Exhibit 99.h.3.
PURCHASE AGREEMENT
This PURCHASE AGREEMENT made this 28th day of November, 2001,
between MCG Capital Corporation, a Delaware corporation, (the "Company"), and
FBR Asset Investment Corporation, a Virginia corporation ("FBR").
W I T N E S S E T H:
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WHEREAS, the Company has filed a registration statement on
Form N-2 with the Securities and Exchange Commission (File No. 333-64596) (the
"Registration Statement") relating to an initial public offering (the "IPO") of
common stock of the Company, including a form of underwriting agreement filed as
an exhibit thereto, which agreement will be entered into by the Company and the
representatives of the several underwriters of the IPO (the "Underwriting
Agreement");
WHEREAS, FBR wishes to purchase shares of common stock of the
Company, subject to the completion of the IPO and the other terms and conditions
set forth herein; and
WHEREAS, the Company has determined to issue and sell shares
of its common stock to FBR on the terms and conditions set forth herein;
NOW, THEREFORE, the Company and FBR agree as follows:
1. Purchase and Sale of Shares. The Company hereby agrees to
issue and sell to FBR, and FBR hereby agrees to purchase, 625,000 shares of
Common Stock, par value $.01 per share (the "Shares"), at the First Time of
Delivery, as such term is defined in the Underwriting Agreement. The purchase
price for each Share shall be equal to the purchase price per share for the Firm
Shares under the Underwriting Agreement.
2. Closing. The closing of the purchase and sale of Shares
hereunder (the "Closing") shall take place concurrently with the closing
contemplated by the First Time of Delivery under the Underwriting Agreement. At
the Closing the Company shall deliver to FBR certificates representing the
Shares registered in the name of FBR or in such other name as FBR shall request
at least three days prior to the Closing, against payment of the purchase price
for the shares by wire transfer of Federal (same day) funds to the account
specified by the Company pursuant to the Underwriting Agreement. The
certificates representing the Shares shall bear appropriate restrictive legends
with respect to their status as restricted shares under the Securities Act of
1933, as amended (the "Securities Act"), and the resulting restrictions on
transfers thereof.
3. Conditions. (a) The satisfaction or waiver by the
Underwriters of all conditions precedent to the closing of the purchase and sale
of the Firm Shares under the Underwriting Agreement shall be conditions
precedent to the obligation of FBR to purchase and pay for the Shares hereunder.
The following shall also be conditions precedent to the obligation of FBR to
purchase and pay for the Shares:
(i) The representations and warranties made by the Company in
Section 4 below shall be true and correct as of the Closing
Date, provided that this clause (i) shall not apply to the
extent that any truth or accuracy of a representation and
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warranty in Section 4 below is also a condition precedent to
the obligations of the Underwriters under the Underwriting
Agreement and such condition precedent has been waived by
the Underwriters.
(ii) The Company and each other party indicated in the signature
blocks thereto shall have executed and delivered a Third
Amended and Restated Registration Rights Agreement,
substantially in the form set forth in Annex A hereto (the
"Registration Rights Agreement"), and the Shares shall
constitute "Registrable Securities" as defined in the
Registration Rights Agreement.
(iii)FBR shall have received legal opinions of Fried, Frank,
Harris, Xxxxxxx and Xxxxxxxx ("FFHSJ"), and Xxxxxxxxxx
Xxxxxx & Xxxxxxx LLP ("SAB"), special counsel to the
Company, in each case in form and substance reasonably
satisfactory to FBR, to the effect set forth in clauses
(ii), (iii) and (iv) of Section 4(a) below (it being
understood that the opinion of SAB shall be limited to
certain matters arising under the Investment Company Act of
1940 and that the opinion of FFHSJ need not express an
opinion with respect to such matters, in each case to an
extent consistent with the respective opinions of such
counsel contemplated to be provided to the Underwriters
pursuant to the Underwriting Agreement).
(b) The following shall be conditions precedent to the
obligation of the Company to issue and sell the Shares to
FBR:
(i) the representations and warranties made by FBR in Section
4(b) below shall be true and correct as of the Closing Date.
(ii) FBR shall have executed and delivered a "lock-up" agreement
relating to the Shares substantially in the form set forth
in Annex B hereto.
