Document:

FORM OF NONQUALIFIED STOCK OPTION AND AWARD AGREEMENT

 EXHIBIT 10.05 
 CAPSTEAD MORTGAGE CORPORATION 
 NONQUALIFIED STOCK OPTION AGREEMENT

 FOR EMPLOYEES 
 THIS AGREEMENT, made as of this [            ] day of [            ],
20[__], (hereinafter called the “Date of Grant”) between Capstead Mortgage Corporation, a Maryland corporation (hereinafter called the “Company”), and
[                    ] (hereinafter called the “Optionee”): 
 R E C I T A L S: 
 The Company has adopted the
[1997][2004] Flexible Long Term Incentive Plan (the “Plan”), which Plan is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.

 The Company has determined that it is in the best interests of the Company and its stockholders to grant the
Optionee the option provided for in this Agreement pursuant to the Plan on the terms set forth therein as an inducement to enter into or remain in the employment of the Company or one of its Affiliates, to enable the Optionee to participate in the
long-term growth and financial success of the Company and as an increased incentive to contribute to the Company’s future success and prosperity. 
 NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows: 

1. Grant of the Option. The Company hereby grants to the Optionee the right and option to purchase, on the terms
and conditions hereinafter set forth, [                ] Shares (the “Option”). The purchase price of the Shares subject to this Option shall be
$[            ] per Share (the “Exercise Price”). The Option is not intended to be treated as an option that complies with Section 422 of the Code or any successor
provision thereto. 
 2. Option Term. The term of the Option shall begin immediately and continue until
the tenth anniversary of the Date of Grant, subject to earlier termination as hereinafter provided. 
 (a) If
the Optionee ceases to be an officer or employee of the Company or any Affiliate by reason of the Optionee’s discharge for cause, all rights of the Optionee to exercise the Option shall terminate, lapse and be forfeited immediately at the time
of the Optionee’s discharge for cause. 
 (b) If the Optionee ceases to be an employee of the Company or
any Affiliate by reason of death, the personal representatives, heirs, legatees or distributees of the Optionee, as appropriate, shall have the right to exercise the Option up to the earlier of (i) six months from the Optionee’s death or
(ii) the remaining term of the Option. 

 (c) If the Optionee ceases to be an employee of the Company or any Affiliate
by reason of the Optionee’s resignation, Retirement, Disability or for any reason other than the Optionee’s death or discharge for cause, all rights of the Optionee to exercise the Option shall terminate, lapse, and be forfeited upon the
earlier of (i) six months after the date of the Optionee’s termination of employment by reason of such employee’s resignation, Retirement, Disability or such other reason or (ii) the remaining term of the Option, except that in
case the Optionee shall die within six months after the date of termination of employment by reason of such employee’s resignation, Retirement, Disability or such other reason, the personal representatives, heirs, legatees or distributees of
the Optionee, as appropriate, shall have the right up to an additional three months from the date of the Optionee’s death to exercise the Option. 
 3. Vesting of Stock Options. 
 (a) The Options shall vest
(become nonforfeitable) in accordance with the schedule set forth below: 
  

					
	 Date
	  	Percentage of Shares Vested on Specified
Date	  	Cumulative Percentage of
Shares
	 [______________]
	  	[__]	  	[__]
	 [______________]
	  	[__]	  	[__]
	 [______________]
	  	[__]	  	[__]
	 [______________]
	  	[__]	  	[__]

provided, however, that notwithstanding the foregoing schedule, and except as otherwise provided below in paragraphs (b), (c),
(d) or (e) below, no additional Options shall vest after: 
 (i) termination of
Optionee’s employment with the Company or any Affiliate for any reason (including voluntary and involuntary discharge, Disability or Retirement), in which case the Optionee shall, at the time of termination, forfeit all right, title and
interest in and to any Options not then vested; 
 (ii) an Optionee working full-time at the
Date of Grant reduces his/her scheduled hours worked per week below a standard 40-hour work week, in which case the Optionee shall, at the time of such reduction and subject to management’s discretion, forfeit all right, title and interest in
and to any Options not then vested; or 
 (iii) an Optionee working part-time at the Date of
Grant reduces his/her scheduled hours worked per week below a standard 20-hour work week, in which case the Optionee shall, at the time of such reduction and subject to management’s discretion, forfeit all right, title and interest in and to
any Options not then vested. 

  
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 (b) If the Optionee ceases to be an employee of the Company or any Affiliate
by reason of death, the personal representatives heirs, legatees or distributees of the Optionee, as appropriate, shall become fully vested in the Option effective on the date of the Optionee’s death and shall have the immediate right to
exercise the Option to the extent not previously exercised. 
 (c) In the event of the dissolution or
liquidation of the Company, the Option shall terminate as of a date to be fixed by the Board; provided, however, that not less than 30 days’ written notice of the date so fixed shall be given to the Optionee and the Optionee shall be fully
vested in and shall have the right during such period to exercise the Option even though the Option would not otherwise be exercisable under the Vesting Schedule. At the end of such period, any unexercised portion of the Option shall terminate and
be of no further effect. 
 (d) In the event of a Reorganization: 

(1) If there is no plan or agreement respecting the Reorganization or if such plan or agreement does not
specifically provide for the change, conversion or exchange of the Shares under the unexercised portion of the Option for other securities, then the provisions of the above paragraph (c) of this Section 3 shall apply as if the Company had
dissolved or been liquidated on the effective date of the Reorganization; or 
 (2) If there is
a plan or agreement respecting the Reorganization and if such plan or agreement specifically provides for the change, conversion or exchange of the Shares under the unexercised portion of the Option for securities of another corporation, then the
Board shall adjust the Shares under the unexercised portion of the Option in a manner not inconsistent with the provisions of such plan or agreement for the adjustment, change, conversion or exchange of such Shares and the Option. 

(e) In the event of a Change in Control of the Company, the Option shall become fully vested and immediately exercisable.

 4. Exercise of the Option. 

(a) This Option may be exercised as to Shares only in amounts and at intervals of time specified in this Agreement. Each
exercise of the Option, or any part thereof, shall be evidenced by a notice in writing to the Company. The Exercise Price of the Shares as to which the Option shall be exercised shall be paid in full at the time of exercise, and may be paid to the
Company either: 
 (1) in cash (including check, bank draft or money order); or 

(2) by the delivery of Shares having a Fair Market Value equal to the aggregate Exercise Price; provided,
however, that such Shares, if acquired by the exercise of an Option shall have been owned by the Optionee for more than six months prior to exercise; or 

  
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 (3) by a combination of cash and Shares as described above;
or 
 (4) by arrangement with a broker acceptable to the Committee in which payment of the
Exercise Price is made pursuant to an irrevocable direction from the Optionee to the broker to deliver the Company proceeds from the sale of the option Shares in an amount equal to the exercise price of the Shares. 

(b) The amount, as determined by the Committee, of any federal, state or local tax required to be withheld by the Company
due to the exercise of the Option granted hereunder shall be satisfied either (i) by payment by the Optionee to the Company of the amount of such withholding obligation in cash or (ii) through either the retention by the Company of a
number of shares out of the Shares being acquired through the exercise of the Option granted hereunder or the delivery of already owned Shares having a Fair Market Value equal to the amount of the withholding obligation. The cash payment or the
amount equal to the Fair Market Value of the Shares so withheld, as the case may be, shall be remitted by the Company to the appropriate taxing authorities. 
 (c) The Optionee shall not have any of the rights of a stockholder of the Company with respect to the Shares covered by this Agreement except to the extent that one or more certificates of such Shares
shall have been delivered to the Optionee, or the Optionee has been determined to be a stockholder of record by the Company’s Transfer Agent, upon due exercise of the Option granted hereunder. 

5. No Right to Continued Employment. This Agreement shall not confer on the Optionee any right to continue serving
as an employee of the Company nor shall this Agreement limit in any way the Company’s right to terminate or change the terms of the Optionee’s employment. 

6. Adjustments Upon Changes in Capitalization or Reorganization. The number of Shares subject to the Option shall
be adjusted from time to time as follows: 
 (a) Subject to any required action by stockholders, the number of
Shares subject to the option granted hereunder, and the Exercise Price, shall be proportionately adjusted for any increase or decrease in the number of issued Shares of the Company resulting from a subdivision or consolidation of Shares or the
payment of a stock dividend (but only in Shares) or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company. 

(b) Subject to any required action by stockholders, if the Company shall be the surviving corporation in any
Reorganization, merger or consolidation, the Option granted hereunder shall pertain to and apply to the securities to which a holder of the number of Shares subject to the Option granted hereunder would have been entitled, and if a plan or agreement
reflecting any such event is in effect that specifically provides for the change, conversion or exchange of Shares, then any adjustment to Shares subject to the Option granted hereunder shall not be inconsistent with the terms of any such plan or
agreement. 

  
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 (c) In the event of a change in the Shares of the Company as presently
constituted, which is limited to a change of par value into the same number of Shares with a different par value or without par value, the Shares resulting from any such change shall be deemed to be the Shares within the meaning of the Plan.

