/or Capstead, as applicable, by all necessary action
(corporate and other); this Agreement and the Indenture have been, and
the Terms Agreement, when executed and delivered, will have been, duly
executed and delivered by the Company, and/or Capstead, as applicable,
enforceable in accordance with their terms, subject, as to
enforceability of remedies, to applicable bankruptcy, insolvency,
reorganization, or other laws affecting creditors' rights generally,
and to general principles of equity and equitable remedies (regardless
of whether the enforceability of such remedies is considered in a
proceeding in equity or at law). Neither the execution and delivery
of this Agreement, the Indenture or the Terms Agreement, the
incurrence of the obligations herein or therein set forth, nor the
consummation of the
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transactions contemplated herein or therein will conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, mortgage, pledge, charge, security interest or
encumbrance (collectively, "Lien") upon any property or assets of the
Company or Capstead, as applicable, pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or Capstead, as applicable, is a party or by
which any of them may be bound, or to which any of the property or
assets of any of them is subject (other than the Lien created pursuant
to the Indenture), which separately or in the aggregate are material,
nor will any such action result in any violation of the provisions of
the charter or bylaws of either of the Company or Capstead, or, to the
best of such entity's knowledge, of any law, administrative regulation
or administrative or court decree.
(m) The issuance of the Bonds underwritten by you has
been duly authorized by the Company (or will have been so authorized
prior to each issuance of Bonds underwritten by you) and, when such
Bonds are executed and authenticated and delivered in accordance with
the Indenture and sold to the Underwriters pursuant to this Agreement
and any Terms Agreement, such Bonds will be entitled to the benefits
and security provided by the Indenture and will constitute the legal,
valid and binding non-recourse obligations of the Company enforceable
in accordance with their terms, but otherwise subject, as to
enforceability of remedies, to applicable bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally,
and to general principles of equity and equitable remedies (regardless
of whether the enforceability of such remedies is considered in a
proceeding in equity or at law).
(n) The Bonds of each Series underwritten by you and the
Indenture will conform in all material respects to the respective
descriptions thereof contained in the applicable Final Prospectus,
except that no representation or warranty is made that the Bonds
conform with any description thereof contained in the Current Report.
(o) At the Closing Time with respect to a Series of
Bonds, the Company will own (i) the Conventional Certificates listed
in Schedule A to the Series Supplement relating to the applicable
Series of Bonds and (ii) the money or other assets specified or
referred to in the granting clauses of such Series Supplement as being
pledged to the Trustee at Closing Time (together, the "Initial
Collateral"), free and clear of any Lien, except the Lien of the
Indenture; the Company has power and authority (corporate and other)
to assign, pledge and deliver the Initial Collateral to the Trustee
under the Indenture, and will have duly authorized such assignment,
pledge and delivery to the Trustee by all necessary corporate action.
(p) As of the Closing Time with respect to a Series of
Bonds, the Company will have assigned, pledged and delivered to the
Trustee under the Indenture all of its right, title and interest in
and to, among other things, (i) Conventional Certificates with an
aggregate
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outstanding principal balance as of such Closing Time at least equal
to the aggregate original principal amount of the Bonds of the
applicable Series then being issued and (ii) cash and/or other assets,
if any, in the amount set forth in the related Series Supplement.
(q) At the Closing Time with respect to a Series of
Bonds, each Conventional Certificate listed on Schedule A to the
Series Supplement relating to the applicable Series of Bonds will have
been duly and validly assigned, pledged and delivered to the Trustee,
or its nominee, and together with such assignment, pledge and delivery
of each Conventional Certificate, the filing of a UCC-1 financing
statement with respect to the Conventional Certificates in the office
of the Secretary of State of the State of Texas and in such other
jurisdictions, if any, as the Company deems appropriate and the
possession by the Trustee, or its nominee, of the Conventional
Certificates and of the monies and/or other assets, if any, specified
in the related Series Supplement, will create as security for
repayment of the Bonds a valid, perfected first security interest.
The information set forth with respect to the Conventional
Certificates in Schedule A to the related Series Supplement will as of
the Closing Time of such Series be true and correct in all material
respects.
(r) The Company is not, and will not as a result of the
offer and sale of the Bonds as contemplated in this Agreement and any
applicable Terms Agreement become, an "investment company" or under
the "control" of an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment
Company Act") which would be required to register under the Investment
Company Act.
(s) The representations and warranties made by the
Company in the Indenture and made in any Officers' Certificate of the
Company delivered pursuant to the Indenture will be true and correct
at the time made and at the Closing Time.
(t) The Pooling and Servicing Agreement, the Conventional
Certificates created thereby and the mortgage loans evidenced thereby
shall conform in all material respects to the respective descriptions
thereof contained in the applicable Final Prospectus, except that no
representation is made that the Conventional Certificates conform with
the descriptions thereof (if any) contained in the Current Report.
(u) Any certificate signed by an officer of the Company
or Capstead and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company or
Capstead, respectively, to each Underwriter as to the matters covered
thereby.
(v) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body of the United States is required for the issue and sale
of the Bonds, or the consummation by the Company of the other
transactions
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contemplated by this Agreement, each Terms Agreement or the Indenture,
except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Bonds by
the Underwriters or as have been obtained.
(w) At the Closing Time of a Series, the Bonds of such
Series shall have been rated in the highest rating category by at
least two nationally recognized statistical rating organizations or in
such lower rating categories as are acceptable to the Underwriters.
(x) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this
Agreement, the related Terms Agreement, the Indenture and the Bonds
have been paid or will be paid at or prior to the Closing Time.
(y) All of the information regarding the characteristics
of the Mortgage Loans contained in the Registration Statement or
furnished to you by the Company in writing or by electronic
transmission is true and correct.
SECTION 2. Sale and Delivery to the Underwriters; Closing. The
several commitments of the Underwriters to purchase Bonds pursuant to any Terms
Agreement shall be deemed to have been made on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, the respective original principal amounts of the Bonds set
forth in the applicable Terms Agreement opposite the name of such Underwriter,
plus any additional original principal amount of Bonds which such Underwriter
may be obligated to purchase pursuant to Section 10 hereof.
Delivery of, and payment of the purchase price for, the Bonds shall be
made at the office of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed upon by you and
the Company, at 10:00 A.M. (Dallas time) on the date set forth in the
applicable Terms Agreement, or such other time as shall be agreed upon by you
and the Company (such time and date being referred to as the "Closing Time").
