MEMBERSHIP INTEREST PURCHASE AGREEMENT Among BIMINI CAPITAL MANAGEMENT, INC., ORCHID ISLAND TRS, LLC and CITIGROUP GLOBAL MARKETS REALTY CORP. Dated as of May 27, 2008
Exhibit
10.1
Among
ORCHID
ISLAND TRS, LLC
and
CITIGROUP
GLOBAL MARKETS REALTY CORP.
Dated
as of May 27, 2008
TABLE OF
CONTENTS
|
ARTICLE
I
|
DEFINITIONS
|
1
|
|
Section
1.1.
|
Definitions
|
1
|
|
Section
1.2.
|
Other
Defined Terms; Interpretation
|
3
|
|
ARTICLE
II
|
PURCHASE
AND SALE OF MEMBERSHIP INTERESTS
|
4
|
|
Section
2.1.
|
Purchase
and Sale
|
4
|
|
Section
2.2.
|
Purchase
Price
|
4
|
|
Section
2.3.
|
Closing
|
4
|
|
Section
2.4.
|
Expiration
of Option
|
5
|
|
Section
2.5.
|
Cancellation
of Rights
|
5
|
|
ARTICLE
III
|
REPRESENTATIONS
AND WARRANTIES OF SELLER
|
5
|
|
Section
3.1.
|
Organization
and Qualification
|
6
|
|
Section
3.2.
|
Authority;
Binding Effect of Agreement
|
6
|
|
Section
3.3.
|
No
Conflicts
|
6
|
|
Section
3.4.
|
Consents
and Approvals
|
6
|
|
Section
3.5.
|
Ownership
of Purchased Membership Interests
|
6
|
|
Section
3.6.
|
Non-Foreign
Status
|
7
|
|
Section
3.7.
|
No
Other Representations
|
7
|
|
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES OF PURCHASER AND THE COMPANY
|
7
|
|
Section
4.1.
|
Organization
and Qualification
|
7
|
|
Section
4.2.
|
Authority;
Binding Effect of Agreement
|
7
|
|
Section
4.3.
|
No
Conflicts
|
7
|
|
Section
4.4.
|
Consents
and Approvals
|
8
|
|
Section
4.5.
|
Financial
Statements
|
8
|
|
Section
4.6.
|
Ownership
of Company Membership Interests
|
8
|
|
Section
4.7.
|
Operating
Agreement
|
8
|
|
Section
4.8.
|
Restricted
Securities
|
9
|
|
Section
4.9.
|
Subscriber
Bears Economic Risk
|
9
|
|
Section
4.10.
|
Acquisition
For Own Account
|
9
|
|
Section
4.11.
|
Accredited
Investor
|
9
|
|
Section
4.12.
|
Information
|
9
|
|
Section
4.13.
|
No
Public Market
|
9
|
|
Section
4.14.
|
Legends
|
9
|
|
Section
4.15.
|
No
Other Representations
|
10
|
|
ARTICLE
V
|
COVENANTS
AND OTHER AGREEMENTS
|
10
|
|
Section
5.1.
|
Transfer
Taxes
|
10
|
|
Section
5.2.
|
Public
Announcements
|
10
|
|
Section
5.3.
|
Further
Assurances; Post-Closing Cooperation
|
10
|
|
Section
5.4.
|
Financial
Statements for 2008
|
10
|
|
Section
5.5.
|
Transfer
Approved
|
10
|
|
Section
5.6.
|
Withdrawal
as a Member of the Company
|
10
|
|
ARTICLE
VI
|
CONDITIONS
TO OBLIGATIONS OF PARTIES
|
11
|
|
Section
6.1.
|
Conditions
Precedent to Each Party’s Obligations at the Closing
|
11
|
|
Section
6.2.
|
Conditions
Precedent to the Obligations of Seller at Closing
|
11
|
|
Section
6.3.
|
Conditions
to the Obligations of Purchaser at Closing
|
12
|
|
ARTICLE
VII
|
DISPUTE
RESOLUTION
|
12
|
|
Section
7.1.
|
Survival
of Representations and Warranties
|
12
|
|
Section
7.2.
|
Damages.
|
13
|
|
ARTICLE
VIII
|
MISCELLANEOUS
|
13
|
|
Section
8.1.
|
Notices
|
13
|
|
Section
8.2.