 To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments
shall be made by the Board, whose determination shall be final, binding and conclusive. 
 Except as otherwise
specifically provided in this Agreement, the Optionee shall have no rights by reason of any subdivision or consolidation of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, reorganization, merger or consolidation or spin-off of assets or stock of another corporation, and any issued by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to the Option granted hereunder. 

7. Non-Transferability of the Option. This Agreement, and the Option granted hereunder, shall not be transferable
otherwise than by will or the laws of descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee; provided, however, that this Agreement, and the Option granted hereunder, may be transferred to one or
more members of the immediate family of the Optionee or to a trust for the benefit of such person or as directed under a qualified domestic relations order. Any attempted assignment, transfer, pledge, hypothecation or other disposition of this
Agreement and the Option granted hereunder contrary to the provisions hereof, or the levy of any execution, attachment or similar process upon this Agreement, and the Option granted hereunder, shall be null and void and without effect. 

8. Compliance with Securities and other Laws. In no event shall the Company be required to issue Shares under the
Option granted hereunder, if the issuance thereof would constitute a violation of applicable federal or state securities laws or regulations or a violation of any other law or regulation of any governmental or regulatory agency or authority or any
national securities exchange. As a condition to any issuance of Shares, the Company may place legends on shares, issue stop transfer orders and require such agreements or undertakings as the Company may deem necessary or advisable to assure
compliance with any such laws or regulations, including, if the Company or its counsel deems it appropriate, representations from the Optionee that the Optionee is acquiring the Shares solely for investment and not with a view to distribution and
that no distribution of the Shares will be made unless such shares are registered pursuant to applicable federal and state securities laws, or in the opinion of counsel of the Company, such registration is unnecessary. 

  
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 9. Issuance of Shares. Upon the Company’s determination that the
Option granted hereunder has been validly exercised as to any of the Shares, the Committee shall, at its sole discretion, cause the Secretary of the Company to issue certificates in the Optionee’s name for such Shares. The Company shall not be
liable to the Optionee for damages relating to any delays in issuing the certificates, if any, to the Optionee, any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.

 10. Alternative Award for Cancellation of the Option. For purposes of this Agreement, the payment to
the Optionee of an alternative award or an amount in cash pursuant to the terms of Section 16 of the Plan in consideration of the cancellation of the Option granted hereunder shall extinguish any rights of the Optionee in connection with this
Agreement. 
 11. Notices. Any notice necessary under this Agreement shall be in writing, signed by the
party giving or making the same, and addressed (a) to the Company in the care of its President or Secretary at the principal executive office of the Company in Dallas, Texas, (b) to the Optionee at the address appearing in the personnel
records of the Company for such Optionee or (c) to either party at such other address as either party hereto may hereafter designate in writing to the other. Except as otherwise provided herein, any such notice shall be deemed effective upon
receipt thereof by the addressee. 
 12. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT
OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND. 
 13. Option Subject to Plan.
The Option is subject to the Plan. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or
provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail. 
 14.
Amendment of Agreement. This Agreement may be amended, altered, suspended, discontinued or terminated by the Committee; provided that no such amendment, alteration, suspension or termination shall materially impair the rights of the Optionee
hereunder without the consent of the Optionee. 
 15. Administration of Plan and Agreement. Any
determinations or decisions made or actions taken arising out of or in connection with the interpretation and administration of the Plan and this Agreement by the Committee shall be final and conclusive. 

16. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an
original for all purposes and both of which taken together shall constitute but one and the same instrument. 

  
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 [Signature Page Follows] 

  
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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the Date of Grant. By execution of this Agreement the Optionee acknowledges receipt of a copy of the Plan, the Company’s Annual Report on Form 10-K for the year ended December 31, 20[__] and the informational supplement required by
Rule 428(b)(1) under the Securities Act of 1933. 
  

			
	 CAPSTEAD MORTGAGE
 CORPORATION

		
	 By: 
	 	 
	 	 	
		 	 Andrew F. Jacobs

		 	 President and Chief Executive Officer

  

			
	 [OPTIONEE]

	
	 
	 	 	
		 	
[                        ]

  
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 EXHIBIT 10.3 
 CAPSTEAD MORTGAGE CORPORATION 
 RESTRICTED STOCK AGREEMENT

 FOR EMPLOYEES 
 THIS AGREEMENT made and entered into as of the [            ] day of
[            ], 20[        ] (hereinafter called the “Award Date”), by and between Capstead Mortgage Corporation, a Maryland
corporation (the “Company”), and [                    ] (the “Grantee”). 

WHEREAS, the Company, having determined that its interests will be advanced by providing an incentive to the Grantee to
increase the performance of the Company and its Affiliates, has awarded to the grantee a restricted stock award conditioned upon the execution by the Company and the Grantee of a Restricted Stock Agreement. 

THEREFORE, in consideration of the mutual promise(s) and covenant(s) contained herein, the parties hereby agree as
follows: 
 SECTION 1. GRANT. 

1.1 Grant and Acceptance. Pursuant to the
[            ], 20[        ] authorization to grant shares of restricted stock to the current employees, the Company does hereby grant
and transfer to the Grantee, for no cash consideration from the Grantee, and the Grantee does hereby accept from the Company, an aggregate of [            ] shares (the “Award
Shares”) of the Common Stock, $0.01 par value per share, of the Company (the “Common Stock”) according to the terms and conditions and subject to the restrictions hereinafter set forth. 

1.2 Effect of Plan. The Award Shares shall constitute Restricted Stock and this grant shall constitute an
Award, each as defined in the Company’s [1997][2004] Flexible Long Term Incentive Plan (the “Plan”). This Agreement is expressly subject to the terms and provisions of the Plan and in the event there is a conflict between the terms of
the Plan and this Agreement, the terms of the Plan shall control. All undefined capitalized terms used herein shall have the meanings assigned in the Plan. The Award is subject to all laws, approvals, requirements and regulations of any governmental
authority which may be applicable thereto. 
 SECTION 2. RIGHTS IN SHARES. The Grantee, for the duration
of this Agreement, shall be the record owner of, and shall be entitled to vote, the Award Shares and shall be entitled to receive all dividends and any other distributions declared on the Award Shares (provided, however, that nothing contained
herein shall cause the Company to declare any such dividends or to make any such distributions). 
 SECTION 3.
VESTING. 
 3.1 Vesting. The Award Shares shall vest (become nonforfeitable) in accordance
with the schedule set forth below: 

					
	 Date
	  	Percentage of Shares Vested on Specified Date	  	Cumulative Percentage of
Shares
	 [___________]
	  	[__]	  	[__]
	 [___________]
	  	[__]	  	[__]
	 [___________]
	  	[__]	  	[__]
	 [___________]
	  	[__]	  	[__]

provided, however, that notwithstanding the foregoing schedule, and except as otherwise provided in Sections 3.2, 3.3 and 3.4 below, no
additional Award Shares shall vest after: 
 (i) termination of Grantee’s employment with
the Company or any Affiliate for any reason (including termination by reason of voluntary or involuntary discharge, Disability or Retirement) in which case the Grantee shall, at the time of termination, forfeit all right, title and interest in and
to any Award Shares not then vested, or 
 (ii) a Grantee working full-time at the Award Date
reduces his/her scheduled hours worked per week below a standard 40-hour work week, in which case the Grantee shall, at the time of such reduction and subject to management’s discretion, forfeit all right, title and interest in and to any Award
Shares not then vested; or 
 (iii) a Grantee working part-time at the Award Date reduces
his/her scheduled hours worked per week below a standard 20-hour work week, in which case the Grantee shall, at the time of such reduction and subject to management’s discretion, forfeit all right, title and interest in and to any Award Shares
not then vested. 
 3.2 Effect of Grantee’s Death. If the Grantee ceases to be an employee of
the Company or any Affiliate by reason of death, any and all outstanding Award Shares not fully vested shall automatically vest in full and the personal representatives heirs, legatees or distributees of the Grantee, as appropriate, shall become
fully vested in the Award Shares effective on the date of the Grantee’s death. 
 3.3 Effect of
Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, any and all outstanding Award Shares not fully vested shall automatically vest in full immediately prior to such dissolution or liquidation.

 3.4 Effect of Change of Control. In the event of a Change in Control (as defined in the Plan),
any and all outstanding Award Shares not fully vested shall automatically vest in full. The date on which such accelerated vesting shall occur shall be the date of the occurrence of the Change in Control. 

3.5 Effect of Forfeiture. Any Award Shares forfeited pursuant to Section 3.1 shall revert to the
Company. 
 SECTION 4. STOCK CERTIFICATES. Upon grant of the Award Shares, the Company shall cause its
Transfer Agent to record Grantee’s ownership of such Award Shares in book entry form. As Award Shares vest hereunder, such Award Shares shall be transferred into an unrestricted 

  
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account in the name of the Grantee or, at the request of the Grantee, issued in stock certificate form. Any such certificates shall be unencumbered by any of the restrictions enumerated herein
other than such restrictions as may be imposed by applicable federal or state securities laws and regulations. 