Payment shall be made in immediately available or next day funds as specified
in the Terms Agreement, payable to or upon the order of the Company, against
delivery to you for the respective accounts of the Underwriters of the Bonds to
be purchased by them. Such Bonds shall be in such denominations and registered
in such names as you may request in writing at least two business days prior to
the Closing Time. The Bonds will be made available for your examination in
Dallas, Texas not later than 10:00 A.M. on the Business Day prior to the
Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with
you, and with each Underwriter participating in the offering of the applicable
Series of Bonds, as follows:
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(a) Immediately following the execution of each Terms
Agreement, the Company will prepare a Final Prospectus setting forth
the principal amount of Bonds covered thereby and their terms not
otherwise specified in the Indenture, the names of the Underwriters
participating in the offering and the principal amount of Bonds which
each severally has agreed to purchase, the names of any Underwriters
acting as co-managers with you in connection with the offering, the
price at which the Bonds are to be purchased by the Underwriters from
the Company, and such other information as you and the Company deem
appropriate in connection with the offering of the Bonds. The Company
will promptly transmit copies of the Final Prospectus to the
Commission for filing pursuant to Rule 424 of the 1933 Act Regulations
and will furnish to the Underwriters named therein as many copies of
the Final Prospectus as you shall reasonably request.
(b) The Company will cause any Computational Materials
(as defined in Section 8 below) with respect to the Bonds that are
delivered by you to the Company pursuant to Section 8 hereof to be
filed with the Commission on a Current Report on Form 8-K (the
"Current Report") pursuant to Rule 13a-11 under the 1934 Act not later
than the Business Day immediately following the Business Day on which
all such Computational Materials are delivered to counsel for the
Company by you prior to 3:00 p.m. Dallas, Texas time, and will
promptly advise you when such Current Report has been filed, provided
that in any event the Company will cause the Computational Materials
to be so filed not later than the date on which the related Final
Prospectus is required to be so filed pursuant to Rule 424 under the
1933 Act. Such Current Report shall be incorporated by reference in
such Final Prospectus and the related Registration Statement.
Notwithstanding the two preceding sentences, the Company shall have no
obligation to file any materials provided by you pursuant to Section 8
("Section 8 Materials") which, in the reasonable determination of the
Company (a "Non-Filing Determination"), are not required to be filed
pursuant to the ▇▇▇▇▇▇ Letter (as defined in Section 8 below), or
which contain erroneous information or contain any untrue statement of
a material fact or, when read in conjunction with the Final Prospectus
and Prospectus Supplement, omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading (it being understood, however, that the Company shall have
no obligation to review or pass upon the accuracy or adequacy of, or
to correct, any Computational Materials provided by you to the Company
pursuant to Section 8 hereof); provided that, in the event of a
Non-Filing Determination, the Company shall immediately notify you in
writing of the reasons for such Non-Filing Determination; and,
provided, further, that the Company shall file those Section 8
Materials for which you have specifically confirmed in writing that
the items giving rise to the Non-Filing Determination are complete and
correct and that you are advising the Company to file such Section 8
Materials.
(c) The Company will notify you immediately, and in
writing confirm the notice, (i) of the receipt of any comments from
the Commission, (ii) of any request by the
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Commission for any amendment to the Registration Statement or any
amendment or supplement to the Final Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iv) of receipt by the
Company of any notification with respect to the suspension of the
qualification of the Bonds for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose, and (v) of
the happening of any event which makes untrue any statement of a
material fact made in, or results in the omission of material
information from, the Registration Statement or in any Final
Prospectus then required to be distributed or which requires the
making of a change in the Registration Statement or any such Final
Prospectus in order to make any material statements therein, in the
light of the circumstances under which they were made, not misleading.
The Company will make every reasonable effort to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(d) The Company will give you notice of its intention to
file any amendment to the Registration Statement or any amendment or
supplement to the Final Prospectus, whether pursuant to the 1934 Act,
1933 Act or otherwise, and will not file any such amendment or
supplement without furnishing a copy thereof to you and counsel for
the Underwriters and obtaining your consent to such filing, which
consent shall not be unreasonably withheld or delayed.
(e) The Company will deliver to you, as soon as
practicable, as many signed copies of the Registration Statement as
originally filed and of each amendment thereto, with signed consents
and exhibits filed therewith (including exhibits incorporated by
reference therein and documents incorporated by reference in the Final
Prospectus), and will also deliver to you such number of conformed
copies of the Registration Statement as originally filed and of each
amendment thereto (including consents and exhibits) as you may
reasonably request.
(f) The Company will furnish to each Underwriter, from
time to time during the period when the Final Prospectus is required
to be delivered under the 1933 Act, such number of copies of the Final
Prospectus (as amended or supplemented), other than exhibits to the
related Current Report, as it may reasonably request for the purposes
contemplated by the 1933 Act or the ▇▇▇▇ ▇▇▇.
(g) If at any time when a prospectus relating to the
Bonds is required to be delivered under the 1933 Act any event occurs
as a result of which the applicable Final Prospectus as then amended
or supplemented would include an untrue statement of a material fact,
or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is
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necessary at any time to amend such Final Prospectus to comply with
the 1933 Act, the Company, subject to subparagraph (d) above, promptly
will prepare and file with the Commission an amendment or supplement
which will correct such statement or omission or an amendment which
will effect such compliance; provided, however, that the Company will
not be required to file any such amendment or supplement with respect
to any Computational Materials incorporated by reference in the Final
Prospectus other than any amendments or supplements of such
Computational Materials that are furnished to the Company by the
Underwriter pursuant to Section 8(g) hereof that the Company
determines to file in accordance therewith.
(h) The Company will endeavor, in cooperation with you
and counsel for the Underwriters, to qualify the Bonds for offering
and sale under the applicable securities and Blue Sky laws of such
jurisdictions as you may reasonably designate, and will maintain such
qualification in effect for a period of not less than one year after
the date hereof, unless the offering and sale of the Bonds is exempt
from such qualification under the Secondary Mortgage Market
Enhancement Act of 1984, and will cooperate with you and counsel for
the Underwriters, to determine the eligibility of the Bonds for
investment by institutional investors in such jurisdictions. The
Company will, at your request or the request of counsel for the
Underwriters, file such statements and reports as may be required by
the laws of each jurisdiction in which the Bonds have been qualified
as above provided. Notwithstanding the foregoing, no such
qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to general service of process,
other than by reason of the offer and sale of the Bonds, qualification
as a foreign corporation or to taxation as a foreign corporation doing
business in such jurisdiction.
