Exhibit 99.2
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
December 2, 1999, by and between Anthracite Capital, Inc., a Maryland
corporation, with headquarters located at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the "Company"), and RECP II Anthracite, LLC, a
Delaware limited liability company (the "Buyer"), a wholly-owned subsidiary
of DLJ Real Estate Capital Partners II, L.P. ("RECP").
WHEREAS:
A. The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D ("Regulation D") as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "1933 Act");
B. The Company has authorized a new series of preferred stock, $.001
par value per share ("Preferred Stock"), designated as 10.5% Series A
Senior Cumulative Convertible Redeemable Preferred Stock (together with any
preferred stock issued in replacement thereof or otherwise with respect
thereto in accordance with the terms thereof, the "Preferred Shares"),
having the rights, preferences and privileges set forth in the Articles
Supplementary to the charter of the Company attached hereto as Exhibit A
(the "Articles Supplementary");
C. The Buyer desires to purchase and the Company desires to issue
and sell, upon the terms and conditions set forth in this Agreement,
1,200,000 Preferred Shares for an aggregate purchase price of thirty
million dollars ($30,000,000) (the "Purchase Price");
D. The Preferred Shares shall have the rights, terms and conditions,
and are convertible into shares of common stock, $0.001 par value per
share, of the Company ("Common Stock"), as set forth in the Articles
Supplementary;
E. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement, in the form attached hereto as Exhibit B (the
"Registration Rights Agreement"), pursuant to which the Company has agreed
to provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and intending to be legally bound, the Company and the
Buyer hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES
A. PURCHASE OF PREFERRED SHARES. On the Closing Date (as defined
below), the Company agrees to issue and sell to the Buyer and the Buyer
agrees to purchase from the Company 1,200,000 Preferred Shares.
B. FORM OF PAYMENT. On or prior to the Closing Date, subject to the
satisfaction (or waiver) of all of the terms and conditions set forth
herein, and in reliance on the representations, warranties and covenants
set forth or referred to herein, the Buyer agrees to pay the Purchase Price
to the Company, which shall be $25.00 for each Preferred Share, or $30
million in the aggregate, for the Preferred Shares to be issued and sold to
it at the Closing (as defined below), by wire transfer of immediately
available funds to the account designated by the Company at least three (3)
business days prior to the Closing Date, against delivery of a duly
executed certificate registered in the name of the Buyer and in the form
agreed upon by the Company and the Buyer representing the Preferred Shares
which the Buyer is purchasing.
C. CLOSING DATE. Subject to the satisfaction (or waiver) of all of
the terms and conditions set forth in Section 5 and Section 6 below, the
date and time of the issuance and sale of the Preferred Shares pursuant to
this Agreement (the "Closing Date") shall be 1:00 p.m. Eastern Standard
Time on December 2, 1999 (the "Closing").
2. BUYER'S REPRESENTATIONS AND WARRANTIES. The Buyer represents and
warrants to the Company that:
A. INVESTMENT PURPOSE. As of the date hereof, the Buyer is agreeing
to purchase the Preferred Shares and the shares of Common Stock issuable
upon conversion or otherwise pursuant to the Preferred Shares (such shares
of Common Stock sometimes referred to herein as the "Conversion Shares"
and, collectively with the Preferred Shares, the "Securities") for its own
account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration
under the 1933 Act; provided, however, that by making the representation
herein, the Buyer does not agree to hold any of the Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act. Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities
may be pledged as collateral in connection with a bona fide margin account
or other lending arrangement.
B. ACCREDITED INVESTOR STATUS. RECP, the wholly-owned parent of the
Buyer, is an "accredited investor" as that term is defined in Rule 501(a)
of Regulation D (an "Accredited Investor").
C. RELIANCE ON EXEMPTIONS. The Buyer understands that the
Securities are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying upon the truth and
accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such exemptions and
the eligibility of the Buyer to acquire the Securities. The Buyer
acknowledges that it has reviewed the provisions of Rule 144 (as defined
below) and in connection with the sale of the Securities other than
pursuant to an effective registration statement under the 1933 Act will
comply with terms of such rule or another available exemption from
registration.
D. INFORMATION. Except as listed on Schedule 2(D) hereof, the Buyer
and its advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested
by the Buyer or its advisors. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither
such inquiries nor any other due diligence investigation conducted by the
Buyer or any of its advisors or representatives shall modify, amend or
affect the Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. The Buyer understands that its
investment in the Securities involves a significant degree of risk.
E. GOVERNMENTAL REVIEW. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
F. TRANSFER OR RE-SALE. The Buyer understands that: (i) except as
provided in the Registration Rights Agreement, the sale or re-sale of the
Securities has not been and is not being registered under the 1933 Act or
any applicable state securities laws, and the Securities may not be
transferred unless (a) the Securities are sold pursuant to an effective
registration statement under the 1933 Act, (b) the Securities are sold or
transferred in compliance with certain provisions of the Company's Articles
of Incorporation as amended (the "Articles") relating to Company's election
to be taxed as a Real Estate Investment Trust (a "REIT") under the rules
and regulations of the Internal Revenue Code of 1986, as amended (the
"Code") as described more fully in the Company's registration statement on
Form S-3, which does not register the sale of the Preferred Shares to the
Buyer, originally filed under Rule 415 of the 1933 Act with the SEC on
April 1, 1999 (Registration No. 333-75473) (as amended, the "Registration
Statement") under the section titled "DESCRIPTION OF CAPITAL STOCK --
Repurchase of Shares and Restrictions on Transfer," (c) the Securities are
sold or transferred to an "affiliate" (as defined in Rule 144 promulgated
under the 1933 Act (or a successor rule) ("Rule 144") of the Buyer who
agrees to sell or otherwise transfer the Securities only in accordance with
this Section 2(F) and who is an Accredited Investor or (d) the Securities
are sold pursuant to Rule 144 if available; (ii) any sale of such
Securities made in reliance on Rule 144 may be made only in accordance with
the terms of said Rule 144 and further, if said Rule 144 is not applicable,
any re-sale of such Securities under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC promulgated thereunder; and (iii) neither the
Company nor any other person is under any further obligation to register
such Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in each
case, other than pursuant to the Registration Rights Agreement) .
Notwithstanding the foregoing or anything else contained herein to the
contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement.