SECTION 5. TRANSFER AND REPURCHASES UPON TERMINATION. 

5.1 The unvested Award Shares shall not be offered, sold, transferred, assigned, exchanged, pledged, encumbered or
otherwise disposed of (each, a “Transfer”) for any purpose whatsoever, other than to the Company, and shall not be subject, in whole or in part, to execution, attachment, or similar process in all such cases until the date of vesting. Any
attempted Transfer of the unvested Award Shares, other than in accordance with the terms set forth herein, shall be void and of no effect. 
 5.2 Grantee acknowledges that any sale, assignment, transfer or other disposition of vested Award Shares may be subject to restrictions contained in applicable federal or state securities laws and
regulations and that any such sale, assignment, transfer or other disposition of Award Shares by him or her will be in compliance with such laws and regulations. 

SECTION 6. WITHHOLDINGS. The Company and each Affiliate shall have the right to retain and withhold from any
payment (including the vesting) of Award Shares (and any dividends on Award Shares) any amounts required to be withheld or otherwise deducted and paid with respect to such payment (including the vesting thereof). At its discretion, the Company and
each Affiliate may require the Grantee receiving Award Shares to reimburse the Company or any Affiliate for any such taxes required to be withheld by the Company or the Affiliate and withhold any distribution in whole or in part until the Company
and each Affiliate is so reimbursed. In lieu thereof, the Company and each Affiliate shall have the right to withhold from any other cash amounts due or to become due from the Company or the Affiliate to the Grantee an amount equal to such taxes
required to be withheld by the Company or the Affiliate as reimbursement for any such taxes or retain and withhold a number of shares having a market value not less than the amount of such taxes in order to reimburse the Company or the Affiliate for
any such taxes. 
 SECTION 7. ADJUSTMENTS TO AWARD SHARES. 

7.1 Stock Dividends and Splits and Similar Transactions. Subject to any required action by the
Company’s Board of Directors and stockholders, the number of Award Shares shall be proportionately adjusted for any increase or decrease in the number of issued Shares of the Company resulting from the payment of a Share dividend, a Share
split, a Share reverse-split or any similar transaction. 
 7.2 Change in Par Value. In the event
of a change in the Company’s Shares which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be
deemed to be shares within the meaning of the Plan. 
 7.3 Other Capital Adjustments. Except as
hereinbefore expressly provided in Section 7.1 and except for rights that all holders of Common Stock shall have, Grantee shall have no rights by reason of any subdivision or consolidation of Shares of any class or payment of any share

  
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dividend or any other increase or decrease in the number of shares of any class or by reason of any dissolution, liquidation, merger or consolidation or spin-off of assets or stock of another
corporation; any issuance by the Company of Shares of any class, or securities convertible into Shares of any class, shall not affect the Award, and no adjustment by reason thereof shall be made with respect to the number or price of the
Company’s Shares subject to the Award. An Award of Restricted Stock shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to
merge or to consolidate or to dissolve, liquidate or sell or transfer all or any part of its business or assets. 
 SECTION 8. GRANTEE’S REPRESENTATIONS AND WARRANTIES. Grantee represents and warrants that: 
 (a) such Grantee has not and will not, directly or indirectly, Transfer any Award Shares except in accordance with the terms of this Agreement; 

(b) such Grantee has, or such Grantee together with such Grantee’s advisors, if any, have such knowledge and
experience in financial, business and tax matters that such Grantee is, or such Grantee together with such Grantee’s advisors, if any, are capable of evaluating the merits and risks relating to such Grantee’s investment in the Award Shares
and making an investment decision with respect to the Company; 
 (c) such Grantee has been given the
opportunity to obtain information and documents relating to the Company and to ask questions of and receive answers from representatives of the Company concerning the Company and such Grantee’s investment in the Award Shares; and 

(d) such Grantee realizes that there are substantial risks incident to an investment in the Award Shares. 

SECTION 9. IMPACT ON OTHER BENEFITS. The value of the Award Shares (either on the Award Date or at the time the
shares are vested) shall not be includable as compensation or earnings for purposes of any other benefit plan offered by the Company. 
 SECTION 10. ADMINISTRATION. The Committee shall have full authority and discretion (subject only to the express provisions of the Plan) to decide all matters relating to the administration and
interpretation of the Plan and this Agreement. All such Committee determinations shall be final, conclusive, and binding upon the Company, the Grantee, and any and all interested parties. 

SECTION 11. NO AGREEMENT TO CONTINUE IN EMPLOYMENT. Nothing in the Plan or this Agreement shall confer on the
Grantee any right to continue in the employ of the Company or any Affiliate or interfere in any way with the right of the Company and any Affiliate to terminate the Grantee’s employment at any time. 

SECTION 12. AMENDMENT(S). This Agreement shall be subject to the terms of the Plan, as amended from time to time,
except that the Award that is the subject of this Agreement may not in any way be restricted or limited by any amendment or termination approved after the Award Date without the Grantee’s written consent. 

  
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 SECTION 13. FORCE AND EFFECT. The various provisions of this
Agreement are severable in their entirety. Any determination of invalidity or unenforceability of any one provision shall have no effect on the continuing force and effect of the remaining provisions. 

SECTION 14. GOVERNING LAWS. This Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Maryland. 
 SECTION 15. MISCELLANEOUS. 

15.1 Any notice necessary under this Agreement shall be in writing, signed by the party giving or making the same, and
addressed (a) to the Company in the care of its President or Secretary at the principal executive office of the Company in Dallas, Texas, (b) to the Grantee at the address appearing in the personnel records of the Company for such Grantee
or (c) to either party at such other address as either party hereto may hereafter designate in writing to the other. Except as otherwise provided herein, any such notice shall be deemed effective upon receipt thereof by the addressee.

 15.2 This Agreement may be executed in counterparts, each of which shall be deemed an original for all
purposes and both of which taken together shall constitute but one and the same instrument. 
 [Signature Page Follows]

  
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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date hereof. By execution of this Agreement, the Grantee acknowledges receipt of a copy of the Plan, the Company’s Annual Report on Form 10-K for the year ended December 31, 20[__] and the informational supplement required by
Rule 428(b)(1) under the Securities Act of 1933. 
  

			
	 CAPSTEAD MORTGAGE CORPORATION

		
	 By: 
	 	 
		 	 Andrew F. Jacobs

		 	 President and Chief Executive Officer

  

			
	 [GRANTEE]

	
	 
		 	 [                    ]

  
 6PURCHASE AGMNT. DATED SEPTEMBER 23, 2005 RELATING TO CMT I PREFERRED SECURITIES

 EXHIBIT 10.08 

 
  

 
 PURCHASE AGREEMENT

 among 
 Capstead Mortgage Corporation 
 Capstead Mortgage Trust I 

and 
 Merrill
Lynch International 
  
  

            Dated as of September 23, 2005
             
  
  

 
  

 
  

  

 PURCHASE AGREEMENT 

THIS PURCHASE AGREEMENT, dated as of September 23, 2005 (this “Purchase Agreement”), is entered
into among Capstead Mortgage Corporation, a Maryland corporation (the “Company”), Capstead Mortgage Trust I, a Delaware statutory trust (the “Trust”, and together with the Company, the “Sellers”),
and Merrill Lynch International or its assignee (the “Purchaser”). 
 WITNESSETH: 

WHEREAS, the Trust proposes to issue and sell 17,500 Preferred Securities of the Trust, having a stated liquidation
amount of $1,000 per security, bearing a fixed rate of interest for the ten-year period commencing with the issue date and a variable rate, reset quarterly, equal to LIBOR (as defined in the Indenture) plus 3.50% for the twenty-year period
commencing on the tenth anniversary of the issue date (the “Preferred Securities”); 
 WHEREAS,
the entire proceeds from the sale of the Preferred Securities will be combined with the entire proceeds from the sale by the Trust to the Company of its common securities (the “Common Securities”), and will be used by the Trust to
purchase unsecured junior subordinated notes of the Company (the “Junior Subordinated Notes”); 

WHEREAS, the Preferred Securities and the Common Securities for the Trust will be issued pursuant to the Amended and
Restated Trust Agreement (the “Trust Agreement”), dated as of the Closing Date, among the Company, as depositor, Wells Fargo Bank, National Association, a national banking association, as property trustee (in such capacity, the
“Property Trustee”), Wells Fargo Delaware Trust Company, a national banking association, as Delaware trustee (in such capacity, the “Delaware Trustee”), the Administrative Trustees named therein (in such capacities,
the “Administrative Trustees”) and the holders from time to time of undivided beneficial interests in the assets of the Trust; and 
 WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior Subordinated Indenture, dated as of the Closing Date (the “Indenture”), between the Company and Wells Fargo
Bank, National Association, a national banking association, as indenture trustee (in such capacity, the “Indenture Trustee”). 
 NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows: 

1. Definitions. The Preferred Securities, the Common Securities and the Junior Subordinated Notes are
collectively referred to herein as the “Securities.” This Purchase Agreement, the Indenture, the Trust Agreement and the Securities are collectively referred to herein as the “Operative Documents.” All other
capitalized terms used but not defined in this Purchase Agreement shall have the respective meanings ascribed thereto in the Indenture. 