|
Entire
Agreement
|
14
|
|
Section
8.3.
|
Expenses
|
14
|
|
Section
8.4.
|
Waiver
|
14
|
|
Section
8.5.
|
Amendment
|
14
|
|
Section
8.6.
|
No
Third-Party Beneficiary
|
14
|
|
Section
8.7.
|
Assignment;
Binding Effect
|
14
|
|
Section
8.8.
|
Consent
To Jurisdiction And Service Of Process
|
15
|
|
Section
8.9.
|
Invalid
Provisions
|
15
|
|
Section
8.10.
|
Governing
Law
|
15
|
|
Section
8.11.
|
Counterparts
|
15
|
|
Section
8.12.
|
Interpretation
|
15
|
MEMBERSHIP
INTEREST PURCHASE AGREEMENT, dated as of May 27, 2008, by and among CITIGROUP
GLOBAL MARKETS REALTY CORP., a New York corporation (“Seller”), BIMINI
CAPITAL MANAGEMENT, INC., a Maryland corporation (“Purchaser”), and
ORCHID ISLAND TRS, LLC, a Delaware limited liability company (the “Company”).
BACKGROUND
WHEREAS,
pursuant to a Membership Interest Purchase, Option and Investor Rights
Agreement, dated as of December 21, 2006, by and among Seller, Purchaser and the
Company (the “Initial
Purchase Agreement”), Seller purchased a non-voting Class B membership
interest in the Company constituting 7.5% of the issued and outstanding limited
liability company interests of the Company (the “Purchased Membership
Interests”) from Purchaser; and
WHEREAS,
Seller now wishes to sell and dispose of, and Purchaser wishes to purchase, the
Purchased Membership Interests on the terms and subject to the conditions set
forth in this Agreement.
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained and other valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as
follows:
ARTICLE
I
DEFINITIONS
Section
1.1. Definitions.
(a) As used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate” means,
with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with the Person specified. The term “control”
(including the terms “controlling,” “controlled by” and “under common control
with”) means possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Agreement” means this
Membership Interest Purchase Agreement together with the Exhibits attached
hereto.
“Business Day” means
any day other than a Saturday, Sunday or any day on which banks located in New
York City, New York are authorized or required to be closed for the conduct of
regular banking business.
“Closing” means the
closing of the sale and purchase of the Purchased Membership Interests as
contemplated by this Agreement.
“Company Membership
Interests” means the issued and outstanding limited liability company
interests in the Company regardless of class or series.
“Encumbrances” means
any and all liens, encumbrances, charges, security interests, mortgages,
pledges, options, title defects, or other adverse claims or restrictions on
title of any nature whatsoever and, when used with respect to the Purchased
Membership Interests, shall include without limitation, any rights of first
refusal or first offer, proxies, voting trusts or agreements.
“GAAP” means United
States generally accepted accounting principles as in effect on the date of this
Agreement.
“Governmental
Authority” means any international, supranational, national, provincial,
regional, federal, state, municipal or local government, any instrumentality,
subdivision, court, administrative or regulatory agency or commission or other
authority thereof, or any quasi-governmental or private body exercising any
regulatory, taxing, importing or other governmental or quasi-governmental
authority.
“Losses” means any and
all damages, fines, fees, penalties, deficiencies, liabilities, claims, losses
(excluding loss of value), demands, judgments, settlements, actions, obligations
and costs and expenses (including interest, court costs and the reasonable fees
and costs of attorneys, accountants and other experts).
“Material Adverse
Effect” or “Material Adverse
Change” means any effect or change that would be materially adverse to
the business of the Company, taken as a whole, or to the ability of any party to
consummate timely the transactions contemplated hereby; provided that none of
the following shall be deemed to constitute, and none of the following shall be
taken into account in determining whether there has been, a Material Adverse
Effect or Material Adverse Change: any adverse change, event,
development, or effect arising from or relating to (1) national or international
political or social conditions, including the engagement by the United States in
hostilities, whether or not pursuant to the declaration of a national emergency
or war, or the occurrence of any military or terrorist attack upon the U.S., or
any of its territories, possessions, or diplomatic or consular offices or upon
any military installation, equipment or personnel of the U.S., (2) changes in
U.S. generally accepted accounting principles, (3) changes in laws, rules,
regulations, orders, or other binding directives issued by any Governmental
Authority, (4) the taking of any action contemplated by this Agreement and the
other agreements contemplated hereby, or (5) the announcement or consummation of
the transactions contemplated by this Agreement.