(i) The Company will make generally available to its
security holders and will deliver to you as soon as practicable an
earnings statement, conforming to the requirements of Section 11(a) of
the 1933 Act, covering a period of at least twelve months beginning
after the effective date of the Registration Statement. Compliance
with Rule 158 under the 1933 Act shall satisfy the requirements of
this paragraph.
(j) So long as any Bonds are outstanding, the Company
will furnish to you (or cause to be furnished to you) as soon as
practicable upon your written request:
(i) copies of the annual reports and other items
required to be delivered to the Bondholders pursuant to the
Indenture;
(ii) copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange by the Company; and
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(iii) information as to the outstanding principal
balances of the mortgage loans underlying the Conventional
Certificates, and, to the extent that such information has
been maintained in the ordinary course of business by the
Company, such other information as may reasonably be requested
by you which in your judgment is necessary or appropriate to
the maintenance of a secondary market in the Bonds.
(k) So long as any Bonds of any Series underwritten by
you are outstanding, Capstead will furnish to you within five days
after they are available, upon your written request, copies of all
reports filed by Capstead under the 1934 Act.
(l) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13 or 14 of the 1934 Act; provided, however, that the Company will not
be required to file any amendment or supplement to the Current Report
incorporated by reference in the Prospectus other than any amendments
or supplements thereto that are furnished to the Company by you
pursuant to Section 8(g) hereof which the Company determines to file
in accordance therewith.
(m) The Company shall prepare and file with the
Commission, within the period provided in the related Final
Prospectus, its Current Report on Form 8-K which shall include such
detailed information, schedules and reports (the "Detailed
Description") regarding the Conventional Certificates and the mortgage
loans underlying such Conventional Certificates relating to the Series
of Bonds offered by such Final Prospectus (the "Mortgage Loans") as
you may reasonably request.
(n) During the period, if any, commencing on the date of
the applicable Terms Agreement and expiring on the date specified in
such Terms Agreement (the "Stand-Off Period"), neither the Company,
Capstead nor the Partnership or any subsidiary thereof will, without
your prior written consent or as may be otherwise permitted by such
Terms Agreement, offer or sell, or enter into any agreement to sell to
the public, any mortgage-related or mortgage-backed securities issued
by any of them which are similar to the Bonds. The provisions of this
subparagraph (n) do not apply to securities issued or guaranteed by
GNMA, FNMA or FHLMC.
SECTION 4. Payment of Expenses. Unless otherwise specified in
the applicable Terms Agreement, the Company will pay, and Capstead will cause
the Company to pay, all expenses incident to the performance of the Company's
obligations under this Agreement and the applicable Terms Agreement (other than
the expenses of the Independent Accountants under Section 5(f) hereof, which
will be paid by you), including and without limitation those related to: (i)
the filing of the Registration Statement with respect to the Bonds and all
amendments thereto, (ii) the printing
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or photocopying and delivery to the Underwriters, in such quantities as you may
reasonably request, of copies of this Agreement and the Terms Agreement, (iii)
the preparation, registration, issuance and delivery to the Underwriters of the
Bonds underwritten pursuant to this Agreement, (iv) the fees and disbursements
of the Company's counsel and accountants, and of any counsel rendering a
closing opinion with respect to matters of local law, (v) the qualification of
the Bonds underwritten pursuant to this Agreement under securities and Blue Sky
laws and the determination of the eligibility of the Bonds for investment in
accordance with the provisions of Section 3(h), including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of any Blue Sky Survey and
Legal Investment Survey, (vi) the printing and delivery to the Underwriters, in
such quantities as you may reasonably request, of copies of the Registration
Statement with respect to the Bonds underwritten pursuant to this Agreement and
all amendments thereto, of any preliminary prospectus and preliminary
prospectus supplement and of the Final Prospectus and all amendments and
supplements thereto and all documents incorporated therein (other than exhibits
to the Current Report), and of any Blue Sky Survey and Legal Investment Survey,
(vii) the printing or photocopying and delivery to the Underwriters, in such
quantities as you may reasonably request, of copies of the Indenture, (viii)
the fees charged by investment rating agencies for rating the Bonds
underwritten pursuant to this Agreement, (ix) the fees and expenses, if any,
incurred in connection with the listing of the Bonds underwritten pursuant to
this Agreement on any national securities exchange, and (x) the fees and
expenses of the Trustee and its counsel.
If this Agreement is terminated by you in accordance with the
provisions of Section 5 or 10(b)(i), the Company shall, and Capstead will cause
the Company to, reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters to purchase the Bonds pursuant to any Terms Agreement are
subject to the accuracy in all material respects of the representations and
warranties of the Company and Capstead herein contained, to the performance by
the Company and Capstead of their obligations hereunder, and to the following
further conditions:
(a) At the applicable Closing Time (i) no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, (ii) the rating assigned as of the date
of the applicable Terms Agreement by any nationally recognized
securities rating agency to the Bonds to be underwritten at such time
pursuant to this Agreement shall not have been lowered since that date
and (iii) there shall not have come to your attention any fact that
would cause you to believe that the Final Prospectus at the time it
was required to be delivered to a purchaser of the Bonds to be
underwritten at such time pursuant to this Agreement contained an
untrue statement of a material fact or omitted to state a material
fact
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necessary in order to make the statements therein, in light of the
circumstances existing at such time, not misleading.
(b) At the applicable Closing Time you shall have
received:
(1) An opinion, addressed to the Underwriters and dated the Closing
Time, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel to the Company, in form and substance
reasonably satisfactory to you and counsel for the Underwriters, to the effect
that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) The Company has corporate power and authority
to own, lease and operate its properties and conduct its
business as described in the applicable Final Prospectus; and
the Company is qualified as a foreign corporation to transact
business in the State of Texas and each other jurisdiction
where the nature of its assets requires such qualification.
(iii) All the authorized, issued and outstanding
capital stock of the Company has been duly authorized and
validly issued and is fully paid and non-assessable, and is
owned of record by Capstead, to the knowledge of such counsel,
free and clear of any lien, security interest, encumbrance,
option, warrant, voting trust or similar arrangement.
(iv) The Company is not in violation of its charter
or bylaws. To the best of such counsel's knowledge, the
Company is not in default in the performance or observance of
any obligation, agreement, covenant or condition contained in
any material contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which it is a party or by
which it or its properties may be bound.