  
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 2. Purchase and Sale of the Preferred Securities. 

(a) The Sellers agree to sell to the Purchaser, and the Purchaser agrees to purchase from the Sellers the Preferred
Securities for an amount (the “Purchase Price”) equal to $17,500,000. The Purchaser shall be responsible for the rating agency costs and expenses. The Trust shall use the Purchase Price, together with the proceeds from the sale of
the Common Securities, to purchase the Junior Subordinated Notes. 
 (b) Delivery or transfer of, and payment
for, the Preferred Securities shall be made at 11:00 A.M. Eastern Standard time (11:00 A.M. New York time), on September 26, 2005, (such date and time of delivery and payment for the Preferred Securities being herein called the “Closing
Date”). The Preferred Securities shall be transferred and delivered to the Purchaser against the payment of the Purchase Price to the Trust or the Company made by wire transfer in immediately available funds on the Closing Date to a U.S.
account designated in writing by the Company at least two business days prior to the Closing Date. 
 (c)
Delivery of the Preferred Securities shall be made at such location, and in such names and denominations, as the Purchaser shall designate at least two business days in advance of the Closing Date. The Company and the Trust agree to have the
Preferred Securities available for inspection and checking by the Purchaser not later than 2:00 P.M., Eastern Standard time, on the business day prior to the Closing Date. The closing for the purchase and sale of the Preferred Securities shall occur
at the offices of DLA Piper Rudnick Gray Cary US LLP, 1221 S. Mopac Expressway, Suite 400, Austin, Texas 78746, or such other place as the parties hereto shall agree. 

3. Conditions. The obligations of the parties under this Purchase Agreement are subject to the following
conditions: 
 (a) The representations and warranties contained herein shall be accurate as of the date of
delivery of the Preferred Securities. 
 (b) The Purchaser shall have sold securities issued by it in such an
amount that the net proceeds therefrom shall be available on the Closing Date and shall be sufficient to purchase the Preferred Securities and all other preferred securities contemplated in agreements similar to this Agreement. 

(c) Each of Andrews Kurth LLP and Hogan & Hartson L.L.P., counsel for the Company and the Trust ( each the
“Company Counsel”), shall have delivered an opinion, dated the Closing Date, addressed to the Purchaser, Taberna Capital Management, LLC and Wells Fargo Bank, National Association, in substantially the form set out for such Company Counsel
in Annex A-I hereto and (ii) the Company shall have furnished to the Purchaser a certificate signed by the Company’s Chief Executive Officer, President, a Senior Vice President, Chief Financial Officer, or Treasurer, dated the
Closing Date, addressed to the Purchaser, in substantially the form set out in Annex A-II hereto. In rendering their opinion, the Company Counsel may rely as to factual matters upon certificates or other documents furnished by officers,
directors and trustees of the Company and the Trust and by government officials (provided, however, that 

  
 2 

 
copies of any such certificates or documents are delivered to the Purchaser) and by and upon such other documents as such counsel may, in their reasonable opinion, deem appropriate as a basis for
the Company Counsel’s opinion. The Company Counsel may specify the jurisdictions in which they are admitted to practice and that they are not admitted to practice in any other jurisdiction and are not experts in the law of any other
jurisdiction. If the Company Counsel is not admitted to practice in the State of New York, the opinion of the Company Counsel may assume, for purposes of the opinion, that the laws of the State of New York are substantively identical, in all
respects material to the opinion, to the internal laws of the state in which such counsel is admitted to practice. Such Company Counsel Opinion shall not state that they are to be governed or qualified by, or that they are otherwise subject to, any
treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991). 

(d) The Purchaser shall have been furnished the opinion of DLA Piper Rudnick Gray Cary US LLP, special tax counsel for
the Purchaser, dated the Closing Date, addressed to the Purchaser, the Company and Wells Fargo Bank, National Association, in substantially the form set out in Annex B hereto. 

(e) The Purchaser shall have received the opinion of Potter, Anderson & Carroon, LLP, special Delaware counsel
for the Delaware Trustee, dated the Closing Date, addressed to the Purchaser and its successors and assigns, Wells Fargo Delaware Trust Company, the Delaware Trustee and the Company, in substantially the form set out in Annex C hereto.

 (f) The Purchaser shall have received the opinion of Potter, Anderson & Carroon, LLP, special
counsel for the Property Trustee and the Indenture Trustee, dated the Closing Date, addressed to the Purchaser and the Company, in substantially the form set out in Annex D hereto. 

(g) The Purchaser shall have received the opinion of Potter, Anderson and Carroon, LLP, special Delaware counsel for the
Delaware Trustee, dated the Closing Date, addressed to the Purchaser, the Company and Wells Fargo Delaware Trust Company, in substantially the form set out in Annex E hereto. 

(h) The Company shall have furnished to the Purchaser a certificate of the Company, signed by the Chief Executive
Officer, President or a Senior Vice President, and Chief Financial Officer, or Treasurer of the Company, and the Trust shall have furnished to the Purchaser a certificate of the Trust, signed by an Administrative Trustee of the Trust, in each case
dated the Closing Date, and, in the case of the Company, as to (i) and (ii) below and, in the case of the Trust, as to (i) below. 

(i) the representations and warranties in this Purchase Agreement are true and correct on and as of the
Closing Date with the same effect as if made on the Closing Date, and the Company and the Trust have complied with all the agreements and satisfied all the conditions on either of their part to be performed or satisfied at or prior to the Closing
Date; and 

  
 3 

 (ii) since June 30, 2005 (the date of the latest
Financial Statements), there has been no material adverse change in the condition (financial or other), earnings, business, liabilities or assets of the Company and its subsidiaries taken as a whole, whether or not arising from transactions
occurring in the ordinary course of business (a “Material Adverse Change”). 
 (i) Subsequent
to the execution of this Purchase Agreement, there shall not have been any change in or affecting the condition (financial or other), earnings, business or assets of the Company and its subsidiaries, whether or not occurring in the ordinary course
of business, the effect of which is, in the Purchaser’s reasonable judgment, so material and adverse as to make it impractical or inadvisable to proceed with the purchase of the Preferred Securities. 

(j) Prior to the Closing Date, the Company and the Trust shall have furnished to the Purchaser and its counsel such
further information, certificates and documents as the Purchaser or its counsel may reasonably request. 
 If
any of the conditions specified in this Section 3 shall not have been fulfilled when and as provided in this Purchase Agreement, or if any of the opinions, certificates and documents mentioned above or elsewhere in this Purchase
Agreement shall not be reasonably satisfactory in form and substance to the Purchaser or its counsel, this Purchase Agreement and all the Purchaser’s obligations hereunder may be canceled at, or at any time prior to, the Closing Date by the
Purchaser. Notice of such cancellation shall be given to the Company and the Trust in writing or by telephone or facsimile confirmed in writing. 
 Each certificate signed by any trustee of the Trust or any officer of the Company and delivered to the Purchaser or the Purchaser’s counsel in connection with the Operative Documents and the
transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the Trust and/or the Company, as the case may be, and not by such trustee or officer in any individual capacity. 

4. Representations and Warranties of the Company and the Trust. The Company and the Trust jointly and
severally represent and warrant to, and agree with the Purchaser, as follows: 
 (a) Neither the Company nor the
Trust, nor any of their “Affiliates” (as defined in Rule 501(b) of Regulation D (“Regulation D”) under the Securities Act (as defined below)), nor any person acting on its or their behalf, has, directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act of 1933, as amended (the “Securities Act”).

 (b) Neither the Company nor the Trust, nor any of their Affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities. 

  
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 (c) The Securities (i) are not and have not been listed on a national
securities exchange registered under section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or quoted on a U.S. automated inter-dealer quotation system and (ii) are not of an open-end investment
company, unit investment trust or face-amount certificate company that are, or are required to be, registered under section 8 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the Securities
otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”). 
 (d) Neither the Company nor the Trust, nor any of their Affiliates, nor any person acting on its or their behalf, has engaged, or will engage, in any “directed selling efforts” within the
meaning of Regulation S under the Securities Act with respect to the Securities. 
 (e) Neither the Company nor
the Trust is, and, immediately following consummation of the transactions contemplated hereby and the application of the net proceeds therefrom, will not be, an “investment company” in each case within the meaning of section 3(a) of the
Investment Company Act. 
 (f) The Trust has been duly created and is validly existing in good standing as a
statutory trust under the Delaware Statutory Trust Act, 12 Del. C. §3801, et seq. (the “Statutory Trust Act”) with all requisite power and authority to own property and to conduct the business it transacts and proposes
to transact and to enter into and perform its obligations under the Operative Documents to which it is a party. The Trust is duly qualified to transact business as a foreign entity and is in good standing in each jurisdiction in which such
qualification is necessary, except where the failure to so qualify or be in good standing would not have a material adverse effect in the condition (financial or otherwise), earnings, business, liabilities or assets of the Trust, whether or not
arising in transactions occurring in the ordinary course of business. The Trust is not a party to or otherwise bound by any agreement other than the Operative Documents. The Trust is and will be, under current law, classified for federal income tax
purposes as a grantor trust and not as an association or publicly traded partnership taxable as a corporation. 