“Operating Agreement”
means the Seventh Amended and Restated Limited Liability Company Agreement of
the Company dated as of July 20, 2007, attached hereto as Exhibit
A.
“Ordinary Course of
Business” means the ordinary course of business consistent with past
practice (including with respect to quantity and frequency).
“Person” means any
natural person, corporation, general partnership, limited partnership, limited
or unlimited liability company, proprietorship, joint venture, other business
organization, trust, business trust, union, association, Governmental Authority
or other entity.
“Securities Act” means
the Securities Act of 1933, as amended from time to time, and the rules and
regulations promulgated thereunder.
“Subsidiary” means,
with respect to any Person, any other Person (i) of which the first Person
owns directly or indirectly 50% or more of the outstanding voting stock or other
equity interest in the other Person; (ii) of which the first Person or any
other Subsidiary of the first Person is a general partner or (iii) of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
with respect to the other Person are at the time owned by the first Person
and/or one or more of the first Person’s Subsidiaries.
“Tax” or “Taxes” means (a) any
and all U.S. federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise, profits,
withholding, social security (or similar, including the Federal Insurance
Contributions Act), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind or any charge of any kind in the nature of
(or similar to) taxes whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not and (b) any liability for the payment of any
amounts of the type described in clause (a) of this definition as a result of
being a member of an affiliated, consolidated, combined or unitary group for any
period, as a result of any tax sharing or tax allocation agreement, arrangement
or understanding, or as a result of being liable for another person’s taxes as a
transferee or successor, by contract or otherwise.
Section
1.2. Other Defined Terms;
Interpretation.
(a) Other
terms defined are in the other parts of this Agreement indicated
below:
|
“Amended and Restated
Guaranty”
|
6.2(c)
|
|
“Closing Date”
|
2.3
|
|
“Company”
|
Preamble
|
|
“Financial Projections”
|
4.5(b)
|
|
“Financial Statements”
|
4.5(a)
|
|
“Initial Purchase Agreement”
|
Recitals
|
|
“Parent Guaranty”
|
6.2(c)
|
|
“Purchase Price”
|
2.2
|
|
“Purchased Membership
Interests”
|
Recitals
|
|
“Purchaser”
|
Preamble
|
|
“Repurchase Agreement”
|
6.2(c)
|
|
“Seller”
|
Preamble
|
(b) For the
purposes of this Agreement, except to the extent that the context otherwise
requires:
(i) when a
reference is made in this Agreement to an Article, Section or Exhibit, such
reference is to an Article or Section of, or an Exhibit to, this Agreement
unless otherwise indicated;
(ii) the table
of contents and headings for this Agreement are for reference purposes only and
do not affect in any way the meaning or interpretation of this
Agreement;
(iii) whenever
the words “include,” “includes” or “including” (or similar terms) are used in
this Agreement, they are deemed to be followed by the words “without
limitation”;
(iv) the words
“hereof,” “herein” and “hereunder” and words of similar import, when used in
this Agreement, refer to this Agreement as a whole and not to any particular
provision of this Agreement;
(v) all terms
defined in this Agreement have their defined meanings when used in any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;
(vi) the
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms;
(vii) if any
action is to be taken by any party hereto pursuant to this Agreement on a day
that is not a Business Day, such action shall be taken on the next Business Day
following such day;
(viii) references
to a Person are also to its heirs, personal representatives, permitted
successors and assigns;
(ix) the use
of “or” is not intended to be exclusive unless expressly indicated
otherwise;
(x) “contract”
includes any note, bond, mortgage, indenture, deed of trust, loan, credit
agreement, franchise concession, contract, agreement, permit, license, lease,
purchase order, sales order, arrangement or other commitment, obligation
or understanding, whether written or oral;
(xi) “assets”
shall include “rights,” including rights under contracts; and
(xii) “reasonable
efforts” or similar terms shall not require the waiver of any rights under this
Agreement.