G. LEGENDS. The Buyer understands that the Preferred Shares shall
bear a restrictive legend in substantially the following form (and a stop-
transfer order may be placed against transfer of the certificates for such
Securities):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED, SOLD, OR OTHERWISE TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE APPLICABLE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED AS COLLATERAL
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LENDING
ARRANGEMENT."
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it
is stamped, if, unless otherwise required by applicable state securities
laws, (a) such Security is sold pursuant to an effective registration
statement filed under the 1933 Act or otherwise may be sold pursuant to
Rule 144 without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder
provides the Company with reasonable assurances that such Security can be
sold pursuant to Rule 144. The Buyer agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has
been removed, in compliance with applicable prospectus delivery
requirements, if any.
Until (i) the Board of Directors of the Company determines it is no
longer in the best interests of the Company to attempt to, or continue to,
qualify as a REIT and (ii) there is an affirmative vote of not less than
two-thirds of all of the votes ordinarily entitled to be cast in the
election of directors, voting together as a single class approving the
determination of the Board of Directors set forth in clause (i) above, the
Preferred Shares shall bear a legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the
certificates for such Securities):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER FOR THE PURPOSE OF THE COMPANY'S ELECTION TO BE SUBJECT TO TAX
AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE"). SUBJECT TO THE EXEMPTIONS GRANTED UNDER (I) THE
SECURITIES PURCHASE AGREEMENT DATED DECEMBER 2, 1999, BETWEEN THE COMPANY
AND RECP II ANTHRACITE, LLC, A DELAWARE LIMITED LIABILITY COMPANY ("RECP
II"), A WHOLLY OWNED SUBSIDIARY OF DLJ REAL ESTATE CAPITAL PARTNERS II,
L.P. ("RECP") AND THAT CERTAIN LETTER FROM THE COMPANY TO RECP II AND RECP
DATED DECEMBER 2, 1999 REGARDING SUCH EXEMPTIONS OR (II) PURSUANT TO
SECTION 6.1.7 OF THE ARTICLES OF INCORPORATION OF THE COMPANY, NO PERSON
MAY (I) BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF COMMON STOCK IN
EXCESS OF 9.8% OF THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK, (II)
BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF ANY CLASS OR SERIES OF
PREFERRED STOCK IN EXCESS OF 9.8% OF THE NUMBER OF OUTSTANDING SHARES OF
SUCH CLASS OR SERIES OF PREFERRED STOCK, (III) BENEFICIALLY OWN SHARES OF
EQUITY STOCK THAT WOULD RESULT IN THE SHARES OF EQUITY STOCK BEING
BENEFICIALLY OWNED BY FEWER THAN 100 PERSONS (DETERMINED WITHOUT REFERENCE
TO ANY RULES OF ATTRIBUTION), OR (IV) BENEFICIALLY OWN OR CONSTRUCTIVELY
OWN SHARES OF EQUITY STOCK THAT WOULD RESULT IN THE COMPANY BEING "CLOSELY
HELD" WITHIN THE MEANING OF SECTION 856(H) OF THE CODE. ANY PERSON WHO
ATTEMPTS TO BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF EQUITY STOCK
IN EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE COMPANY IN
WRITING. IF THE RESTRICTIONS ABOVE ARE VIOLATED, THE SHARES OF EQUITY
STOCK REPRESENTED HEREBY WILL BE TRANSFERRED AUTOMATICALLY AND BY OPERATION
OF LAW TO A TRUST AND SHALL BE DESIGNATED SHARES-IN-TRUST. ALL CAPITALIZED
TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE COMPANY'S ARTICLES
FILED WITH THE DEPARTMENT OF ASSESSMENT AND TAXATION OF THE STATE OF
MARYLAND ON MARCH 20, 1998, AS THE SAME MAY BE FURTHER AMENDED FROM TIME TO
TIME (THE "ARTICLES"), A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON
TRANSFER, WILL BE SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS."
H. OWNERSHIP LIMITATIONS. Subject to Sections 3(Y), 4(H) and 6(I)
hereof, the Buyer understands the restrictions on transfer and ownership of
the Company's shares of beneficial interest included in the Articles and
this Agreement as such restrictions relate to the election by the Company
to be taxed as a REIT for United States federal income tax purposes
pursuant to Sections 856 through 860 of the Code (the "REIT Provisions of
the Code"), and as described in the Registration Statement the section
titled "DESCRIPTION OF CAPITAL STOCK -- Repurchase of Shares and
Restrictions on Transfer."
I. AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized by the Buyer. This
Agreement has been duly executed and delivered on behalf of the Buyer, and
this Agreement constitutes, and upon execution and delivery by the Buyer of
the Registration Rights Agreement, such agreement will constitute, valid
and binding agreements of the Buyer enforceable in accordance with their
terms, subject, in each case, to applicable bankruptcy, insolvency,
reorganization or similar laws affecting generally the enforcement of
creditors' rights and subject to a court's discretionary authority with
respect to the granting of specific performance or other equitable
remedies.
J. NO CONFLICTS. The execution and performance of this Agreement
and the Registration Rights Agreement do not conflict with any agreement to
which the Buyer is a party or is bound thereby, any court order or judgment
addressed to the Buyer, or the constituent documents of the Buyer.
K. RESIDENCY. The Buyer is a resident of the jurisdiction set forth
immediately below such Buyer's name on the signature pages hereto.
L. USE OF ASSETS. The assets being used by the Buyer to purchase
the Securities do not constitute assets of any employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended), or any plan (within the meaning of
Section 4975 of the Code).
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Buyer that:
A. ORGANIZATION AND QUALIFICATION. The Company, Anthracite
Securitization Corp., a Delaware corporation ("ASC") and Anthracite
Funding, LLC, a Delaware limited liability company ("AFLLC," and together
with ASC, the "Subsidiaries"), and Black Rock Financial Management Inc., a
Delaware corporation (the "Manager"), have each been duly organized and
are each validly existing as corporations or limited liability companies in
good standing under the laws of their respective jurisdictions of
incorporation or formation and are duly qualified or registered to transact
business in each jurisdiction in which they conduct their business as now
conducted or proposed to be conducted as described in the Registration
Statement, with full power and authority to own, lease, use and operate
their properties and to carry on their business as and where now owned,
leased, used, operated and conducted or proposed to be conducted as
described in the Registration Statement, except where the failure to be so
qualified or registered cannot reasonably be expected to have a material
adverse effect on (i) the business, operations, assets, financial
condition, results of operations or prospects of the Company and the
Subsidiaries, or (ii) the ability of the Manager to perform its obligations
under the Investment Advisory Agreement between the Manager and the Company
dated March 28, 1998 (the "Management Agreement") or the Administration
Agreement between the Company and the Manager dated January 1, 1998 (the
"Administration Agreement") (a "Material Adverse Effect"). Except for the
Subsidiaries, the Company has no other "significant subsidiaries" as
defined under the 1933 Act. The Company owns 100% of the equity interests
in AFLLC and 10% of the issued and outstanding shares of voting Class A
common stock, par value $.01 per share, of ASC and 90% of the issued and
outstanding shares of non-voting Class B common stock, par value $.01 per
share of ASC.
