Exhibit 10.3
SECOND AMENDMENT, dated as of July 1, 2001 (the "Second
Amendment"), to the Investment Advisory Agreement (the "Agreement"), dated as
of March 27, 1998 between Anthracite Capital, Inc., a Maryland corporation
(the "Company"), and BlackRock Financial Management, Inc., a Delaware
corporation (the "Manager"), as amended by that (i) certain First Amendment,
dated as of January 1, 2001 between the Company and the Manager; and (ii)
certain letter agreement dated May 5, 2000 between the Company and the Manager.
R E C I T A L S
Section 12 of the Agreement provides, among other things, that
the Company and the Manager may amend the Agreement, if, but only if, such
amendment is in writing and is signed by the parties thereto.
The Company and the Manager hereby enter into this Second
Amendment pursuant to Section 12 of the Agreement, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Second Amendment a valid
agreement between the Company and the Manager in accordance with its terms
have been done.
In the event that any term or provision contained herein shall
conflict or be inconsistent with any provision contained in the Agreement,
the terms and provisions of this Second Amendment shall govern.
All terms used in this Second Amendment which are defined in the
Agreement have the meanings assigned to such terms in the Agreement.
ARTICLE I
AMENDMENTS
Section 1.1 Amendment and Restatement of Section 5(a) of the
Agreement.
Section 5(a) of the Agreement is hereby Amended and Restated as
follows:
"(a) Commencing with the first fiscal quarter after the Closing
Date, the Company agrees to pay to the Manager and the Manager agrees to
accept as full compensation for all services rendered by the Manager as such,
(i) a quarterly base management fee calculated as a percentage of the Average
Invested Assets of the Company on the last business day for which market
quotations are available of each calendar quarter and equal to 1% per annum
of such Average Invested Assets rated lower than BB- or not rated, 0.75% of
such Average Invested Assets rated BB- through BB+, and 0.20% of such Average
Invested Assets that are rated above BB+ and (ii) incentive compensation for
each fiscal quarter in an amount equal to the product of (A) 25% of the
dollar amount by which (1)(a) Funds From Operations of the Company (before
incentive fee) per share of Common Stock (based on the weighted average
number of shares outstanding) plus (b) gains (or minus losses) from debt
restructuring and sales of property per share of Common Stock (based on the
weighted average number of shares outstanding), exceed (2) an amount equal to
(a) the weighted average of the price per share of the initial offering and
the prices per share of any secondary offerings of Common Stock by the
Company multiplied by (b) the greater of: (i) 9.5% or (ii) the U.S. Treasury
Rate plus 3.5% per annum (expressed as a quarterly percentage) multiplied by
(B) the weighted average number of shares of Common Stock outstanding during
such quarter. Notwithstanding the foregoing, no payment of any portion of the
incentive compensation provided for in clause (ii) above that is attributable
to net capital gains of the Company prior to the end of the first full fiscal
quarter of the Company's operations following any minimum calculation period
longer than a quarter or other time period required by Rule 205-3 of the
Investment Advisers Act of 1940 at the time of such calculation, shall accrue
or be payable until completion of such fiscal quarter, at which time the
cumulative net capital gains of the Company through the end of such quarter
shall be computed and incentive compensation shall be paid on such net gains
at the rate provided in clause (ii) above and after which time the net
capital gains includible in clause (ii) above for each quarter shall be the
excess of such net capital gains for such minimum calculation period through
the end of such quarter (the "Total Period") over the net capital gains (if
any) for the portion of the Total Period other than such quarter. For any
period less than a quarter during which this Agreement is in effect, the fee
shall be prorated according to the proportion which such period bears to a
full quarter of 90, 91 or 92 days, as the case may be."
ARTICLE II
MISCELLANEOUS
Section 2.1 Governing Law. This Second Amendment shall be
construed in accordance with the laws of the State of New York for contracts
to be performed entirely therein without reference to choice of law
principles thereof.
Section 2.2 Severability. The invalidity or unenforceability of
any provision of this Second Amendment shall not affect the validity of any
other provision, and all other provisions shall remain in full force and
effect.
Section 2.3 Counterparts. This Second Amendment may be signed by
the parties in counterparts which together shall constitute one and the same
agreement among the parties.
Section 2.4 Ratification of the Agreement. As amended by this
Second Amendment, the Agreement is in all respects ratified and confirmed and
the Agreement as so amended by this Second Amendment shall be read, taken and
construed as one and the same instrument.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed all as of the date first written above.
ANTHRACITE CAPITAL, INC.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
BLACKROCK FINANCIAL MANAGEMENT, INC.
By: /s/ Xxxxxxxx X. Xxxx
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Name: Xxxxxxxx X. Xxxx
Title: Chairman and Chief Executive Officer