ARTICLE
II
PURCHASE
AND SALE OF MEMBERSHIP INTERESTS
Section
2.1. Purchase and
Sale. At the Closing, upon the terms and subject to the
conditions of this Agreement, Seller shall sell, transfer, assign, convey and
deliver to Purchaser, and Purchaser shall purchase from Seller, the Purchased
Membership Interests, free and clear of all Encumbrances (other than
Encumbrances created by Purchaser or arising under this Agreement, the Initial
Purchase Agreement, the Operating Agreement, the Securities Act or any
applicable state law).
Section
2.2. Purchase
Price. The purchase price (the “Purchase Price”) to
be paid to Seller by Purchaser for the Purchased Membership Interests at the
Closing shall be US $50,000, to be paid in immediately available
funds.
Section
2.3. Closing. The
Closing shall be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Two
World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at any time after the
satisfaction or waiver of all of the conditions (other than those conditions
that by their nature are to be satisfied by actions taken at Closing, but
subject to the fulfillment or waiver of those conditions) set forth in ARTICLE
VI, but no later than on May 27, 2008 (the “Closing
Date”).
Section
2.4. Expiration of
Option. Seller
acknowledges that the right to purchase Company Membership Interests from
Purchaser constituting 7.49% of all of the Company Membership Interests then
outstanding, which right Purchaser granted to Seller pursuant to the Initial
Purchase Agreement, has expired and is of no further effect.
Section
2.5. Cancellation of Rights.
Each of Seller, Purchaser and the Company agrees that each of
their respective rights pursuant to Sections 2.6, 2.7, 2.8 and 2.9 of the
Initial Purchase Agreement shall be terminated and of no further effect as of
the Closing Date.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
hereby makes the representations and warranties to Purchaser set forth in this
Article III. For purposes of this Article III, the term “knowledge,”
when used below with respect to Seller, shall mean the actual knowledge of
Seller’s executive officers and directors, as the case may be.
Section
3.1. Organization and
Qualification. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of New York
and has all requisite corporate power and authority to own, license, use, lease
and operate its assets and properties and to carry on its business as it is now
being conducted.
Section
3.2. Authority; Binding Effect of
Agreement. Seller has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
and consummate the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by Seller and, assuming the due
authorization, execution and delivery of this Agreement by Purchaser and the
Company, constitutes a valid and legally binding obligation of Seller,
enforceable against Seller in accordance with its terms (subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors’ rights generally and to general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law).
Section
3.3. No
Conflicts. The execution and delivery by Seller of this
Agreement and the performance of the transactions contemplated by this Agreement
do not and will not (i) conflict with or result in a violation of any
provision of the organizational documents of Seller, (ii) to the knowledge of
Seller, result in a
violation or breach of or constitute a default (or an event which, with or
without notice or lapse of time or both, would constitute a default) under, or
result in the termination, modification or cancellation of, or the loss of a
benefit under or accelerate the performance required by, or result in a right of
termination, modification, cancellation or acceleration under the terms,
conditions or provisions of any contract or other instrument of any kind to
which Seller is now a party or by which any of its assets or properties may be
bound or affected, or (iii) violate any order, writ, injunction, decree,
statute, treaty, rule or regulation applicable to Seller, except with respect to
clauses (ii) and (iii) for such violations, breaches and defaults as would not
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect or for which Seller has obtained a valid waiver; provided, however, that any
such violation, breach or default shall be deemed to be a Material Adverse
Effect in the event that such violation, breach or default entitles any person
to take an action to invalidate the transactions contemplated by this
Agreement.
Section
3.4. Consents and
Approvals. No declaration, filing or registration with, or
notice to, or authorization, consent, order or approval of, any Governmental
Authority is required to be obtained or made in connection with or as a result
of the execution and delivery of this Agreement by Seller or the performance by
Seller of the transactions contemplated by this Agreement, except for such
consents, approvals, orders, authorizations, registrations, declarations and
filings as are required to be made under the U.S. federal securities laws and,
for those, the failure of which to obtain would not individually or in the
aggregate reasonably be expected to result in a Material Adverse Effect; provided, however, that any such failure to
obtain any required authorization, consent, order, or approval of any
Governmental Authority with respect to the transactions contemplated hereby
which failure would entitle such Governmental Authority to take any action
seeking to invalidate such transactions shall be deemed to be a Material Adverse
Effect.