(v) To the best of such counsel's knowledge, the
Company owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to lease or own, as the
case may be, and to operate, its properties and to carry on
its businesses as presently conducted; and, to the best of
such counsel's knowledge, the Company has conducted and is
conducting its businesses so as to comply in all material
respects with all applicable laws.
(vi) There is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the best of
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such counsel's knowledge, threatened against the Company which
could reasonably be expected to interfere with or adversely
affect the consummation of the transactions contemplated
herein.
(vii) The execution and delivery of this Agreement,
the applicable Terms Agreement and the Indenture (including
the applicable Series Supplement), the incurrence of the
obligations herein and therein set forth and the consummation
of the transactions contemplated herein and therein have been
duly authorized by the Company, by all necessary action; this
Agreement and the applicable Terms Agreement have been duly
authorized, executed and delivered by the Company; and the
Indenture (including the applicable Series Supplement) has
been duly authorized, executed and delivered by the Company
and constitutes a legal, valid and binding agreement of
the Company, enforceable in accordance with its terms,
subject, as to enforceability of remedies, to applicable
bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and to general principles of
equity and equitable remedies (regardless of whether the
enforceability of such remedies is considered in a proceeding
at law or in equity).
(viii) Neither the execution and delivery of this
Agreement, the applicable Terms Agreement or the Indenture,
the incurrence of the obligations herein or therein set forth,
nor the consummation of the transactions contemplated herein
or therein, to the best of such counsel's knowledge, will
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any Lien upon any
property or assets of the Company pursuant to, any material
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company is a party or by which
it may be bound, or to which any of its assets is subject
(other than the Lien created by the Indenture) which
separately or in the aggregate are material, nor will any such
action result in any violation of the provisions of the
charter or bylaws of the Company or, to the best of such
counsel's knowledge, of any law, administrative regulation or
administrative or court decree.
(ix) No filing or, registration with, notice to or
consent, approval, authorization or order or other action of,
any court or governmental authority or agency, is required for
the consummation by the Company of the transactions
contemplated by this Agreement or the applicable Terms
Agreement, except such as have been obtained and except such
as may be required under state securities or Blue Sky laws in
connection with the distribution of the Bonds referred to in
such Terms Agreement by the Underwriters.
(x) The issuance of the Bonds to be underwritten at
such time pursuant to this Agreement has been duly authorized
by the Company and such Bonds have been
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16
duly executed and delivered by the Company and, assuming due
authorization, execution and delivery of the Indenture by the
Trustee, when authenticated by the Trustee in accordance with
the terms of the Indenture and delivered to and paid for by
the Underwriters pursuant to the applicable Terms Agreement,
will constitute legal, valid and binding non-recourse
obligations of the Company, enforceable in accordance with
their terms, subject, as to enforceability of remedies, to
applicable bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and to general
principles of equity and equitable remedies (regardless of
whether the enforceability of such remedies is considered in a
proceeding at law or in equity), and the Bonds are entitled to
the benefits and security provided by the Indenture.
(xi) The Bonds to be underwritten at such time
pursuant to this Agreement and the Indenture conform in all
material respects to the respective descriptions thereof
contained in the applicable Final Prospectus (excluding any
descriptions thereof in the Current Report, as to which no
opinion need be rendered).
(xii) At the Closing Time, the Company had corporate
power and authority to assign, pledge and deliver the Initial
Collateral to the Trustee under the Indenture, and had duly
authorized such assignment, pledge and delivery to the Trustee
by all necessary corporate action.
(xiii) Immediately prior to the grant to the Trustee
of the Conventional Certificates securing the Bonds to be
underwritten at such time pursuant to this Agreement, the
Company owned such Conventional Certificates, free and clear
of any Lien, except the lien of the Indenture; each such
Conventional Certificate has been duly and validly assigned,
pledged and delivered by the Company to the Trustee or its
nominee under the Indenture; the Indenture, together with such
assignment, pledge and delivery of each such Conventional
Certificate, the filing of a UCC-1 financing statement with
respect to the Conventional Certificates with the office of
the Secretary of State of the State of Texas and in such other
jurisdictions, if any, as such counsel deems appropriate, and
the possession by the Trustee, or its nominee, of the
Conventional Certificates not represented by book-entry
accounts and of the other assets comprising the Initial
Collateral, create as security for such Bonds a valid and
perfected security interest in the Trust Estate as security
for the repayment of such Bonds free and clear of any prior
Lien; a UCC-1 financing statement with respect to the security
interest created by the Indenture has been filed in the office
of the Secretary of State of the State of Texas and in such
other offices, if any, as such counsel deems appropriate; no
other recordings or filings in any jurisdiction are necessary
to perfect the security interest of the Trustee in the Initial
Collateral as
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against any third party, and no further action is required to
create, attach or perfect such security interest except that:
(A) appropriate continuation statements with respect to
the UCC-1 financing statements referred to above must
be filed within six months prior to the expiration of
each consecutive five-year period commencing upon the
date of initial filing, and
(B) with respect to items of Initial Collateral and the
distributions thereof, a perfected security interest
in which is perfected by delivery of possession,
possession of such items must be maintained by the
Trustee or its bailee (other than an affiliate of the
Company).
(xiv) The Registration Statement is effective under
the 1933 Act, and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or
threatened by the Commission. The Indenture has been duly
qualified under the 1939 Act.
(xv) The Registration Statement and the applicable
Final Prospectus, and each amendment or supplement thereto
(other than the financial statements, schedules, notes
thereto, and the financial and statistical data included
therein and any documents incorporated by reference in the
Registration Statement and the applicable Final Prospectus,
including without limitation the Current Report, in each case
as to which no opinion need be rendered), as of their
respective effective or issue dates, complied as to form in
all material respects with the requirements of the 1933 Act,
the 1933 Act Regulations, the 1939 Act and the 1939 Act
Regulations; and each document, if any, filed pursuant to the
1934 Act (other than the financial statements, schedules,
notes thereto, and the financial and statistical data included
therein and any documents incorporated by reference in the
Registration Statement and the applicable Final Prospectus,
including without limitation the Current Report, in each case
as to which no opinion need be rendered) and incorporated by
reference in the applicable Final Prospectus, complied when so
filed as to form in all material respects with the 1934 Act
and the rules and regulations thereunder.