B. AUTHORIZATION; ENFORCEMENT. (i) The Company has all requisite
corporate power and authority to file and perform its obligations under the
Articles Supplementary and to enter into and perform this Agreement and the
Registration Rights Agreement and to consummate the transactions
contemplated hereby and thereby and to issue and sell the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and
delivery of this Agreement and the Registration Rights Agreement by the
Company, the filing of the Articles Supplementary and the consummation by
it of the transactions contemplated hereby and thereby (including without
limitation, the issuance of the Preferred Shares and the issuance and
reservation for issuance of the Conversion Shares issuable upon conversion
of or otherwise pursuant to the Preferred Shares) have been duly authorized
by the Company's Board of Directors and no further consent or authorization
of the Company, its Board of Directors, its stockholders, any governmental
authority or any third party is required, (iii) this Agreement has been
and, as of the Closing, the Articles Supplementary and the Registration
Rights Agreement will be, duly executed and delivered by the Company, and
(iv) this Agreement constitutes, and upon execution and delivery by the
Company of the Registration Rights Agreement and the execution and filing
of the Articles Supplementary, each of such agreements and instruments will
constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization or similar laws affecting
generally the enforcement of creditors' rights and subject to a court's
discretionary authority with respect to the granting of specific
performance or other equitable remedies.
C. CAPITALIZATION. As of September 30, 1999, the authorized capital
stock of the Company consists of: (i) 400,000,000 shares of Common Stock
of which 20,998,334 shares are issued and outstanding and 1,758,144 shares
are reserved for issuance upon the exercise of outstanding options and (ii)
100,000,000 shares of preferred stock, none of which are issued and
outstanding. Except as contemplated by this Agreement and pursuant to the
Company's 1998 Stock Option Plan (the "Plan"), since September 30, 1999,
the Company has not issued any capital stock. All of such issued and
outstanding shares of capital stock have been duly authorized, validly
issued, fully paid and are nonassessable and have been offered, sold and
issued by the Company in compliance with all applicable laws (including,
without limitation, federal and state securities laws). No shares of
capital stock of the Company are subject to preemptive rights of the
stockholders of the Company, and all shares of capital stock of the Company
are free and clear of all liens, pledges, charges, security interests,
encumbrances, options or rights of any kind ("Liens") imposed through the
actions or failure to act of the Company. Except as disclosed in Schedule
3(C), as of the effective date of this Agreement, (i) there are no
outstanding options, warrants, scrips, rights to subscribe for, puts,
calls, rights of first refusal, agreements, understandings, claims or other
commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any shares of
capital stock of the Company, or arrangements by which the Company is or
may become bound to issue additional shares of capital stock of the
Company; (ii) there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement
providing rights to security holders) that will be triggered by the
issuance of the Preferred Shares or the Conversion Shares; (iii) there are
no contracts, agreements or understandings between the Company and any
person or entity granting such person or entity the right to require the
Company to file a registration statement under the 1933 Act with respect to
any securities of the Company or to require the Company to include any
securities of the Company in a registration statement filed under the 1933
Act, other than the registration rights granted to the underwriters in
connection with the Company's initial public offering; and (iv) the Company
is not a party to, nor does it have any knowledge of, any agreement with
respect to the voting of the Common Stock.
D. REIT STATUS. At all times commencing with its taxable year
ending December 31, 1998, the Company has been, and upon the sale of the
Preferred Shares, the Company will continue to be, organized and operated
in conformity with the requirements for qualification and taxation as a
REIT under the Code, and its 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 is not currently a "pension-held REIT" within the meaning of Code
Section 856(h)(3)(D) and the Treasury Regulations promulgated thereunder.
E. ISSUANCE OF SHARES. The Preferred Shares have been duly
authorized and, upon issuance in accordance with the terms of this
Agreement and payment in respect thereof, will be validly issued, fully
paid and non-assessable, and free from all taxes and Liens with respect to
the issue thereof and shall not be subject to any preemptive rights, rights
of first refusal or offer or other similar rights. The Conversion Shares
are duly authorized and reserved for issuance, and, upon conversion of the
Preferred Shares in accordance with the terms thereof, will be validly
issued, fully paid and non-assessable, and free from all taxes and Liens
with respect to the issuance thereof and will not be subject to preemptive
rights, rights of first refusal or offer (other than those contained
herein) or other similar rights. The form of certificates evidencing the
Preferred Shares, and upon conversion of the Preferred Shares, the form of
certificates evidencing the Conversion Shares will comply with all
applicable legal requirements and the rules of the New York Stock Exchange
(the "NYSE") and, in all material respects, with all applicable
requirements of the Articles and By-laws of the Company, as amended (the
"By-laws").
F. NO CONFLICTS. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the filing of the Articles
Supplementary and the issuance, sale and delivery of the Preferred Shares
and the issuance and reservation for issuance of the Conversion Shares)
will not (i) conflict with or result in a violation of any provision of the
Articles or By-laws or the constituent documents of the Subsidiaries (ii)
violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or
both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material
agreement, license, instrument, contract, commitment, arrangement or
indenture to which the Company or any of the Subsidiaries are a party or by
which any of them or their assets are bound (each a "Material Contract"),
or (iii) result in a violation of any law, statute, rule, regulation,
ordinance, order, judgment or decree (including Federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which the Company, any of the Subsidiaries or their
securities are subject) applicable to the Company or any of the
Subsidiaries or by which any of them or their property or assets are bound
or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or
in the aggregate, have a Material Adverse Effect), (iv) result in the
creation or imposition of a material Lien on any assets owned or held by
the Company, (v) violate or result in the revocation or suspension of any
permit held by the Company or the Subsidiaries or (vi) cause the Company to
fail to qualify to be taxed as a REIT for the year ending December 31,
1999. Except as specifically contemplated by this Agreement and as
required under the 1933 Act, any applicable state securities laws and the
rules of the NYSE, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement, the Registration
Rights Agreement or the Articles Supplementary in accordance with the terms
hereof or thereof or to issue and sell the Preferred Shares in accordance
with the terms hereof and to issue the Conversion Shares upon conversion of
the Preferred Shares. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the date
hereof.