Section
3.5. Ownership of Purchased
Membership Interests. Seller is the lawful record and
beneficial owner of the Purchased Membership Interests and owns such Purchased
Membership Interests free and clear of all Encumbrances whatsoever, except for
any Encumbrances created by this Agreement, the Initial Purchase Agreement, the
Operating Agreement, Purchaser, the Company and restrictions on transfer under
federal and state securities laws. Upon the assignment of the
Purchased Membership Interests by Seller to Purchaser in the manner contemplated
under ARTICLE II, and the payment by Purchaser of the Purchase Price to Seller,
Purchaser will acquire the beneficial and legal title to the Purchased
Membership Interests, free and clear of all Encumbrances, except for any
Encumbrances created by this Agreement, the Initial Purchase Agreement, the
Operating Agreement, Purchaser, the Company or restrictions on transfer under
federal and state securities laws.
Section
3.6. Non-Foreign
Status. Seller is not a foreign person as such term is used in
U.S. Treasury Regulation Section 1.1445-2.
Section
3.7. No Other
Representations. Except as expressly provided above, or
elsewhere in this Agreement, Seller does not make to Purchaser, and Seller
hereby expressly disclaims, any representation or warranty of any kind or
nature, written or oral, statutory, express or implied, including, without
limitation, with respect to the Purchased Membership Interests.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PURCHASER AND THE COMPANY
Purchaser
and the Company hereby jointly and severally represent and warrant to Seller
that:
Section
4.1. Organization and
Qualification. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland
and the Company is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware. Each of
Purchaser and the Company have all requisite corporate power and authority to
own, license, use or lease and operate their respective assets and properties
and to carry on their respective businesses as they are now conducted, except
where the failure to have such power and authority would not individually or in
the aggregate reasonably be expected to result in a Material Adverse
Effect.
Section
4.2. Authority; Binding Effect of
Agreement. Each of Purchaser and the Company have all
requisite corporate power and authority to execute and deliver this Agreement
and to perform their respective obligations and consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement and the performance of the transactions contemplated hereby have been
duly authorized and no other corporate proceedings on the part of Purchaser or
the Company are necessary to authorize the execution and delivery of this
Agreement and the performance by Purchaser and the Company of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and the Company and, assuming the due authorization,
execution and delivery of this Agreement by the Seller, constitutes valid and
binding obligations of Purchaser and the Company enforceable against Purchaser
and the Company in accordance with its terms (subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors’ rights
generally and to general principles of equity, regardless of whether enforcement
is sought in a proceeding in equity or at law).
Section
4.3. No Conflicts. Except
for those provisions of the Operating Agreement which may be triggered by the
transfer of the Purchased Membership Interests to Purchaser (which transfer does
not, however, cause an actual violation, breach or default under the Operating
Agreement), the execution and delivery by Purchaser and the Company of this
Agreement and the performance of the transactions contemplated hereby do not and
will not (i) conflict with or result in a breach of any provisions of the
certificate of incorporation and bylaws of Purchaser or Operating Agreement of
the Company, (ii) result in a violation or breach of or constitute a default (or
an event which, with or without notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or the loss of a
benefit under or accelerate the performance required by, or result in a right of
termination, modification, cancellation or acceleration under the terms,
conditions or provisions of any contract or other instrument of any kind to
which Purchaser or the Company is now a party or by which Purchaser or the
Company or any of its properties or assets may be bound or affected, or (iii)
violate any order, writ, injunction, decree, statute, treaty, rule or regulation
applicable to Purchaser or the Company, except with respect to clauses (ii) and
(iii) for such violations, breaches and defaults as would not individually or in
the aggregate reasonably be expected to result in a Material Adverse Effect or
for which the Purchaser or Company, as the case may be, has obtained a valid
waiver; provided, however, that any such violation, breach or default shall be
deemed to be a Material Adverse Effect in the event that such violation, breach
or default entitles any person to take an action to invalidate the transactions
contemplated by this Agreement.
Section
4.4. Consents and
Approvals. No declaration, filing or registration with, or notice to, or
authorization, consent, order or approval of, any Governmental Authority is
required to be obtained or made in connection with or as a result of the
execution and delivery of this Agreement by Purchaser or the Company or the
performance by Purchaser or the Company of the transactions contemplated by this
Agreement, except for such consents, approvals, orders, authorizations,
registrations, declarations and filings as are required to be made under the
U.S. federal securities laws and, for those, the failure of which to obtain
would not individually or in the aggregate reasonably be expected to result in a
Material Adverse Effect; provided, however, that any such failure to
obtain any required authorization, consent, order, or approval of any
Governmental Authority with respect to the transactions contemplated hereby
which failure would entitle such Governmental Authority to take any action
seeking to invalidate such transactions shall be deemed to be a Material Adverse
Effect.