(xvi) The statements in the applicable Final
Prospectus under the caption "Certain Federal Income Tax
Consequences", to the extent they constitute matters of law or
legal conclusions, have been prepared or reviewed by such
counsel and correctly represent the opinion of such counsel;
the descriptions in such Final Prospectus of statutes, legal
and governmental proceedings and contracts and other documents
are accurate and fairly present the information required to be
shown.
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(xvii) To the best of such counsel's knowledge,
there are no legal or governmental proceedings pending or
threatened which are required to be disclosed therein, nor any
contracts or documents of a character required to be described
or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto (other than financial
statements, schedules, and notes thereto and the financial and
statistical data included therein and the other documents, if
any, incorporated by reference therein, as to which no opinion
need be rendered).
(xviii) The Company is not, and will not as a result
of the offer and sale of the Bonds as contemplated in this
Agreement and any applicable Terms Agreement, become an
"investment company" or under the "control" of an "investment
company" as such terms are defined in the Investment Company
Act which would be required to register under the Investment
Company Act.
(xix) Nothing has come to the attention of such
counsel that would lead them to believe that the Registration
Statement or any amendment thereto (other than the financial
statements, schedules, notes thereto and the financial and
statistical data included therein and any documents
incorporated by reference therein including without limitation
the Current Report related thereto, in each case as to which
no opinion need be rendered), at their respective effective
dates, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
that the Final Prospectus or any amendment or supplement
thereto (other than the Current Report related thereto, in
each case as to which no opinion need be rendered), at their
respective issue dates or, as amended or supplemented (except
as aforesaid), at Closing Time, contained an untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(xx) The Bonds to be underwritten at such time
pursuant to this Agreement, or the Classes thereof as are
identified in such opinion for these purposes, will be
"mortgage related securities", as defined in Section 3(a)(41)
of the 1934 Act, so long as such Bonds or the identified
Classes are rated in one of the two highest rating categories
by at least one nationally recognized statistical rating
organization.
(2) The opinion, addressed to the Underwriters and dated the
Closing Time, of counsel to Capstead in form and substance reasonably
satisfactory to you and counsel for the Underwriters, to the effect that:
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(i) Capstead has been duly organized and is validly
existing as a corporation, in good standing under the laws of
the jurisdiction of its organization with corporate power and
authority to own, lease and operate its properties and conduct
its business as described in the applicable Final Prospectus.
(ii) Capstead is not, nor will it be, as a result of
its entering into this Agreement and consummating the
transactions contemplated hereby, in violation of its charter
or bylaws, and to the best of such counsel's knowledge, is not
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which it or its
properties may be bound.
(iii) There is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the best of such counsel's
knowledge, against Capstead which could reasonably be expected
to interfere with or adversely affect the consummation of the
transactions contemplated herein.
(iv) The execution and delivery of this Agreement
and the applicable Terms Agreement, the incurrence of the
obligations herein and therein set forth and the consummation
of the transactions contemplated herein and therein have been
duly authorized by Capstead by all necessary corporate action;
and this Agreement and the applicable Terms Agreement have
been duly authorized, executed and delivered by Capstead.
(v) No filing or registration with, notice to or
consent, approval, authorization or order or other action of,
any court or governmental authority or agency, is required for
the consummation by Capstead of the transactions contemplated
by this Agreement or the applicable Terms Agreement, except
such as have been obtained and except such as may be required
under state securities or Blue Sky laws in connection with the
distribution of the Bonds to be underwritten at such time
pursuant to this Agreement by the Underwriters.
(c) At the Closing Time you shall have received the
opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., addressed to the Underwriters and
dated the Closing Time, with respect to certain tax matters, in
substantially the same form as their opinion filed as Exhibit 8.1 of
the Registration Statement.
(d) At the Closing Time you shall have received the
favorable opinion, dated the Closing Time, of Stroock & Stroock &
▇▇▇▇▇, counsel for the Underwriters, with respect to
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the matters set forth in clauses (i), (vii), (x), (xi), (xiv), (xv),
(xix) and (xx) of paragraph (b)(1) of this Section 5 and in clause
(iv) of paragraph (b)(2) of this Section 5.
(e) At the Closing Time there shall not have been, since
the date of the applicable Terms Agreement or since the respective
dates as of which information is given in the Registration Statement,
any material adverse change in the condition, financial or otherwise,
earnings, business affairs, regulatory situation or business prospects
of the Company or Capstead, whether or not arising in the ordinary
course of business, and you shall have received, at the Closing Time,
a certificate of the Chairman of the Board, the President, any Senior
Executive Vice President, Executive Vice President, Senior Vice
President, Vice President or Authorized Officer of the Company and of
Capstead to the effect that there has been no such material adverse
change and to the effect that the other representations and warranties
of the Company and Capstead contained in Section 1 are true and
correct with the same force and effect as though made at and as of the
Closing Time.
(f) The Company and you shall have received from Deloitte
& Touche LLP (the "Independent Accountants") an agreed upon procedures
letter, dated as of the date of the applicable Terms Agreement and
delivered simultaneously with the printing of the Final Prospectus, in
form and substance satisfactory to you. In addition, the Company and
you shall have received from the Independent Accountants an agreed
upon procedures letter, in form and substance satisfactory to you,
with respect to the Computational Materials that are described in
Section 8(a) hereof.
(g) [Reserved]
(h) At the Closing Time, you and the Company shall have
received the favorable opinion of counsel for the Trustee, addressed
to the Underwriters and the Company and dated the Closing Time, in
form and substance satisfactory to you and counsel for the
Underwriters and the Company, to the effect that:
(i) The Trustee is duly incorporated, validly
existing and in good standing as a national banking
association under the laws of the United States of America,
with full corporate and trust power and authority to conduct
its business and affairs as a trustee;
(ii) The Trustee has full power and authority to
execute and deliver the Indenture and to perform its
obligations thereunder;
(iii) The Trustee has duly accepted the office of
Trustee under the Indenture; and
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(iv) The Trustee has duly authorized, executed and
delivered the Indenture.
(i) At the Closing Time, the Bonds then to be
underwritten pursuant to this Agreement shall be rated in the highest
rating category by the rating agencies requested to rate such Bonds or
such other rating category as the related Terms Agreement shall state.