G. MANAGEMENT AGREEMENT. Each of the Company and the Manager, has
all requisite power and authority to perform the Management Agreement and
the Administration Agreement and to consummate the transactions
contemplated therein; the Management Agreement and the Administration
Agreement have been duly authorized, executed and delivered by each of the
Company and the Manager and constitute valid and binding agreements of each
of the Company and the Manager, enforceable in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, and by
general principles of equity.
H. CONSENTS. No approval, authorization, consent or order of or
filing with any federal, state or local governmental or regulatory
commission, board, body, authority or agency is required in connection with
(i) the execution, delivery and performance by the Company of this
Agreement, the Articles Supplementary, the Registration Rights Agreement,
or the consummation of the transaction contemplated hereby and thereby,
(ii) the sale and delivery of the Preferred Shares, other than (x) such as
have been obtained, or will have been obtained at the Closing, under the
1933 Act or the 1934 Act (as defined herein) and (y) any necessary
qualification under the applicable securities or blue sky laws.
I. COMPLIANCE. The Company is in compliance in all material
respects with all applicable statutes, laws, ordinances, rules,
regulations, orders, decrees and judgments applicable to it, except those
noncompliance with which is not reasonably expected by the Company to have
a Material Adverse Effect.
J. PROCEEDINGS. There are no actions, suits, proceedings, inquiries
or investigations pending or, to the Company's knowledge, threatened
against the Company, the Subsidiaries or the Manager or any of their
officers and directors or to which the properties, assets or rights of the
Company or the Subsidiaries are subject, at law or in equity, before or by
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority, arbitral panel or agency which could reasonably be
expected to result in a judgment, decree, award or order having a Material
Adverse Effect, or which could adversely affect the consummation of the
transactions contemplated by this Agreement, the Registration Rights
Agreement, the Management Agreement or the Administration Agreement in any
material respect.
K. BROKER/DEALER. The Company (i) is not required to register as a
"broker" or "dealer" in accordance with the provisions of the Securities
Exchange Act of 1934 or the rules and regulations thereunder (the "1934
Act"), and (ii) directly, or indirectly through one or more intermediaries,
does not control or have any other association with (within the meaning of
Article 1 of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD")) any member firm of the NASD.
L. INSIDER LOANS. Except as otherwise disclosed in the Company SEC
Documents (defined below), there are no material outstanding loans or
advances or material guarantees of indebtedness by the Company to or for
the benefit of any of the officers or directors of the Company.
M. INVESTMENT COMPANY. The Company is not, nor as a result of
transactions contemplated hereby and the application of the proceeds from
the sale of the Preferred Shares, will it become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act").
N. FINDERS FEES. The Company has not incurred any liability for any
brokers' or finder's fees or similar payments in connection with the
transactions herein contemplated.
O. SEC FILINGS. Since January 1, 1998, the Company has filed in a
timely manner all reports required to be filed by it pursuant to the
federal securities laws and the rules and regulations of the SEC
promulgated thereunder (the "Company SEC Documents"), all of which, to the
Company's knowledge, at the time such Company SEC Documents were filed,
complied in all material respects with the requirements of the 1933 Act or
the 1934 Act, as applicable, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Documents. To the Company's
knowledge, none of the Company SEC Documents (including all financial
statements included therein, and exhibits and schedules thereto, and
documents incorporated by reference therein), at the time filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The Company has not filed any report or other document with the SEC since
November 15, 1999.
P. FINANCIAL INFORMATION. To the Company's knowledge, the financial
statements of the Company included in the Company SEC Documents (i) comply
as to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto,
(ii) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered
thereby, (iii) fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments and the absence of
footnotes) the consolidated financial position of the Company and any
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and their cash flow statements for the periods
then ended, and (iv) are correct and complete in all material respects, and
are materially consistent with the Company's books and records, which books
and records are accurate and complete in all material respects. The pro
forma financial data included in the Company's most recent Form 10-Q has
been prepared in accordance with the applicable rules and guidelines of the
SEC with respect to pro forma financial data, and the adjustments used
therein are appropriate to give effect to the transaction or circumstance
referred to therein.
Q. ABSENCE OF CERTAIN CHANGES. Except as set forth in the Company
SEC Documents, since December 31, 1998, the Company and the Subsidiaries
have conducted their respective businesses in the ordinary course. Since
September 30, 1999, there has been no development in the Company's business
which has had a Material Adverse Effect.
R. LIABILITIES. Except as set forth in the Company SEC Documents,
the Company has no liabilities or obligations (whether absolute, accrued,
contingent or otherwise), except for liabilities incurred in the ordinary
and usual course of business since September 30, 1999 consistent with the
past practices of the Company.
S. PRIVATE OFFERING. None of the Company, its Affiliates (as
defined below) or any person acting on their or any of their Affiliates'
behalf, has engaged, or will engage, in connection with the offering of the
Securities, in any communication or other form of general solicitation or
general advertising within the meaning of Rule 502(c) under the 1933 Act.
Assuming the representations and warranties of the Buyer set forth in
Section 2 are true, the offer, issuance and sale of the Securities in the
manner contemplated by this Agreement are exempt from the registration and
prospectus delivery requirements of the 1933 Act, and have been registered
or qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws. "Affiliate" of any person or entity means a person or
entity which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such person
or entity.
T. YEAR 2000 COMPLIANCE. Except as set forth in Schedule 3(T): (i)
all of the equipment and systems used by the Company and its Subsidiaries
are "Year 2000 Compliant" so that they will accurately process, calculate,
compare, sequence, transmit and receive date/time data from, into, and
between the 20th and 21st centuries and the years 1999 and 2000 and leap
year calculations, except for such noncompliance that would not,
individually or in the aggregate, have a Material Adverse Effect; and (ii)
no material equipment and systems will create any logical or mathematical
inconsistency or malfunction or cease to function when processing date/time
data, except for such inconsistencies or malfunctions that would not,
individually or in the aggregate, have a Material Adverse Effect.