Section
4.5. Financial
Statements
(a) The
Company has made available to Seller its unaudited consolidated balance sheet
and statements of operations, stockholders’ equity, and cash flows as of and for
the fiscal year ended December 31, 2007 and its unaudited consolidated balance
sheet and statements of operations, stockholders’ equity, and cash flows as of
and for the three months ended March 31, 2008 (collectively, the “Financial
Statements”). Except for normal year-end adjustments, the lack
of intercompany eliminations, footnotes and other presentation items, the
Financial Statements have been prepared in accordance with GAAP on a consistent
basis, and present fairly, in all material respects, the consolidated financial
condition of the Company as of such date and the consolidated results of
operations of the Company for such period.
(b) On or
about May 20, 2008, the Company made available to Seller its projected unaudited
consolidated balance sheet as of December 31, 2008, and its projected unaudited
statement of operations for the fiscal year ended December 31, 2008 (the "Financial
Projections"). The Financial Projections were prepared by the
Company based on information available to the Company as of May 20, 2008, and on
the Company's management's good faith belief with respect to future
events. The Financial Projections are subject to risks and
uncertainties that could cause actual performance or results to differ
materially from those expressed in such Financial Projections. The
Company does not make any representation or warranty as to the likelihood that
such Financial Projections will be achieved and hereby expressly disclaims any
such representation or warranty.
Section
4.6. Ownership of Company
Membership Interests. Upon consummation of the sale of the Purchased
Membership Interests to the Purchaser and the transactions contemplated pursuant
to this Agreement, Purchaser will own 100% of the Company Membership
Interests.
Section
4.7. Operating Agreement.
Attached hereto as Exhibit A is the Operating Agreement, which agreement is in
full force and effect and is the only agreement in effect with respect to the
matters described therein.
Section
4.8. Restricted
Securities. Purchaser understands that the Purchased
Membership Interests have not been registered under the Securities Act or the
securities or blue sky laws of any State of the United States or any other
jurisdiction. Purchaser also understands that the Purchased
Membership Interests are being offered and sold pursuant to an exemption from
registration contained in the Securities Act and any such State or other
jurisdictions’ securities or blue sky laws based in part upon Purchaser’s and
the Company’s representations contained in this Agreement.
Section
4.9. Subscriber Bears Economic
Risk. Purchaser has such knowledge and experience in financial
and business matters so that it is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its own
interests. Purchaser is able to bear the economic risk of this
investment indefinitely.
Section
4.10. Acquisition For Own
Account. Purchaser is acquiring the Purchased Membership
Interests for its own account for investment only, and not with a view towards a
distribution thereof in violation of the Securities Act; provided, that this
representation and warranty shall not limit Purchaser’s right to sell the
Purchased Membership Interests in compliance with applicable securities laws and
the Operating Agreement.
Section
4.11. Accredited
Investor. Purchaser is an accredited investor within the
meaning of Regulation D under the Securities Act.
Section
4.12. Information.
(a) Purchaser
(i) has been provided with such information regarding the Company and the
Purchased Membership Interests that it believes necessary for purposes of making
an informed decision to enter into this Agreement and acquire the Purchased
Membership Interests, (ii) has received and carefully reviewed this
Agreement, (iii) has been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other representatives of Seller
concerning the terms and conditions of the acquisition, and (iv) has
received any additional information which Purchaser or its advisors or agents
has requested.
(b) Purchaser
is familiar with and understands the terms of its acquisition of the Purchased
Membership Interests pursuant to this Agreement, including the rights to which
Purchaser is entitled under this Agreement and the Operating
Agreement. In evaluating the suitability of an investment in the
Company, Purchaser has not relied upon any representation or other
information (whether oral or written) from Seller, or any agent,
employee or Affiliate of Seller other than as set forth in this Agreement or
resulting from Purchaser’s own independent investigation. Purchaser
understands and acknowledges that nothing in this Agreement or any other
materials provided to Purchaser in connection with the purchase of the Purchased
Membership Interests constitutes investment, tax or legal advice. To
the extent deemed necessary or advisable by Purchaser in its sole discretion,
Purchaser has retained, at its sole expense, and relied upon appropriate
professional advice regarding the investment, tax and legal merits and
consequences of this Agreement and its purchase of the Purchased Membership
Interests hereunder.