(g) The Trust Agreement has been duly authorized by the Company and, on the Closing Date specified in
Section 2(b), will have been duly executed and delivered by the Company and the Administrative Trustees of the Trust, and, assuming due authorization, execution and delivery by the Property Trustee and the Delaware Trustee, will be a
legal, valid and binding obligation of the Company and the Administrative Trustees, enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and
to general principles of equity. Each of the Administrative Trustees of the Trust is an employee of the Company and has been duly authorized by the Company to execute and deliver the Trust Agreement. 

(h) The Indenture has been duly authorized by the Company and, on the Closing Date, will have been duly executed and
delivered by the Company, and, assuming due authorization, execution and delivery by the Indenture Trustee, will be a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. 

  
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 (i) The Preferred Securities and the Common Securities have been duly
authorized by the Trust and, when issued and delivered against payment therefor on the Closing Date in accordance with this Purchase Agreement, in the case of the Preferred Securities, and in accordance with the Common Securities Subscription
Agreement, in the case of the Common Securities, will be validly issued, fully paid and non-assessable and will represent undivided beneficial interests in the assets of the Trust entitled to the benefits of the Trust Agreement, enforceable against
the Trust in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. The issuance of the Securities is not subject to any preemptive
or other similar rights. On the Closing Date, all of the issued and outstanding Common Securities will be directly owned by the Company free and clear of any pledge, security interest, claim, lien or other encumbrance of any kind (each, a
“Lien”). 
 (j) The Junior Subordinated Notes have been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered to the Indenture Trustee for authentication in accordance with the Indenture and, when authenticated in the manner provided for in the Indenture and delivered to the Trust against payment
therefor in accordance with the Junior Subordinated Note Purchase Agreement, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture, enforceable against the Company in accordance with their
terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. 
 (k) This Purchase Agreement has been duly authorized, executed and delivered by the Company and the Trust. 
 (l) Neither the issue and sale of the Common Securities, the Preferred Securities or the Junior Subordinated Notes, nor the purchase of the Junior Subordinated Notes by the Trust, nor the execution and
delivery of and compliance with the Operative Documents by the Company or the Trust, nor the consummation of the transactions contemplated herein or therein, (i) will conflict with or constitute a violation or breach of the Trust Agreement or
the charter or bylaws of the Company or any subsidiary of the Company or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental authority, agency or instrumentality or court, domestic or
foreign, having jurisdiction over the Trust or the Company or any of its subsidiaries or their respective properties or assets (collectively, the “Governmental Entities”), (ii) will conflict with or constitute a violation or
breach of, or a default or Repayment Event (as defined below) under, or result in the creation or imposition of any Lien upon any property or assets of the Trust, the Company or any of the Company’s subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the Trust, the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or (B) to which any of the property or
assets of any of them is subject, or any judgment, order or decree of any court, Governmental Entity or arbitrator, except, in the case of this clause (ii), for such conflicts, 

  
 6 

 
breaches, violations, defaults, Repayment Events (as defined below) or Liens which (X) would not, singly or in the aggregate, materially adversely affect the consummation of the transactions
contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities and assets of the Company and its subsidiaries
taken as a whole, whether or not arising from transactions occurring in the ordinary course of business (a “Material Adverse Effect”) or (iii) require the consent, approval, authorization or order of any court or Governmental
Entity. As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness by the Trust or the Company or any of its subsidiaries prior to its scheduled maturity. 

(m) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of
Maryland, with all requisite corporate power and authority to own, lease and operate its properties and conduct the business it transacts and proposes to transact, and is duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its activities requires such qualification, except where the failure of the Company to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect. 

(n) The Company has no “Significant Subsidiaries” as such term is defined in Rule 1-02(w) of Regulation S-X.

 (o) Each of the Trust, the Company and each of the Company’s subsidiaries hold all necessary approvals,
authorizations, orders, licenses, consents, registrations, qualifications, certificates and permits (collectively, the “Governmental Licenses”) of and from Governmental Entities necessary to conduct their respective businesses as
now being conducted, and neither the Trust, the Company nor any of the Company’s subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Government License, except where the failure to be so
licensed or approved or the receipt of an unfavorable decision, ruling or finding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the
invalidity or the failure of such Governmental Licenses to be in full force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; and the Company and its subsidiaries are in compliance with all applicable laws, rules,
regulations, judgments, orders, decrees and consents, except where the failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect. 

(p) All of the issued and outstanding shares of capital stock of the Company and each of its subsidiaries are validly
issued, fully paid and non-assessable; all of the issued and outstanding capital stock of each subsidiary of the Company is owned by the Company, directly or through subsidiaries, other than the outstanding capital stock of Capstead Inc. which is
owned approximately 98.5% by the Company; all of the issued and outstanding capital stock of each subsidiary of the Company that is owned by the Company is free and clear of any Lien, claim or equitable right; and none of the issued and outstanding
capital stock of the Company or any 

  
 7 

 
subsidiary was issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws of such entity or under any agreement to which the Company or any
of its subsidiaries is a party. 
 (q) Neither the Company nor any of its subsidiaries is (i) in violation
of its respective charter or by-laws or similar organizational documents or (ii) 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 agreement or instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except, in the case of clause (ii),
where such violation or default would not, singly or in the aggregate, have a Material Adverse Effect. 
 (r)
There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of the Company or the Trust after due inquiry, threatened against or affecting the Trust or the
Company or any of the Company’s subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, materially adversely affect the consummation of the transactions contemplated by
the Operative Documents or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Trust or the Company or any of its subsidiaries is a party or of which any of their respective properties or
assets is subject, including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect. 
 (s) The accountants of the Company who certified the Financial Statements (as defined below) are independent public accountants of the Company and its subsidiaries within the meaning of the Securities
Act, and the rules and regulations of the Securities and Exchange Commission (the “Commission”) thereunder. 
 (t) The audited consolidated financial statements (including the notes thereto) and schedules of the Company and its consolidated subsidiaries for the fiscal year ended December 31, 2004 (the
“Financial Statements”) and the interim unaudited consolidated financial statements of the Company and its consolidated subsidiaries for the quarter ended June 30, 2005 (the “Interim Financial Statements”)
provided to the Purchaser are the most recent available audited and unaudited consolidated financial statements of the Company and its consolidated subsidiaries, respectively, and fairly present in all material respects, in accordance with U.S.
generally accepted accounting principles, the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates and for the periods therein specified, subject, in
the case of Interim Financial Statements, to year-end adjustments (which are expected to consist solely of normal recurring adjustments). Such consolidated financial statements and schedules have been prepared in accordance with U.S. generally
accepted accounting principles (“GAAP”)consistently applied throughout the periods involved (except as otherwise noted therein). 
 (u) None of the Trust, the Company nor any of its subsidiaries, to their knowledge, has any material liability, whether asserted or unasserted, whether absolute or

  
 8 

 
contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation,
circumstance, condition or other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim or demand against the Company or its subsidiaries that could give rise to any such liability) that, singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect, except for (i) liabilities set forth in the Financial Statements or the Interim Financial Statements and (ii) normal fluctuations in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business of the Trust, the Company and all of its subsidiaries since the date of the most recent balance sheet included in such Financial Statements. 

(v) Since the respective dates of the Financial Statements and the Interim Financial Statements, there has not been
(A) any Material Adverse Change or (B) any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock other than regular quarterly dividends on the Company’s common stock, regular
quarterly dividends on the Company’s Series A preferred stock and regular monthly dividends on the Company’s Series B preferred stock. 
 (w) The documents and reports of the Company filed with the Commission in accordance with the Exchange Act, from and including the commencement of the fiscal year covered by the Company’s most recent
Annual Report on Form 10-K, at the time they were or hereafter are filed by the Company with the Commission (collectively, the “1934 Act Reports”), complied and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder (the “1934 Act Regulations”), and, at the date of this Purchase Agreement and on the Closing Date, do not and will not include 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; and other than such instruments, agreements, contracts and
other documents as are filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments, agreements, contracts or documents of a character described in
Item 601 of Regulation S-K promulgated by the Commission to which the Company or any of its subsidiaries is a party other than the Operative Documents. The Company is in compliance with all currently applicable requirements of the Exchange
Act that were added by the Sarbanes-Oxley Act of 2002. 
 (x) No labor dispute with the employees of the Trust,
the Company or any of its subsidiaries exists or, to the knowledge of the executive officers of the Trust or the Company, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect. 

(y) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any
Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the Trust or the Company of their respective obligations under the Operative Documents, as applicable, or the consummation by the
Trust and the Company of the transactions contemplated by the Operative Documents. 