U. NO DEFAULTS. Neither the Company nor any Subsidiary is in breach
or violation of, or in default under (nor has any event occurred which with
notice, lapse of time, or both would constitute a breach of, or default
under or give to others any rights of termination, amendment, acceleration
or cancellation), its charter or by-laws, or in the performance or
observance of any obligation, agreement, covenant or condition contained in
any license, indenture, mortgage, deed of trust, loan or credit agreement,
contract, or other agreement or instrument to which the Company or the
Subsidiaries is a party or by which any of them or their respective assets
are bound, except for such breaches or defaults that could be reasonably
expected not to have a Material Adverse Effect. The Manager is not in
breach or violation of or in default under (nor has any event occurred
which with notice, lapse of time, or both would constitute a breach of, or
default under or give to others any rights of termination, amendment,
acceleration or cancellation) the Management Agreement or Administration
Agreement.
V. BUSINESS. Neither the Company nor the Subsidiaries own or
operate any real property.
W. EMPLOYEES. Neither the Company nor the Subsidiaries retain any
employees.
X. INVESTMENTS. As used in this Section 3(X), "Company" means the
Company and the Subsidiaries. The Company owns and has good and marketable
title to all of the investments in other persons or entities
("Investments"), free and clear of all Liens, except those Liens that
could, individually or in the aggregate, not reasonably be expected to
result in a Material Adverse Effect. There is no monetary default, breach,
violation or event of acceleration on the part of any person or entity that
is a party thereto beyond any applicable grace period existing under any of
the Investments or loans securing such Investments or loans by the Company
to any other person or entity, except for (i) such defaults, breaches,
violations or events of acceleration that would not reasonably be expected
to result in a Material Adverse Effect and (ii) such loans in special
servicing set forth on Schedule 3(X) hereto. The Company has not given any
notice (that is still outstanding) of any non-monetary default, breach,
violation or event of acceleration and, to the Company's knowledge there is
no non-monetary default, breach, violation or event of acceleration
existing under any of the Investments, loans securing such Investments or
loans by the Company to any other person or entity that could, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect. The Company has not received any written notice or been informed
of any default, breach or violation by the Company of any of the terms of
any Investment, loans securing such Investments or loans by the Company to
any other person or entity, and to the Company's knowledge, no such
default, breach or violation exists, except, in either instance, for such
defaults, breaches or violations that could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect,
and no person has any right of offset against the Company in respect of any
Investment, loans securing such Investments or loans by the Company to any
other person or entity. To the Company's knowledge, there is no monetary
default or any material default, breach, violation or event of acceleration
under any loan or security ranking in priority senior to any Investment,
loans securing such Investmensts or loans by the Company to any other
person or entity of the Company.
Y. OWNERSHIP LIMITATIONS. The Company has taken all actions
necessary to (i) exempt (the "Exemption") the Buyer, RECP and their
respective Affiliates and the direct and indirect holders of interests
therein ("Ownership Limitation Affiliates") from the Ownership Limit (as
defined in the Articles) pursuant to Section 6.1.7 of the Articles with
respect to all Preferred Shares and 22% of the Common Stock (after taking
into account any Common Stock issuable upon conversion of the Preferred
Shares) of the Company determined by (i) the number of shares outstanding
or (ii) Current Market Price (as defined in the Articles Supplementary)
whichever produces the largest holding of Common Stock under the two
methods, computed with regard to all outstanding shares of Common Stock
(the "Allowed Common Shares"), and (ii) to exempt Buyer, RECP and Ownership
Limitation Affiliates from the "Interested Stockholder" and "Control Share
Acquisition" provisions (Subtitles 6 and 7 of Title 3) of the Maryland
General Corporation Law, with respect to the ownership by the Buyer, RECP,
the Ownership Limitation Affiliates or any Qualifying Transferee of the
Preferred Shares and any future ownership of Allowed Common Shares, and the
Company will not take any action that results in the Buyer, RECP, the
Ownership Limitation Affiliates or any Qualifying Transferee no longer
being exempted or excepted, as applicable, from the Ownership Limit and
Maryland law provisions, as described above, provided Buyer complies with
the terms and conditions of the Exemption as set forth in that certain
letter from the Company to Buyer dated the date hereof regarding the
Exemption (the "Exemption Letter"). Any transferee of the Buyer (i) which
is not an "individual" (within the meaning of Section 542(a)(2) of the
Code, as modified by Section 856(h)(3), i.e., not treating a pension fund
under Section 401(a) of the Code as an individual), (ii) whose ownership of
Preferred Shares or Allowed Common Shares into which such Preferred Shares
are convertible will not cause the Company to (a) fail to qualify as a REIT
under the Code or (b) be a "pension-held REIT" within the meaning of
Section 856(h)(3)(D) of the Code and (iii) who executes a shareholder
undertaking substantially similar to that executed by Buyer in connection
with the Company's issuance of the Exemption (a "Qualifying Transferee"),
shall, upon such transfer, also be (i) exempt from the Ownership Limit with
respect to the Preferred Shares and the Allowed Common Shares and (ii)
exempt from the "Interested Stockholder" and "Control Share Acquisition"
provisions of the Maryland General Corporation Law.
Z. DISCLOSURE. Neither this Agreement, the Registration Rights
Agreement, the Articles Supplementary, any exhibit or schedule hereto or
thereto, nor any other statements or certificates made or delivered in
connection herewith or therewith, on behalf of the Company, the
Subsidiaries or the Manager (as supplemented or amended by documents
delivered at a later time, but prior to the Closing), contains any untrue
statement of a material fact and, when taken together with the Company SEC
Documents, do not omit to state a material fact necessary to make the
statements herein or therein, in light of the circumstances under which
they were made, not misleading.
AA. AFFILIATE TRANSACTIONS. Neither the Company nor any Subsidiary
has entered into any transaction, agreement or arrangement with the Manager
or any of its Affiliates except for the Management Agreement, the
Administration Agreement or as set forth on Schedule 3(AA).
BB. TAX RETURNS. The Company and ASC each has timely filed all
material United States federal, state, local, and foreign tax returns
required to be filed which tax returns are true, accurate and complete in
all material respects. The Company and ASC each has paid all material
United States federal, state, local, and foreign taxes required to be paid.
There are no material tax liens against the Company or its assets except
for liens for taxes not yet due or payable. AFLLC is a wholly-owned
limited liability company that is treated as a disregarded entity for
United States federal income tax purposes.