(iii)FFHSJ shall have received a legal opinion of counsel of
Friedman, Billings, Xxxxxx & Co., Inc. (or such other
counsel as FFHSJ may approve), in form and substance
reasonably satisfactory to FFHSJ , to the effect that FBR is
a "qualified institutional buyer" within the meaning of Rule
144A under the Securities Act, together with permission for
FFHSJ to rely on such opinion for purposes of delivery of
the opinion contemplated by Section 3(a)(iii) above.
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4. Representations and Warranties
(a) The Company represents and warrants to FBR as follows:
(i) The Company makes the representations set forth in
paragraphs (a), (b), (c), (f), (g), (i), (j), and (k) of
Section 1 of the Underwriting Agreement, except that such
representations and warranties shall relate, in addition and
as the context may permit, to the execution and delivery by
the Company of this Agreement and the Registration Rights
Agreement and to the performance by the Company of its
obligations hereunder and thereunder.
(ii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental body or
agency is required for the execution, delivery and
performance by the Company of its obligations under this
Agreement and the Registration Rights Agreement or for the
issuance and sale of the Shares hereunder.
(iii)Each of this Agreement and the Registration Rights Agreement
has been duly authorized, executed and delivered by the
Company and constitutes a valid and legally binding
obligation of the Company enforceable in accordance with its
terms.
(iv) When issued against payment therefore under this Agreement,
the Shares will be duly authorized, validly issued, fully
paid and nonassessable and FBR will own the Shares free and
clear of any claims, liens or encumbrances of any kind.
(b) FBR represents and warrants to the Company as follows:
(i) It is a "qualified institutional buyer" within the meaning
of Rule 144A under the Securities Act.
(ii) This Agreement has been duly authorized, executed and
delivered by FBR and constitutes a valid and legally binding
agreement of FBR enforceable in accordance with its terms.
(iii)It has received a copy of the Company's preliminary
prospectus (subject to completion, dated November 1, 2001)
relating to the IPO (the "Preliminary Prospectus") and
Pre-Effective Amendment No. 5 to the Registration Statement
("Amendment No. 5"), and has reviewed such prospectus and
such amendment, including the information set forth under
"Risk Factors", to the extent it has considered appropriate.
(iv) It is capable of evaluating the merits and risks of the
acquisition of the Shares, is acquiring the Shares for its
own account, as principal, and is acquiring the Shares for
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investment and not with a view to the resale or distribution
of all or any part of such Shares.
(v) In making its decision to purchase the Shares under this
Agreement, it has not sought the advice of the Company with
respect to the tax, accounting, legal or other regulatory or
investment issues relating to the Shares and the
consummation of the transactions contemplated by this
Agreement, and it is relying solely on the information set
forth in the Preliminary Prospectus and the Registration
Statement, including Amendment No. 5, and the
representations and warranties of the Company in this
Agreement.
(vi) It acknowledges that the Shares have not been registered
under the Securities and may not be offered or sold unless
registered thereunder or unless an exemption from such
registration is available, and it agrees not to reoffer or
resell the Shares unless they are sold under an effective
registration statement under the Securities Act, in reliance
on Rule 144 under the Securities Act, or otherwise in a
transaction not requiring registration under the Securities
Act, and in any case in compliance with all applicable state
securities laws.
5. Termination. This Agreement shall automatically terminate
without further action by either party if (i) the Underwriting Agreement has not
been executed and delivered by the parties thereto and become effective by 11:59
p.m. Eastern Time on November 29, 2001, or (ii) the Underwriting Agreement is
terminated pursuant to its terms without the First Time of Delivery having
occurred thereunder.
6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
7. Survival of Representations and Warranties. All
representations, warranties and agreements contained herein or made in writing
by or on behalf of FBR and the Company pursuant hereto shall survive the
execution and delivery of this Agreement and the purchase and sale of the Shares
hereunder for a period of three years from the date of this Agreement.
8. Use of Capitalized Terms. Capitalized terms used but not
defined in this Agreement have the meanings specified in the Underwriting
Agreement.
9. Counterparts. This Agreement may be executed by the parties
hereto in separate and several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above mentioned.
MCG CAPITAL CORPORATION
By:___________________________
Title:
FBR ASSET INVESTMENT CORPORATION
By:____________________________
Title:
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