(j) At the Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions (including
copies of insurance policies described in the applicable Final
Prospectus and opinions of counsel with respect to such policies) as
they may reasonably require for the purpose of enabling them to pass
upon the Registration Statement, the applicable Final Prospectus, the
issuance and sale of the Bonds then to be underwritten pursuant to
this Agreement as contemplated in the applicable Terms Agreement and
related proceedings, or in order to evidence the accuracy of any of
the representations and warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Company, Capstead and the Partnership in connection with the issuance
and sale of the Bonds then to be underwritten pursuant to this
Agreement as contemplated in the applicable Terms Agreement and in the
Indenture shall be reasonably satisfactory in form and substance to
you and counsel for the Underwriters.
(k) At the Closing Time, you shall have received a
reliance letter related to each opinion of counsel for the Company
that is delivered to the rating agencies requested to rate the Bonds
then to be underwritten pursuant to this Agreement.
If any condition in this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement and the applicable Terms
Agreement may be terminated by you by notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party except as provided in Section 4.
SECTION 6. Indemnification. (a) The Company and Capstead, jointly
and severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, preliminary
prospectus supplement or the Final Prospectus (or any
amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to
make the statements therein in the
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light of the circumstances under which they were made not
misleading; provided, however, that (A) the Company shall not
be liable in any such case if such untrue statement or
omission or such alleged untrue statement or omission was made
(1) in reliance upon and in conformity with written
information furnished to the Company by any Underwriter
through you expressly for use in the Registration Statement
(or any amendment thereto) or in any preliminary prospectus,
preliminary prospectus supplement or each Final Prospectus (or
any amendment or supplement thereto) or (2) in any Current
Report or any amendment or supplement thereof, except to the
extent that any untrue statement or alleged untrue statement
therein results (or is alleged to have resulted) directly from
an error (a "Mortgage Collateral Error") in the information
concerning the characteristics of the Mortgage Loans furnished
by the Company to you in writing or by electronic transmission
that was used in the preparation of either (x) any
Computational Materials (or amendments or supplements thereof)
included in such Current Report (or amendment or supplement
thereof) or (y) any written or electronic materials furnished
to prospective investors on which the Computational Materials
(or amendments or supplements thereof) were based; (B) such
indemnity with respect to any Corrected Statement (as defined
below) in such Final Prospectus (or supplement thereto) shall
not inure to the benefit of any Underwriter (or any person
controlling any Underwriter) from whom the person asserting
any loss, claim, damage or liability purchased the Bonds that
are the subject thereof if such person did not receive a copy
of a supplement to such Final Prospectus at or prior to the
confirmation of the sale of such Bonds and the untrue
statement or admission of a material fact contained in such
Final Prospectus (or supplement thereto) was corrected (a
"Corrected Statement") in such other supplement and such
supplement was furnished by the Company to you prior to the
delivery of such confirmation; and (C) such indemnity with
respect to any Mortgage Collateral Error shall not inure to
the benefit of any Underwriter (or any person controlling the
Underwriter) from whom the person asserting any loss, claim,
damage or liability received any Computational Materials (or
any written or electronic materials on which the Computational
Materials are based) that were prepared on the basis of such
Mortgage Collateral Error, if, prior to the time of
confirmation of the sale of the applicable Bonds to such
person, the Company notified you in writing of the Mortgage
Collateral Error or provided in written or electronic form
information superseding or correcting such Mortgage Collateral
Error (in any such case a "Corrected Mortgage Collateral
Error"), and such Underwriter failed to notify such person
thereof or to deliver to such person corrected Computational
Materials (or underlying written or electronic materials
relating thereto);
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation,
investigation or proceeding by any governmental agency or
body, commenced or
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threatened, or of any claim whatsoever based, in each case,
upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company;
(iii) against any and all expense whatsoever, as
incurred (including the reasonable fees and disbursements of
counsel chosen by you) reasonably incurred in investigating,
preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or
body, commenced or threatened or any claim whatsoever based
upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, its directors, each of its officers who
signed the Registration Statement, Capstead and each person, if any,
who controls the Company or Capstead within the meaning of Section 15
of the 1933 Act and the officers and directors of any such person
against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this
Section, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus,
preliminary prospectus supplement or the Final Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity
with (i) written information furnished to the Company by such
Underwriter expressly for use in the Registration Statement (or any
amendment thereto) or in any preliminary prospectus, preliminary
prospectus supplement or each Final Prospectus (or any amendment or
supplement thereto) or (ii) any Computational Materials (or amendments
or supplements thereof) furnished to the Company by such Underwriter
pursuant to Section 8 hereof and incorporated by reference in such
Registration Statement or the related Final Prospectus or any
amendment or supplement thereto (except that no such indemnity shall
be available for any losses, claims, damages or liabilities, or
actions in respect thereof, resulting from any Mortgage Collateral
Error, other than a Corrected Mortgage Collateral Error).
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect
of which indemnity may be sought hereunder but failure to so notify an
indemnifying party shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense
of such action. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel in connection with
any one action or separate but similar and related actions in the same
jurisdiction arising out of the same general allegations or similar
circumstances.
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(d) The indemnity agreement provided by this Section 6
shall be in addition to any liability the Company and the Underwriters
shall otherwise have.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unavailable to or insufficient to hold
harmless the indemnified parties although applicable in accordance with its
terms, the Company and Capstead, on the one hand, and the Underwriters on the
other, shall:
(a) in the case of any losses, claims, damages and liabilities
(or actions in respect thereof) relating to a class or classes of any
Series of Bonds (a "Class" or "Classes," as the case may be) which do
not arise out of or are not based upon any untrue statement or
omission of a material fact in any Computational Materials (or any
amendments or supplements thereof), contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred in respect of any
Class or Classes underwritten pursuant to this Agreement by the
Company or Capstead and the Underwriter of such Class or Classes, as
incurred, in such proportions that the Underwriter of such Class or
Classes is responsible for that portion represented by the percentage
that the difference between the proceeds to the Company appearing on
the cover page of the applicable Final Prospectus and the total of all
proceeds received by such Underwriter from the sale of all Bonds
underwritten by it (the "Underwriting Discount") bears to the total
proceeds received by such Underwriter from such Bonds, and the Company
and Capstead are responsible for the balance;
(b) in the case of any losses, claims, damages and liabilities
(or actions in respect thereof) which arise out of or are based upon
any untrue statement or omission of a material fact in any
Computational Materials (or any amendments or supplements thereof),
contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement
incurred in respect of any Class or Classes underwritten pursuant to
this Agreement by the Company or Capstead, and the Underwriter of such
Class or Classes, as incurred, in such proportion as is appropriate to
reflect the relative fault of the Company and Capstead on the one hand
and such Underwriter on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities,
claims, damages and expenses (or actions in respect thereof) as well
as any other relevant equitable considerations; provided that in no
event shall such Underwriter be responsible for an amount greater than
the excess, if any, of (i) the total proceeds received by such
Underwriter in the sale of all Bonds underwritten by it (taking into
account any gains or losses realized by such Underwriter in any
hedging transactions directly related to the Bonds) over (ii) the
proceeds received by the Company in respect of the Bonds purchased by
such Underwriter.