4. COVENANTS.
A. BEST EFFORTS. The parties shall use their best efforts to
satisfy timely each of the conditions described in Sections 5 and 6 of this
Agreement.
B. FORM D; BLUE SKY LAWS. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D of the Securities
Act and to provide a copy thereof to each Buyer promptly after such filing.
The Company shall take such action as the Company shall reasonably
determine is necessary to qualify the Securities for issuance and sale to
the Buyer at the date of issuance pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the United States
(or to obtain an exemption from such qualification).
C. REPORTING STATUS; ELIGIBILITY TO USE FORM S-3. The Common Stock
is registered under Section 12(g) of the 1934 Act. So long as the Buyer
beneficially owns any of the Securities, the Company shall timely file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not, so long as the Buyer beneficially owns any of the
Securities, terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would permit such termination. The Company currently meets,
and, so long as the Buyer beneficially owns any of the Securities, will
take reasonable action to continue to meet, the "registrant eligibility"
requirements set forth in the general instructions to Form S-3 under the
Securities Act.
D. RESERVATION OF SHARES. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number
of shares of Common Stock to provide for the full conversion of the
outstanding Preferred Shares and issuance of the Conversion Shares in
connection therewith.
E. LISTING. Following registration thereof under the 1933 Act, the
Company shall promptly secure the listing of the Conversion Shares upon
each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official
notice of issuance) and, so long as the Buyer or its assigns owns any of
the Securities, shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of the Conversion Shares.
F. NO INTEGRATION. The Company shall not make any offers or sales
of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder
under the 1933 Act or cause the offering of Securities to be integrated
with any other offering of securities by the Company for the purpose of any
stockholder approval provision applicable to the Company or its securities.
G. CONSENTS AND APPROVALS. No approval, authorization, consent or
order of or filing with any federal, state or local governmental or
regulatory commission, board, body, authority or agency is required in
connection with (i) the execution, delivery and performance by the Company
of this Agreement, the Articles Supplementary, the Registration Rights
Agreement, the consummation of the transactions contemplated hereby and
thereby or (ii) the sale and delivery of the Preferred Shares, other than
(x) such as have been obtained, or will have been obtained at the Closing,
under the 1933 Act or the 1934 Act and (y) any necessary qualification
under the applicable securities or blue sky laws.
H. EXCEPTED HOLDER. In accordance with Section 3(Y) hereof, the
Company will not cause the Buyer, RECP, or the Ownership Limitation
Affiliates or any Qualifying Transferee to fail to be (a) exempt from the
Ownership Limit (as defined in the Articles) pursuant to 6.1.7 of the
Articles with respect to the Preferred Shares and the Allowed Common Shares
as set forth in the Exemption Letter and (b) exempted from the "Interested
Stockholder" and "Control Share Acquisition" provisions (Subtitles 6 and 7
of Title 3) of the Maryland General Corporation Law, with respect to the
ownership by the Buyer, RECP, the Ownership Limitation Affiliates or any
Qualifying Transferee of the Preferred Shares and any future ownership of
Allowed Common Shares. As set forth in the Exemption Letter, the Company
may demand reasonable information concerning any proposed transferee
demonstrating that such Person satisfies the requirements to be a
Qualifying Transferee (as set forth in Section 3(Y)) prior to registering
such transfer of Preferred Shares or Allowed Common Shares.
I. REIT STATUS. The Company will use its best efforts to operate in
a manner in accordance with the requirements for qualification and taxation
as a REIT. In the event of the taking or proposed taking of any action
that would cause any representation set forth in Section 3(D) to be
incorrect if made as of any date following the Closing, the Company shall
use reasonable efforts to notify the undersigned prior to the taking of
such action.
J. INVESTMENT COMPANY. The Company will conduct its affairs in such
a manner so as to ensure that the Company is not an "investment company" or
an entity subject to regulation as an investment company within the meaning
of the 1940 Act.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the
Company hereunder to issue and sell the Preferred Shares to the Buyer at
the Closing is subject to the satisfaction (or waiver), on or before the
Closing Date, of each of the following conditions thereto, provided that
these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion by prior delivery of written
notice of such waiver to the Buyer:
A. The Buyer shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to the Company.
B. The Buyer shall have delivered the Purchase Price in accordance
with Section 1(B) above.
C. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a particular date and in such case shall be
true and correct as of that particular date), and the Buyer shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer at or prior to the
Closing Date.
D. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
E. The Buyer shall have delivered an executed copy of the
Shareholder's Undertaking, dated as of the Closing Date, in the form
attached as Exhibit C hereto.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The obligation of
the Buyer hereunder to purchase the Preferred Shares at the Closing is
subject to the satisfaction (or waiver), on or before the Closing Date, of
each of the following conditions, provided that these conditions are for
the Buyer's sole benefit and may be waived by the Buyer at any time in its
sole discretion by prior delivery of written notice by the Buyer to the
Company:
A. The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer and all
covenants, agreements and conditions contained therein that are required to
have been performed or complied with on or prior to the Closing, shall have
been performed or complied with or waived in writing by the Buyer.
B. The Company shall have delivered to the Buyer a duly executed
certificate representing the Preferred Shares in accordance with Section
1(B) above.
C. The Articles Supplementary shall have been accepted for filing
with the SDAT, and a copy thereof certified by the SDAT shall have been
made available to the Buyer, and the Articles Supplementary shall be in
full force and effect without modification.
D. The representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a particular date and in such case shall be
true and correct as of that particular date) and the Company shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing Date.
E. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement, nor shall any action, suit or
proceeding be pending or threatened with respect thereto.
F. Trading in the Common Stock on the NYSE shall not have been
suspended by the SEC or the NYSE.
G. The Company shall have obtained all requisite consents of or
approvals from federal, state and any other Governmental Authority (as
defined below) necessary to consummate the transactions contemplated by
this Agreement and issue the Securities and permit the utilization of the
proceeds of the Preferred Shares as described herein. "Governmental
Authority" means any nation or government, any state, province, county or
other political subdivision thereof, and any entity exercising any
executive, legislative, judicial, regulatory or administrative functions
of, or pertaining to, government.
H. There shall be no pending (of which an employee of the Company
has received service or notice of process) or threatened action, suit,
investigation, litigation or proceeding affecting the Company or any of the
Subsidiaries before any Governmental Authority ("Litigation"), that would
in the reasonable opinion of the Company, result in an adverse decision
that could (A) have a Material Adverse Effect or (B) restrain, prevent or
impose materially adverse conditions upon the transactions contemplated by
this Agreement.