  
 9 

 (z) Except as disclosed in the Company’s 1934 Act Reports and for liens
for (i) taxes and other governmental charges and assessments which are not yet delinquent or the amount of which is being contested in good faith by appropriate proceedings; (ii) encumbrances in the nature of zoning restrictions,
easements, rights or restrictions of record on the use of real property; (iii) statutory or common law liens to secure landlords, lessors or renters under leases or rental agreements confined to the premises rented; (iv) liens created
under or in connection with asset securitizations, repurchase agreements, warehouse credit facilities or other loan facilities; and (v) other liens incurred in the ordinary course of business not material in amount, each of the Trust, the
Company and each subsidiary of the Company has good and marketable title to all of its respective real and personal properties, in each case free and clear of all Liens and defects, except for those that would not, singly or in the aggregate, have a
Material Adverse Effect; and all of the leases and subleases under which the Trust, the Company or any subsidiary of the Company holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force
and effect would not, singly or in the aggregate, have a Material Adverse Effect, and none of the Trust, the Company or any subsidiary of the Company has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of
the Trust, the Company or any subsidiary of the Company under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease,
except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect. 
 (aa)
Commencing with its taxable year ended December 31, 1985, the Company has been, and upon the completion of the transactions contemplated hereby, the Company will continue to be, organized and operated in conformity with the requirements for
qualification and taxation as a real estate investment trust (a “REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and the Company’s proposed method of
operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code, and no actions have been taken (or not taken which are required to be taken) which would cause such qualification to be lost. The
Company expects to continue to be organized and to operate in a manner so as to qualify as a REIT in the taxable year ending December 31, 2005 and succeeding taxable years. 

(bb) The Company has timely and duly filed all Tax Returns required to be filed by them, and all such Tax Returns are
true, correct and complete in all material respects. The Company has timely and duly paid in full all material Taxes required to be paid by it (whether or not such amounts are shown as due on any Tax Return). There are no federal, state, or other
Tax audits or deficiency assessments proposed or pending with respect to the Company, and no such audits or assessments are threatened. As used herein, the terms “Tax” or “Taxes” mean (i) all federal, state,
local, and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto, imposed by any Governmental Entity, and (ii) all
liabilities in respect of such amounts arising as a result of being a member of any affiliated, consolidated, combined, unitary or similar group, as a successor to another person or by contract. As used herein, the term “Tax
Returns” means all federal, state, local, and foreign Tax returns, declarations, statements, reports, schedules, forms, and information returns and any amendments thereto filed or required to be filed with any Governmental Entity.

  
 10 

 (cc) The Trust is not subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Notes, interest payable by the Company on the Junior Subordinated Notes is deductible by the Company, in whole or in part, for United States federal income tax purposes, and the Trust
is not, or will not be within ninety (90) days of the date hereof, subject to more than a de minimis amount of other taxes, duties or other governmental charges. To the knowledge of the Company and the Trust, there are no rulemaking or
similar proceedings before the United States Internal Revenue Service or comparable federal, state, local or foreign government bodies which involve or affect the Company or any subsidiary, which, if the subject of an action unfavorable to the
Company or any subsidiary, could result in a Material Adverse Effect. 
 (dd) The books, records and accounts of
the Company and its subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its subsidiaries. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances 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 accordance with GAAP 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. 

(ee) The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such
amounts in all material respects as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions contemplated hereby including but not limited to, real or personal property owned or leased
against theft, damage, destruction, act of vandalism and all other risks customarily insured against. All policies of insurance and fidelity or surety bonds insuring the Company or the Company’s businesses, assets, employees, officers and
directors are in full force and effect. The Company is in compliance with the terms of such policies and instruments in all material respects. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Within the past twelve months, the Company has not been denied
any insurance coverage which it has sought or for which it has applied. 
 (ff) The Company and its subsidiaries
or any person acting on behalf of the Company and its subsidiaries including, without limitation, any director, officer, agent or employee of the Company or its subsidiaries has not, directly or indirectly, while acting on behalf of the Company and
its subsidiaries (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from corporate funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful payment. 

  
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 (gg) The information provided by the Company and the Trust pursuant to this
Purchase Agreement and the transactions contemplated hereby does not, as of the date hereof, and will not as of the Closing Date, contain any 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. 
 (hh) Except as would
not, individually or in the aggregate, result in a Material Adverse Change, (i) the Company and its subsidiaries have been and are in compliance with applicable Environmental Laws (as defined below), (ii) none of the Company, any of its
subsidiaries or, to the best of the Company’s knowledge, any other owners of any of the real properties currently or previously owned, leased or operated by the Company or any of its subsidiaries (the “Properties”) at any time or any
other party, has at any time released (as such term is defined in CERCLA (as defined below)) or otherwise disposed of Hazardous Materials (as defined below) on, to, in, under or from the Properties or any other real properties previously owned,
leased or operated by the Company or any of its subsidiaries, (iii) neither the Company nor any of its subsidiaries intends to use the Properties or any subsequently acquired properties, other than in compliance with applicable Environmental
Laws, (iv) neither the Company nor any of its subsidiaries has received any notice of, or has any knowledge of any occurrence or circumstance which, with notice or passage of time or both, would give rise to a claim under or pursuant to any
Environmental Law with respect to the Properties, any other real properties previously owned, leased or operated by the Company or any of its subsidiaries, or their respective assets or arising out of the conduct of the Company or its subsidiaries,
(v) none of the Properties are included or, to the best of the Company’s knowledge, proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the United States Environmental Protection Agency or, to the best of
the Company’s knowledge, proposed for inclusion on any similar list or inventory issued pursuant to any other Environmental Law or issued by any other Governmental Entity, (vi) none of the Company, any of its subsidiaries or agents or, to
the best of the Company’s knowledge, any other person or entity for whose conduct any of them is or may be held responsible, has generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced or
processed any Hazardous Material at any of the Properties, except in compliance with all applicable Environmental Laws, and has not transported or arranged for the transport of any Hazardous Material from the Properties or any other real properties
previously owned, leased or operated by the Company or any of its subsidiaries to another property, except in compliance with all applicable Environmental Laws, (vii) no lien has been imposed on the Properties by any Governmental Entity in
connection with the presence on or off such Property of any Hazardous Material, and (viii) none of the Company, any of its subsidiaries or, to the best of the Company’s knowledge, any other person or entity for whose conduct any of them is
or may be held responsible, has entered into or been subject to any consent decree, compliance order, or administrative order with respect to the Properties or any facilities or improvements or any operations or activities thereon. 

As used herein, “Hazardous Material” shall include, without limitation, any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous substances, hazardous wastes, toxic substances or related materials, asbestos, petroleum, petroleum products and any hazardous material as defined by any federal, state or local
environmental law, statute, ordinance, rule or regulation, including, without limitation, the Comprehensive Environmental 

  
 12 

 
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
§§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001-11050, the Toxic
Substances Control Act, 15 U.S.C. §§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the Clean Water Act (Federal Water
Pollution Control Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any analogous state laws, as
any of the above may be amended from time to time and in the regulations promulgated pursuant to each of the foregoing (including environmental statutes and laws not specifically defined herein) (individually, an “Environmental Law”
and collectively, the “Environmental Laws”) or by any Governmental Entity. 
 (ii) No
subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such
subsidiary’s capital stock, or from repaying to the Company any loans or advances to such subsidiary from the Company. 
 5. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to, and agrees with, the Company and the Trust as follows: 

(a) The Purchaser is aware that the Preferred Securities have not been and will not be registered under the Securities
Act and may not be offered or sold within the United States or to “U.S. persons” (as defined in Regulation S under the Securities Act) except in accordance with Rule 903 of Regulation S under the Securities Act or pursuant to an exemption
from the registration requirements of the Securities Act. 
 (b) The Purchaser is an institutional
“accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act. 
 (c) Neither the Purchaser, nor any of the Purchaser’s affiliates, nor any person acting on the Purchaser’s or the Purchaser’s Affiliate’s behalf has engaged, or will engage, in any
form of “general solicitation or general advertising” (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Preferred Securities. 

(d) The Purchaser understands and acknowledges that (i) no public market exists for any of the Preferred Securities
and that it is unlikely that a public market will ever exist for the Preferred Securities, (ii) the Purchaser is purchasing the Preferred Securities for its own account, for investment and not with a view to, or for offer or sale in connection
with, any distribution thereof in violation of the Securities Act or other applicable securities laws, subject to any requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell
such Preferred Securities pursuant to an effective registration statement under the Securities Act or pursuant to an exemption therefrom or in a transaction not subject thereto, and the Purchaser agrees to the legends and transfer restrictions
applicable to the Preferred Securities contained in the Indenture, and (iii) the Purchaser has had the opportunity to ask questions of, and receive answers and request additional information from, the Company and is aware that it may be
required to bear the economic risk of an investment in the Preferred Securities for an indefinite period of time. 