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25
provided, however, that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter and each director of
the Company, each officer of the Company and Capstead who signed the
Registration Statement, and each person, if any, who controls the Company or
Capstead within the meaning of Section 15 of the 1933 Act and the officers and
directors of any such person shall have the same rights to contribution as the
Company or Capstead.
SECTION 8. Computational Materials. (a) As soon as
practicable and in no event later than 3:00 p.m. Dallas, Texas time three
Business Days before the date on which the Final Prospectus relating to the
Bonds of a Series is required to be filed by the Company with the Commission
pursuant to Rule 424 under the 1933 Act, you shall deliver to the Company five
complete copies of all materials provided by you to prospective investors
regarding the Class or Classes being underwritten by you which constitute
"Computational Materials" within the meaning of the no-action letter dated May
20, 1994 issued by the Division of Corporation Finance of the Commission to
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Acceptance Corporation I, ▇▇▇▇▇▇, Peabody & Co. Incorporated,
and ▇▇▇▇▇▇ Structured Asset Corporation (the "▇▇▇▇▇▇ Letter"), and the filing
of which material is a condition of the relief granted in such letter (such
materials being the "Computational Materials"). Each delivery of Computational
Materials to the Company pursuant to this paragraph (a) shall be effected by
delivering four copies of such materials to counsel for the Company at ▇▇▇▇▇▇▇
& ▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other
address specified by such counsel to you in writing, and one copy of such
materials to the Company.
(b) You represent and warrant to and agree with the
Company, as of the date of the related Terms Agreement and as of the
Closing Date, that:
(i) the Computational Materials furnished to the
Company pursuant to Section 8(a) constitute (either in
original, aggregated or consolidated form) all of the
materials furnished to prospective investors by the
Underwriters prior to the time of delivery thereof to the
Company that are required to be filed with the Commission with
respect to the related Bonds in accordance with the ▇▇▇▇▇▇
Letter, and such Computational Materials comply with the
requirements of the ▇▇▇▇▇▇ Letter; and
(ii) on the date any such Computational Materials
with respect to such Bonds (or any written or electronic
materials furnished to prospective investors on which the
Computational Materials are based) were last furnished to each
prospective investor and on the date of delivery thereof to
the Company pursuant to Section 8(a) and on the related
Closing Date, such Computational Materials (or materials) did
not and will not include any untrue statement of a material
fact or, when read in
--25--
26
conjunction with the Final Prospectus and Prospectus
Supplement, omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
Notwithstanding the foregoing, you make no representation or warranty as to
whether any Computational Materials (or any written or electronic materials on
which the Computational Materials are based) included or will include any
untrue statement resulting directly from any Mortgage Collateral Error (except
any Corrected Mortgage Collateral Error, with respect to materials prepared
after the receipt by you from the Company of notice of such Corrected Mortgage
Collateral Error or materials superseding or correcting such Corrected Mortgage
Collateral Error).
(c) You acknowledge and agree that the Company has not authorized
and will not authorize the distribution of any Computational Materials to any
prospective investor, and agree that any Computational Materials with respect
to any Series of Bonds furnished to prospective investors from and after the
date hereof shall include a disclaimer in form reasonably satisfactory to the
Company. You agree that you will not represent to investors that any
Computational Materials were prepared or disseminated on behalf of the Company.
This disclaimer shall not alter the rights or obligations of the parties hereto
pursuant to Sections 6 and 7 hereof.
(d) If, at any time when a prospectus relating to the Bonds of a
Series is required to be delivered under the 1933 Act, it shall be necessary to
amend or supplement the related Final Prospectus as a result of an untrue
statement of a material fact contained in any Computational Materials provided
by you pursuant to this Section 8 or the omission to state therein a material
fact required, when considered in conjunction with the Final Prospectus and
Prospectus Supplement, to be stated therein or necessary to make the statements
therein, when read in conjunction with the Final Prospectus and Prospectus
Supplement, not misleading, or if it shall be necessary to amend or supplement
any Current Report to comply with the 1933 Act or the rules thereunder, you
promptly will prepare and furnish to the Company for filing with the Commission
an amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. You represent and warrant to the
Company, as of the date of delivery of such amendment or supplement to the
Company, that such amendment or supplement will not include any untrue
statement of a material fact or, when read in conjunction with the Final
Prospectus and Prospectus Supplement, omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
The Company shall have no obligation to file such amendment or supplement if
the Company determines that (i) such amendment or supplement contains any
untrue statement of a material fact or, when read in conjunction with the Final
Prospectus and Prospectus Supplement, omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(it being understood, however, that the Company shall have no obligation to
review or pass upon the accuracy or adequacy of, or to correct, any such
amendment or supplement provided by the Underwriter to the Company pursuant to
this paragraph (d)) or (ii) such filing is not required under the Act; provided
that, in the event the
--26--
27
Company makes such a determination, it shall immediately notify you in writing
of the reasons for such determination; and, provided, further, that it shall
file such amendment or supplement if you specifically confirm in writing to the
Company that (A) such amendment or supplement does not contain any untrue
statement of a material fact or, when read in conjunction with the Final
Prospectus and Prospectus Supplement, omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading
and (B) you are advising the Company to file such amendment or supplement.
(e) You will cooperate with, and provide any information necessary to
the Independent Accountants so that they may complete and deliver their
agreed-upon procedures letter described in Section 5(f) hereof in a timely
manner so that such letter may be delivered to the Company by not later than
5:00 p.m. New York time, on the Business Day before the date on which the
Current Report described in Section 3(b) is required to be filed with the
Commission.
SECTION 9. Representations, Warranties, and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or Capstead
submitted pursuant hereto or as contemplated hereby, shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of the Company or Capstead or a controlling person thereof, and shall survive
delivery of any Bonds to the Underwriters.