I. In accordance with Section 3(Y), the Company shall have taken all
action necessary to (i) exempt the Buyer, RECP, the Ownership Limitation
Affiliates or any Qualifying Transferee from the Ownership Limit (as
defined in the Articles) pursuant to Section 6.1.7. of the Articles, as set
forth in the Exemption Letter, with respect to all Preferred Shares and the
Allowed Common Shares and (ii) cause the Buyer, the Ownership Limitation
Affiliates or any Qualifying Transferee to be exempt from the "Interested
Stockholder" and "Control Share Acquisition" provisions (Subtitles 6 and 7
of Title 3) of the Maryland General Corporation Law, with respect to the
ownership by the Buyer, RECP, the Ownership Limitation Affiliates or any
Qualifying Transferee of the Preferred Shares and any future ownership of
Allowed Common Shares, and the Company will not take any action that
results in the Buyer, the Ownership Limitation Affiliates or any Qualifying
Transferee no longer being exempted or excepted, as applicable, from the
Ownership Limit and Maryland law provisions, as described above, provided
such persons comply with the terms and conditions of the Exemption Letter.
Any transferee of the Buyer (i) which is not an "individual" (within the
meaning of Section 542(a)(2) of the Code, as modified by Section 856(h)(3),
i.e., not treating a pension fund under Section 401(a) of the Code as an
individual), (ii) whose ownership of Preferred Shares or Allowed Common
Shares into which such Preferred Shares are convertible will not cause the
Company to (a) fail to qualify as a REIT under the Code or (b) be a
"pension-held REIT" within the meaning of Section 856(h)(3)(D) of the Code
and (iii) who executes a shareholder undertaking substantially similar to
that executed by Buyer in connection with the Company's issuance of the
Exemption (a "Qualifying Transferee"), shall, upon such transfer, be (i)
exempt from the Ownership Limit with respect to the Preferred Shares and
the Allowed Common Shares, as set forth in the Exemption Letter, and (ii)
exempt from the "Interested Stockholder" and "Control Share Acquisition"
provisions of the Maryland General Corporation Law. The Company shall have
delivered a letter to the Buyer, in a form reasonably satisfactory to the
Buyer confirming the above described exemptions from the Ownership Limit
and "Interested Stockholder" and "Control Share Acquisition" provisions.
J. The Buyer shall have received the following, addressed to them
and in form and substance reasonably satisfactory to them:
(i) certified copies of the resolutions adopted by the Board of
Directors of the Company authorizing the execution, delivery and
performance of this Agreement, the Registration Rights Agreement, each
of the other agreements, instruments and transactions contemplated
hereby or thereby including the issuance and sale of the Securities;
(ii) certified copies of the Articles of Incorporation and By-
laws of the Company as in effect at the Closing;
(iii) a certificate of the Secretary of the Company dated the
Closing Date, as to the incumbency and signatures of the officers
executing this Agreement and all instruments executed pursuant hereto;
(iv) Officer's Certificate, dated as of the Closing Date, of the
Company to the effect set forth in Sections 6(A) (with respect to
performance and compliance with the covenants, agreements and
conditions of this Agreement) and 6(D); and
(v) the opinion of each of (A) Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP and (B) Miles & Stockbridge, P.C., Maryland counsel to the
Company, each in a form reasonably acceptable to the Buyer and its
counsel.
K. All matters relating to this Agreement, the Registration Right
Agreement, the Securities and the transactions contemplated hereby and
thereby and the legal and organizational structure of the Company shall be
reasonably satisfactory from a legal point of view to the Buyer, and the
Buyer shall have received such additional certificates, legal opinions and
other documentation as it may have reasonably requested with respect to
this Agreement, the Registration Right Agreement, the Securities and the
transactions contemplated hereby and thereby.
L. Xxxxxx X. Xxxxxx shall be appointed a Director of the Company by
the Buyer.
7. INDEMNIFICATION
A. The Company shall indemnify and hold harmless the Buyer and its
respective directors, officers, employees, agents, affiliates, successors
and permitted assigns from and against any and all (x) liabilities, losses
or damages ("Loss") and (y) reasonable out-of-pocket expenses, including
without limitation attorneys' fees and expenses ("Expense") incurred by
such party in connection with (i) the Company's breach or failure to
perform its obligations and covenants under this Agreement, the Articles
Supplementary, the Registration Rights Agreement or in connection with the
enforcement by the Buyer of any of the Company's obligations or covenants
hereunder or thereunder including the enforcement of this indemnity and
(ii) any breach of any warranty or the inaccuracy of any representation, or
misrepresentation or omission, made by the Company in this Agreement.
B. The Buyer shall indemnify and hold the Company and its trustees,
officers, employees, agents, affiliates, successors and permitted assigns
harmless from and against any and all Losses and Expenses incurred by the
Company in connection with (i) the Buyer's breach or failure to perform its
obligations under this Agreement, or in connection with the enforcement by
the Company of any of the Buyer's obligations or covenants hereunder or
thereunder including the enforcement of this Indemnity and (ii) any breach
of any warranty or the inaccuracy of any representation, or
misrepresentation or omission, made by the Buyer in this Agreement.
C. If a party believes that any of the persons entitled to
indemnification under this Section 7 has suffered or incurred any Loss or
incurred any Expense, such party shall notify the indemnifying party
promptly in writing describing such Loss or Expense, the amount thereof, if
known, and the method of computation of such Loss or Expense, all with
reasonable particularity and containing a reference to the provisions of
this Agreement, the Articles Supplementary, the Registration Rights
Agreement, or any certificate delivered pursuant hereto in respect of which
such Loss or Expense shall have occurred; provided, however, that the
omission by such indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its indemnification obligation under
this Section 7 except to the extent that such indemnifying party suffers a
material Loss as a result of such failure to give notice. If any action at
law or suit in equity is instituted against a third party with respect to
which any of the persons entitled to indemnification under this Section 7
intends to claim any liability or expense as Loss or Expense under this
Section 7, any such person shall promptly notify the indemnifying party of
such action or suit as specified in this Section 7(C) and in Section 7(D).