  
 13 

 (e) The Purchaser is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction in which it is organized with all requisite (i) power and authority to execute, deliver and perform the Operative Documents to which it is a party, to make the representations and warranties specified
herein and therein and to consummate the transactions contemplated herein and (ii) right and power to purchase the Preferred Securities. 
 (f) This Purchase Agreement has been duly authorized, executed and delivered by the Purchaser and no filing with, or authorization, approval, consent, license, order registration, qualification or decree
of, any governmental body, agency or court having jurisdiction over the Purchaser, other than those that have been made or obtained, is necessary or required for the performance by the Purchaser of its obligations under this Purchase Agreement or to
consummate the transactions contemplated herein. 
 (g) The Purchaser is a “Qualified Purchaser” as
such term is defined in Section 2(a)(51) of the Investment Company Act. 
 6. Covenants and
Agreements of the Company and the Trust. The Company and the Trust jointly and severally agree with the Purchaser as follows: 
 (a) During the period from the date of this Agreement to the Closing Date, the Company and the Trust shall use their best efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 4 hereof to be true as of the Closing Date, after giving effect to the transactions contemplated by this Purchase Agreement, as if made on and as of the Closing Date. 

(b) The Company and the Trust will arrange for the qualification of the Preferred Securities for sale under the laws of
such jurisdictions as the Purchaser may designate in writing and will maintain such qualifications in effect so long as required for the sale of the Preferred Securities. The Company or the Trust, as the case may be, will promptly advise the
Purchaser of the receipt by the Company or the Trust, as the case may be, of any notification with respect to the suspension of the qualification of the Preferred Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. 
 (c) Neither the Company nor the Trust will, nor will either of them permit any
of its Affiliates to, nor will either of them permit any person acting on its or their behalf (other than the Purchaser) to, resell any Preferred Securities that have been acquired by any of them. 

(d) Neither the Company nor the Trust will, nor will either of them permit any of their Affiliates or any person acting
on their behalf to, engage in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Preferred Securities. 

(e) Neither the Company nor the Trust will, nor will either of them permit any of their Affiliates or any person acting
on their behalf to, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of any of the Preferred Securities under the Securities Act. 

  
 14 

 (f) Neither the Company nor the Trust will, nor will either of them permit
any of its Affiliates or any person acting on their behalf to, engage in any form of “general solicitation or general advertising” (within the meaning of Regulation D) in connection with any offer or sale of the any of the Preferred
Securities. 
 (g) So long as any of the Preferred Securities are outstanding, (i) the Preferred Securities
shall not be listed on a national securities exchange registered under section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system and (ii) neither the Company nor the Trust shall be an open-end investment company,
unit investment trust or face-amount certificate company that is, or is required to be, registered under section 8 of the Investment Company Act, and, the Preferred Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3).

 (h) Each of the Company and the Trust shall furnish to (i) the holders, and subsequent holders of the
Preferred Securities, (ii) Taberna Capital Management, LLC (at 450 Park Avenue, 23rd Floor, New York, New York 10022, or such other address as designated by Taberna Capital Management, LLC) and (iii) any beneficial owner of the Preferred
Securities reasonably identified to the Company and the Trust (which identification may be made by either such beneficial owner or by Taberna Capital Management, LLC), a duly completed and executed certificate in the form attached hereto as Annex
F, including the financial statements referenced in such Annex, which certificate and financial statements shall be so furnished by the Company and the Trust not later than forty five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company; provided, that the financial statements of the Company shall be deemed to have been furnished in compliance
with this Section 6(h) if such financial statements have been duly filed with the Commission as part of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, as applicable. 

(i) Each of the Company and the Trust will, during any period in which it is not subject to and in compliance with
section 13 or 15(d) of the Exchange Act, or it is not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, shall provide to each holder of the Preferred Securities and to each prospective
purchaser (as designated by such holder) of the Preferred Securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Securities Act. If the Company and the Trust are
required to register under the Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be sufficient information as required above. This covenant is intended to be for the benefit of the Purchaser, the holders of the Preferred
Securities, and the prospective purchasers designated by the Purchaser and such holders, from time to time, of the Preferred Securities. 
 (j) Neither the Company nor the Trust will, until one hundred eighty (180) days following the Closing Date, without the Purchaser’s prior written consent, offer, sell, contract to sell, grant
any option to purchase or otherwise dispose of, directly or indirectly, (i)

  
 15 

 
any Preferred Securities or other securities substantially similar to the Preferred Securities other than as contemplated by this Purchase Agreement or (ii) any other securities convertible
into, or exercisable or exchangeable for, any Preferred Securities or other securities substantially similar to the Preferred Securities; provided that no such consent shall be required (A) if such other securities have a different maturity
date, interest rate and other terms than those of the Preferred Securities or (B) if, after giving effect to any such offer, sale or option of such other securities shall not result in the required registration of the sale of the Preferred
Securities contemplated herein. 
 (k) Unless and until the Company’s Board of Directors determines that it
is not in the best interests of the Company’s stockholders, the Company will use its best efforts to meet the requirements to qualify as a REIT under Sections 856 through 860 of the Code, effective for the taxable year ending December 31,
2005(and each fiscal quarter of such year) and succeeding taxable years. 
 (l) The Company shall not identify
the Purchaser or Taberna Capital Management, LLC in a press release or any other public statement without the consent of Purchaser or Cohen Bros. & Company, as applicable; provided that the Company shall not be prohibited from making any
public disclosure that it deems, upon advice of counsel, to be necessary or advisable in order to comply with the requirements of the federal securities laws. 
 (m) Each of the Company and the Trust acknowledges and agrees that, subject to the terms of the Trust Agreement, Purchaser, and each successor to Purchaser’s interest in the Preferred Securities, may
(without prior notice to the Company or the Trust and without the Company’s or the Trust’s prior consent), sell or transfer all or a portion of the Preferred Securities or create separate tranches with respect to the Preferred Securities,
and, in connection therewith, the Company and the Trust shall, at the direction of the Purchaser (or any successor to Purchaser’s interest in the Preferred Securities), take such actions as are necessary to change the dates that distributions
are to be made with respect to such Preferred Securities or with respect to a particular tranche of Preferred Securities and to change the corresponding redemption date and expiration of the five-year no-call period of such Preferred Securities or
such tranche of Preferred Securities. Each of the Company and the Trust agrees to cooperate with all reasonable requests of Purchaser in connection with any of the foregoing including, without limitation, (i) splitting, severing, modifying
and/or reissuing the Junior Subordinated Notes to provide for such modified payment dates, redemption date and five-year no-call period, (ii) issuing replacement Preferred Securities reflecting the new distribution dates, redemption date and
five-year no-call period, and (iii) re-executing or making modifications to the Operative Documents and the other documentation evidencing the transactions contemplated hereby, provided that no such modification, revision, additional
documentation, or other action in connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to such documents. 

Purchaser and each successor to Purchaser’s interest in the Preferred Securities is granted the right under the
Indenture and Amended and Restated Trust Agreement to request the substitution of new notes for all or a portion of the Junior Subordinated Notes held by the Trust. The Trust is required under the terms of the Indenture and Amended and Restated
Trust 

  
 16 

 
Agreement to accept such newly issued notes (the “Replacement Notes”) and surrender a like amount of Junior Subordinated Notes to the Company. The Replacement Notes shall bear terms
identical to the Junior Subordinated Notes with the sole exception of interest payment dates (and corresponding redemption date and maturity date), which will be specified by Purchaser or applicable successor. In no event will the interest payment
dates (and corresponding redemption date and maturity date) on the Replacement Notes vary by more than sixty (60) calendar days from the original interest payment dates (and corresponding redemption date and maturity date) under the Junior
Subordinated Notes. 
 Each of the Company and the Trust acknowledges and agrees that, to the extent of the
principal amount of the Replacement Notes issued to the Trust under the Indenture, Purchaser (and each successor to Purchaser’s interest in the Preferred Securities) will require the Trust to issue a new series of Preferred Securities having a
principal amount related to the principal amount of the Replacement Notes (the “Replacement Securities”) to designated holders of Preferred Securities, provided that any such Replacement Securities, and any distributions from the Trust to
the holders of Replacement Securities, must relate solely to the Trust’s interest in the Replacement Notes and in no event will the Preferred Securities other than the Replacement Securities share in the returns from any Replacement Notes. The
Replacement Securities shall have payment dates (and corresponding redemption date and maturity date) that relate to the Replacement Notes. 
 Each of the Company and the Trust agrees to cooperate with all reasonable requests of Purchaser in connection with any of the foregoing, provided that no action requested of the Company or the Trust in
connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to such documents. 
 Each party hereto acknowledges that (i) each purchaser of Preferred Securities in addition to the Purchaser (each, an “Additional Purchaser”) is being granted the same right to elect to
receive Replacement Notes and cause the Trust to issue Replacement Securities as described above (the “Payment Date Election Right”) and (ii) upon or prior to the Purchaser’s or any Additional Purchaser’s election to
exercise the Payment Date Election Right, the Trust Agreement will need to be amended in order to include certain provisions to effectuate the Payment Date Election Right. If, at the time the Purchaser or any Additional Purchaser elects to exercise
the Payment Date Election Right, the Trust Agreement has not been so amended, each party hereto agrees to use commercially reasonable efforts to so amend the Trust Agreement upon such election. 