SECTION 10. Termination of Agreement. (a) This Agreement may be
terminated for any reason at any time by either the Company or you upon the
giving of thirty days' written notice of such termination to the other party
hereto; provided, however, that if a Terms Agreement has been entered into but
the applicable Closing Time has not occurred, this Agreement shall not be
terminated pursuant to this Section 10(a) prior to such Closing Time.
(b) You may terminate this Agreement or such Terms Agreement, by
notice to the Company, at any time at or prior to the Closing Time, (i) if
there has been, since the respective dates as of which information is given in
the Registration Statement or the applicable Final Prospectus, any material
adverse change in the condition, financial or otherwise, earnings, business
affairs, regulatory situation or business prospects of the Company, Capstead or
the Partnership, whether or not arising in the ordinary course of business,
(ii) if there shall have occurred any material adverse change in the financial
markets of the United States or any outbreak or escalation of hostilities or
other national or international calamity or crisis the effect of which is such
as to make it, in your judgment, impracticable to market the Bonds or enforce
contracts for the sale of the Bonds, or (iii) if trading in any securities of
the Company has been suspended by the Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange or the
New York Stock Exchange shall have been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by either of said exchanges or by order of the Commission or any
other governmental authority, or if a banking moratorium shall have
--27--
28
been declared by either Federal or New York authorities, or (iv) if the rating
assigned by any nationally recognized securities rating agency requested to
rate any specific debt securities of the Company as of the date of any
applicable Terms Agreement shall have been lowered since that date or if any
such rating agency shall have publicly announced that it has under surveillance
or review, with possible negative implications, its requested rating of such
debt securities of the Company, or (v) if there shall have come to your
attention any facts that would cause you to believe that the applicable Final
Prospectus, at the time it was required to be delivered to a purchaser of the
Bonds offered thereby, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time of such delivery,
not misleading.
(c) In the event of any such termination, (i) the covenants set
forth in Section 3 with respect to any offering of Bonds shall remain in effect
so long as any Underwriter owns any such Bonds purchased from the Company
pursuant to the applicable Terms Agreement and (ii) the covenant set forth in
Section 3(i), the provisions of Section 4, the indemnity agreement set forth in
Section 6, the contribution provisions set forth in Section 7, and the
provisions of Sections 8, 9 and 14 shall remain in effect.
SECTION 11. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at the Closing Time to purchase the Bonds
which it or they are obligated to purchase hereunder and under the applicable
Terms Agreement (the "Defaulted Bonds"), you shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Bonds in such amounts as may be agreed upon and upon the
terms herein set forth and under the applicable Terms Agreement. If, however,
you have not completed such arrangements within such 24-hour period, then:
(a) if the aggregate original principal amount of
Defaulted Bonds does not exceed 10% of the aggregate original
principal amount of the Bonds to be purchased pursuant to such Terms
Agreement, the non-defaulting Underwriters named in such Terms
Agreement shall be obligated to purchase the full amount thereof in
the proportions that their respective underwriting obligations
thereunder bear to the underwriting obligations of all non-defaulting
Underwriters; and
(b) if the aggregate original principal amount of
Defaulted Bonds exceeds 10% of the aggregate original principal amount
of the Bonds to be purchased pursuant to such Terms Agreement, the
applicable Terms Agreement shall terminate without any liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 11 and nothing in this
Agreement shall relieve any defaulting Underwriter from liability in respect of
its default.
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29
In the event of any such default which does not result in a
termination of this Agreement or such applicable Terms Agreement, either you or
the Company shall have the right to postpone the Closing Time for a period of
time not exceeding seven days in order to effect any required changes in the
Registration Statement or in any other documents or arrangements.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of written telecommunication. Notices to the
Company shall be directed to its agent for service set forth on the cover page
of the Registration Statement, notices to the Company shall be directed to it
at CityPlace Center East, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇ and notices to you shall be directed to you
c/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, or in respect of
any Terms Agreement, to such other person and place agreed upon by those of you
who are parties to such Terms Agreements.
SECTION 13. Parties. This Agreement shall inure to the benefit of
and be binding upon you, the Company and Capstead, and any Terms Agreement
shall inure to the benefit of and be binding upon the Company and Capstead and
any Underwriter who becomes a party to such Terms Agreement, and their
respective successors. Nothing expressed or mentioned in this Agreement or any
Terms Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any Terms Agreement or
any provision herein or therein contained. This Agreement and any Terms
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto and thereto and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Bonds from any Underwriter shall
be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT AND EACH TERMS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
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30
If the foregoing is in accordance with your understanding hereof, the
form of acceptance set forth below should be signed by you, whereupon this
instrument along with all counterparts will become a binding agreement among
the Company, Capstead, and us in accordance with its terms.
Very truly yours,
CMC SECURITIES CORPORATION IV
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
CAPSTEAD MORTGAGE CORPORATION
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
ACCEPTED at New York, New York as
of the date first above written.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Underwriting Agreement - Signature Page
31
EXHIBIT A
CMC SECURITIES CORPORATION IV
(a Delaware corporation)
Collateralized Mortgage Obligations, Series 199_-__
Terms Agreement
Dated: ___________________
CMC Securities Corporation IV
CityPlace Center East
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Underwriting Agreement dated ________ __, 199_
Title of Bonds:
Section 1. The Bonds: The Series 199_-__ Bonds (the "Series 199_-__ Bonds")
shall be as follows:
(a) Principal amount to be issued: $_____________
(b) Public offering price:
(c) Purchase price:
[plus accrued interest from _______________.]
(d) Payment Dates:
(e) Accrual Periods:
(f) Bond Rating: It is a condition to the issuance of the Series 199_-__
Bonds that they be rated "___" by _______________.
32
Section 2. Closing; Stand-Off Period:
(a) Closing date and location:
(b) Type of funds to be delivered by the Underwriters at the Closing:
(c) Expiration date of Stand-Off Period:
(d) Securities excluded from Stand-Off Period restrictions:
Section 3. Co-managers:
Section 4. Purchase by the Underwriter(s):
The Underwriter(s) agrees, subject to the terms and provisions herein and
of the above-referenced Underwriting Agreement (as modified and amended by the
terms hereof), which is incorporated herein in its entirety and made a part
hereof, to purchase [the entire aggregate principal amount of the Series
199_-__ Bonds in the Classes set forth in Section 1 hereof].
[Name of Underwriter]
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
[Name of Underwriter]
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
Accepted:
CMC SECURITIES CORPORATION IV
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted:
CAPSTEAD MORTGAGE CORPORATION
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