D. In the event of any claim for indemnification hereunder resulting
from or in connection with any claim or legal proceeding by a third party,
the indemnified persons shall give notice thereof to the indemnifying party
not later than 20 business days prior to the time any response to the
asserted claim is required, if possible, and in any event within 15 days
following the date such indemnified person has actual knowledge thereof;
provided, however, that the omission by such indemnified party to give
notice as provided therein shall not relieve the indemnifying party of its
indemnification obligation under this Section 7 except to the extent that
such indemnifying party suffers a material Loss as a result of such failure
to give notice. In the event of any such claim for indemnification
resulting from or in connection with a claim or legal proceeding by a third
party, the indemnifying party may, at its sole cost and expense, assume the
defense thereof; provided, however, that counsel for the indemnifying
party, who shall conduct the defense of such claim or legal proceeding,
shall be reasonably satisfactory to the indemnified party; and provided,
further, that if the defendants in any such actions include both the
indemnified persons and the indemnifying party and the indemnified persons
shall have reasonably concluded based on a written opinion of counsel that
there may be legal defenses or rights available to them which have not been
waived and are in actual or potential conflict with those available to the
indemnifying party, the indemnified persons shall have the right to select
one law firm reasonably acceptable to the indemnifying party to act as
separate counsel, on behalf of such indemnified persons, at the expense of
the indemnifying party. Unless the indemnified persons are represented by
separate counsel pursuant to the second proviso of the immediately
preceding sentence, if an indemnifying party assumes the defense of any
such claim of legal proceeding, such indemnifying party shall not consent
to entry of any judgment, or enter into any settlement, that (a) is not
subject to indemnification in accordance with the provisions of this
Section 7, (b) provides for injunctive or other nonmonetary relief
affecting the indemnified persons or (c) does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
indemnified persons of an unconditional release from all liability with
respect to such claim or legal proceeding, without the prior written
consent of the indemnified person (which consent, in the case of clauses
(b) and (c), shall not be unreasonably withheld); and provided, further,
that unless the indemnified persons are represented by separate counsel
pursuant to the second proviso of the immediately preceding sentence, the
indemnified persons may, at their own expense, participate in any such
proceeding with the counsel of their choice without any right of control
thereof. So long as the indemnifying party is in good faith defending such
claim or proceeding, the indemnified persons shall not compromise or settle
such claim or proceeding without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld. If
the indemnifying party does not assume the defense of any such claim or
litigation in accordance with the terms hereof, the indemnified persons may
defend against such claim or litigation in such manner as they may deem
appropriate, including, without limitation, settling such claim or
litigation (after giving prior written notice of the same to the
indemnifying party) on such terms as the indemnified persons may deem
appropriate, and the indemnifying party will promptly indemnify the
indemnified persons in accordance with the provisions of Section 7.
8. GOVERNING LAW; MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws.
B. COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement may be
executed in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. This
Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
C. HEADINGS. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of,
this Agreement.
D. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
E. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Schedules,
Exhibits and instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor
the Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived
other than by an instrument in writing signed by the party to be charged
with enforcement and no provision of this Agreement may be amended other
than by an instrument in writing signed by the Company and the holders of
at least a majority of the Preferred Shares then outstanding. No such
amendment shall be effective to the extent that it applies to less than all
of the holders of the Preferred Shares then outstanding. No consideration
shall be offered or paid to any person to amend or consent to a waiver or
modification of any provision of this Agreement, the Registration Rights
Agreement or the Articles Supplementary unless the same consideration also
is offered to all the parties to this Agreement or the Registration Rights
Agreement or holders of the Preferred Shares, as the case may be.
F. NOTICES. Any notices required or permitted to be given under the
terms of this Agreement shall be sent overnight by express mail or
delivered personally or by courier (including an overnight delivery
service) or by facsimile and shall be effective upon receipt, if delivered
by overnight express mail, personally or by courier (including an overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
Anthracite Capital, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: 000-000-0000
With copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
If to the Buyer to:
RECP II Anthracite, LLC
x/x XXX Xxxx Xxxxxx Xxxxxxx Xxxxxxxx XX, X.X.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx
and Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
With copy to:
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Xx.
Facsimile: (000) 000-0000
Each party shall provide written notice to the other party of any change in
address.
G. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other;
provided, that, subject to Section 2(F), the Buyer may assign its rights
and obligations hereunder to any person that purchases Securities in a
private transaction from the Buyer or to any of its "affiliates," as that
term is defined under the 1934 Act, without the consent of the Company;
provided, further, however, that the transferee has agreed in writing to be
bound by the provisions of this Agreement and acknowledges the assignment
provisions of the Registration Rights Agreement with such transferee
becoming a "Buyer" under this Agreement with all of the rights and
obligations the Buyer has hereunder and the Company shall have been
notified of the name and address of the transferee.
H. THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
I. FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
J. NO STRICT CONSTRUCTION. The language used in this Agreement
shall be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against
any party.
K. EXPENSES. Each of the parties hereto shall pay its own costs and
expenses in connection with the transactions contemplated hereby, whether
or not such transactions shall be consummated, except as shall be
explicitly provided otherwise in the Registration Rights Agreement.
L. SURVIVAL. The agreements and covenants set forth in Sections 3,
4, 7 and 8 shall survive the closing hereunder notwithstanding any due
diligence investigation conducted by or on behalf of the Buyer.
M. KNOWLEDGE CLAUSES. As used in this Agreement, the phrases "to
the Company's knowledge," "to the knowledge of the Company" and phrases of
similar import means the knowledge of the Chief Executive Officer,
President, any Vice President and the Chief Financial Officer of the
Company, after reasonable investigation and inquiry commensurate with that
of a reasonable person holding such position with a public company in the
ordinary course of business.
N. VALIDITY. If fulfillment of any provision of this Agreement, at
the time such fulfillment shall be due, shall transcend the limit of
validity prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provision
contained in this Agreement operates or would operate to invalidate this
Agreement, in whole or in part, then such clause or provision only shall be
held ineffective, as though not herein contained, and the remainder of this
Agreement shall remain operative and in full force and effect.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Agreement to be duly executed as of the date first above written.
ANTHRACITE CAPITAL, INC.
By: /s/ Xxxxxxx X. Xxxx
----------------------------
Xxxxxxx X. Xxxx
Chief Operating Officer and Chief Financial Officer
RECP II ANTHRACITE, LLC
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
ADDRESS: 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
AGGREGATE SUBSCRIPTION AMOUNT: $30,000,000
Number of Preferred Shares: 1,200,000