7. Payment of Expenses. The Company, as depositor of the Trust, agrees to pay all costs and expenses
incident to the performance of the obligations of the Company and the Trust under this Purchase Agreement, whether or not the transactions contemplated herein are consummated or this Purchase Agreement is terminated, including all costs and expenses
incident to (i) the authorization, issuance, sale and delivery of the Preferred Securities and any taxes payable in connection therewith; (ii) the fees and expenses of qualifying the Preferred Securities under the securities laws of the
several jurisdictions as provided in Section 6(b); (iii) the fees and expenses of the counsel, the accountants and any other experts or advisors retained by the Company or the Trust; (iv) the fees and all reasonable expenses of
the Property 

  
 17 

 
Trustee, the Delaware Trustee, the Indenture Trustee and any other trustee or paying agent appointed under the Operative Documents, including the fees and disbursements of counsel for such
trustees, which fees shall not exceed $2,500 for an acceptance fee payable to the Delaware Trustee, $4,000 in administrative fees annually payable to the Delaware Trustee, $4,000 for the legal fees of Potter, Anderson & Carroon, LLP,
special Delaware counsel retained by the Delaware Trustee, and all miscellaneous out-of-pocket expenses of such special Delaware counsel, including fees related to filing for the creation of the Trust; and (vi) the fees and expenses incurred by
Bear, Stearns & Co. Inc., which fees shall not exceed $12,500 for due diligence fees, $2,500 for PORTAL application and settlement fees; $30,000 for the legal fees and expenses of DLA Piper Rudnick Gray Cary US LLP, special counsel retained
by the Purchaser, and $5,000 of related expenses incurred by Bear, Stearns & Co. Inc. 
 If the sale of
the Preferred Securities provided for in this Purchase Agreement is not consummated because any condition set forth in Section 3 hereof to be satisfied by either the Company or the Trust is not satisfied, because this Purchase Agreement
is terminated pursuant to any portion of Section 9 other than clauses (ii) or (iv) or because of any failure, refusal or inability on the part of the Company or the Trust to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder other than by reason of a default by the Purchaser, the Company will reimburse the Purchaser upon demand for all reasonable out-of-pocket expenses (including the fees and expenses of each of the
Purchaser’s counsel specified in subparagraphs (v) and (vi) of the immediately preceding paragraph) that shall have been incurred by the Purchaser in connection with the proposed purchase and sale of the Preferred Securities. The
Company shall not in any event be liable to the Purchaser for the loss of anticipated profits from the transactions contemplated by this Purchase Agreement. 
 8. Indemnification. (a) The Sellers agree, jointly and severally, to indemnify and hold harmless the Purchaser, the Purchaser’s affiliates, Taberna Capital Management, LLC, and
their respective affiliates, and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively, the “Indemnified Parties”) each person, if any, who controls any of the Indemnified Parties within the meaning of the
Securities Act or the Exchange Act, and the Indemnified Parties’ respective directors, officers, employees and agents and each person, if any, who controls the Indemnified Parties within the meaning of the Securities Act, or the U.S. Securities
Exchange Act of 1934, as amended (the “Exchange Act”) against any losses, claims, damages or liabilities, joint or several, to which the Indemnified Parties may become subject, under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are connected with the execution and delivery by Sellers, and the consummation
thereby of the transactions contemplated by, this Purchase Agreement or any other Operative Document other than any such losses, claims, damages or liabilities are caused by the negligence or willful misconduct of the Indemnified Party. Sellers
agree, jointly and severally, to reimburse the Indemnified Parties for any legal or other expenses reasonably incurred by the Indemnified Parties in connection with investigating or defending any such loss, claim, damage or liability or action
arising out of or being connected with the execution and delivery by the Sellers, and the consummation by the Sellers of the transactions contemplated by, this Purchase Agreement or the other Operative Documents. This indemnity agreement will be in
addition to any liability that any of the Sellers may otherwise have. 

  
 18 

 (b) The Company agrees to indemnify the Trust against all loss, liability,
claim, damage and expense whatsoever due from the Trust under paragraph (a) above. 
 (c) Promptly after
receipt by an Indemnified Party under this Section 8 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8,
promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve the indemnifying party from liability under paragraph (a) above unless and to the
extent that such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the
indemnification obligation provided in paragraph (a) above. Purchaser shall be entitled to appoint counsel to represent the Indemnified Party in any action for which indemnification is sought. An indemnifying party may participate at its own
expense in the defense of any such action; provided, that counsel to the indemnifying party shall not (except with the consent of the Indemnified Party) also be counsel to the Indemnified Party. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. An indemnifying party will not, without the prior written consent of the Indemnified Parties, settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding. 

9. Termination; Representations and Indemnities to Survive. This Purchase Agreement shall be subject to
termination in the absolute discretion of the Purchaser, by notice given to the Company and the Trust prior to delivery of and payment for the Preferred Securities, if prior to such time (i) the Trust shall be unable to sell and deliver to the
Purchaser at least $17,500,000 stated liquidation value of Preferred Securities, (ii) a suspension or material limitation in trading in securities generally shall have occurred on the New York Stock Exchange, (iii) a suspension or material
limitation in trading in any of the Company’s securities shall have occurred on the exchange or quotation system upon which the Company’ securities are traded, if any, or (iv) there shall have occurred any outbreak or escalation of
hostilities, or declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the Purchaser’s judgment, impracticable or inadvisable to proceed
with the offering or delivery of the Preferred Securities. The respective agreements, representations, warranties, indemnities and other statements of the Company and the Trust or their respective officers or trustees and of the Purchaser set forth
in or made pursuant to this Purchase Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Purchaser, the Company or the Trust or any of the their respective officers, directors, trustees or
controlling persons, and will survive delivery of and payment for the Preferred Securities. The provisions of Sections 7 and 8 shall survive the termination or cancellation of this Purchase Agreement. 

  
 19 

 10. Amendments. This Purchase Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a written agreement by each of the parties hereto. 
 11. Notices. 
 (a) Any communication shall be given by
letter or facsimile, in the case of notices to the Issuer, to it at: 
 Capstead Mortgage Trust I 

c/o Capstead Mortgage Corporation 

8401 N. Central Expressway, Suite 800 

Dallas, Texas 75225 
 Facsimile: (214) 874-2323 
 Attention: Andrew F. Jacobs

 in the case of notices to the Sponsor, to it at: 

Capstead Mortgage Corporation 

8401 N. Central Expressway, Suite 800 

Dallas, Texas 75225 

Facsimile: (214) 874-2323 

Attention: Andrew F. Jacobs 
 and in the case of notices to the Purchaser, to it at: 
 Merrill Lynch International 
 Merrill Lynch,
Pierce, Fenner & Smith Incorporated 
 450 Park Avenue, 23rd Floor 

New York, New York 10022 

Facsimile: (215) 735-1499 

Attention: Mitchell Kahn 
 with a copy to: 
 DLA Piper Rudnick Gray Cary US
LLP 
 1221 S. Mopac Expressway, Suite 400 

Austin, TX 78746 

Facsimile: (512) 457-7001 

Attention: David B. Jones 

(b) Any such communication shall take effect, in the case of a letter, at the time of delivery and in the case of
facsimile, at the time of dispatch. 

  
 20 

 (c) Any communication not by facsimile shall be confirmed by letter but
failure to send or receive the letter of confirmation shall not invalidate the original communication. 
 12.
Successors and Assigns. This Purchase Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing expressed or mentioned in this Purchase Agreement is
intended or shall be construed to give any person other than the parties hereto and the affiliates, directors, officers, employees, agents and controlling persons referred to in Section 8 hereof and their successors, assigns, heirs and
legal representatives, any right or obligation hereunder. None of the rights or obligations of the Company or the Trust under this Purchase Agreement may be assigned, whether by operation of law or otherwise, without the Purchaser’s prior
written consent. The rights and obligations of the Purchaser under this Purchase Agreement may be assigned by the Purchaser without the Company’s or the Trust’s consent; provided that the assignee assumes the obligations of the Purchaser
under this Purchase Agreement. 
 13. Applicable Law. THIS PURCHASE AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW). 

14. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT TO OR ARISING OUT OF THIS PURCHASE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE
SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS PURCHASE AGREEMENT. 
 15.
Counterparts and Facsimile. This Purchase Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument. This Purchase Agreement may be executed by any one or more of the parties hereto by facsimile. 

  
 21 

 IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of the
date first written above. 
  

			
	 CAPSTEAD MORTGAGE CORPORATION

		
	 By: 
	 	 /s/ Phillip A. Reinsch        

		 	 Name: Phillip A. Reinsch

		 	 Title: Chief Financial Officer

  

			
	 CAPSTEAD MORTGAGE TRUST I

	
	 By: Capstead Mortgage Corporation, as Depositor

  

					
		 	 By: 
	 	 /s/ Phillip A. Reinsch        

		 		 	 Name: Phillip A. Reinsch

		 		 	 Title: Chief Financial Officer

  

			
	 MERRILL LYNCH INTERNATIONAL

		
	 By: 
	 	 /s/ William Berry        

		 	 Name: William Berry

		 	 Title: Managing Director

  
 22

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