Section
4.13. No Public
Market. Purchaser understands that no public market now exists
for any of the Company Membership Interests, and that Seller has made no
assurances that a public market will ever exist for the Company Membership
Interests.
Section
4.14. Legends. Purchaser
understands that certificates representing the Purchased Membership Interests
will bear legends required under applicable federal and state securities
laws.
Section
4.15. No Other
Representations. Except as expressly provided above, or
elsewhere in this Agreement, neither Purchaser nor the Company makes to Seller,
and Purchaser and the Company hereby disclaim, any representation or warranty of
any kind or nature, written or oral, statutory, express or implied, including,
without limitation, with respect to Purchaser, the Company or any of their
respective Subsidiaries or any of their respective assets.
ARTICLE
V
COVENANTS
AND OTHER AGREEMENTS
Section
5.1. Transfer
Taxes. All transfer, registration, stamp, documentary, sales,
use and similar Taxes, any penalties, interest and additions to Tax, and fees
incurred in connection with the purchase of the Purchased Membership Interests,
shall be the responsibility of and be timely paid by Purchaser.
Section
5.2. Public
Announcements. Any press release with respect to the execution
of this Agreement or the transactions contemplated hereby shall be a joint press
release mutually agreed to by Seller and Purchaser. Neither Seller
nor Purchaser nor any of their respective Affiliates shall issue or cause the
dissemination of any press release or other public announcements or statements
with respect to this Agreement or the transactions contemplated hereby without
the consent of the other party, which consent will not be unreasonably withheld,
except as may be required by law or by any listing agreement with a national
securities exchange or trading market, in which case the disclosing party shall
provide the other party with a reasonable opportunity to review and comment on
any such release prior to its dissemination.
Section
5.3. Further Assurances;
Post-Closing Cooperation. From time to time after the Closing,
without additional consideration, each of the parties hereto will (or, if
appropriate, cause their Affiliates to) execute and deliver such further
instruments and take such other action as may reasonably be requested by the
other parties to make effective the transactions contemplated by this Agreement,
including any instruments reasonably requested by Purchaser or the Company to
transfer the collateral securing the Repurchase Agreement (as hereinafter
defined), including without limitation all of the certificates representing
residual interests and each of the promissory notes pledged
thereunder. Further, if any party to this Agreement shall following
the Closing have in its possession any asset or right that under this Agreement
should have been delivered to the other, including payments made to such party
following the Closing, such party shall promptly deliver such asset or right to
the other.
Section
5.4. Financial Statements for
2008. The Company shall make available to Seller, by no
later than March 31, 2009, its unaudited consolidated balance sheet and
statements of operations, stockholders’ equity, and cash flows as of and for the
fiscal year ended December 31, 2008. Except for normal year-end
adjustments, the lack of intercompany eliminations, footnotes and other
presentation items, such financial statements will be prepared in accordance
with GAAP on a consistent basis, and will present fairly, in all material
respects, the consolidated financial condition of the Company as of such date
and the consolidated results of operations of the Company for such
period.
Section
5.5. Transfer
Approved. Purchaser and Seller, being the sole members of the
Company, hereby acknowledge and agree that Section 16 of the Operating Agreement
has been satisfied.
Section
5.6. Withdrawal as a Member of
the Company. Seller agrees that it shall be deemed to have
withdrawn as a member of the Company effective as of the time of Closing and
shall have no rights or obligations as a member under or pursuant to the
Operating Agreement commencing as of the time of Closing, other than the right
to indemnification and limitation of liability rights of a member set forth in
the Operating Agreement.
ARTICLE
VI
CONDITIONS
TO OBLIGATIONS OF PARTIES
Section
6.1. Conditions Precedent to Each
Party’s Obligations at the Closing. The respective obligations
of each party to effect the Closing are subject to the fulfillment on or prior
to the Closing Date of the following conditions, which conditions may be waived,
in whole or in part, at the option of each party to the extent permitted by
law:
(a) Consents and
Approvals. All necessary consents and approvals of any
Governmental Authority or any other Person required for the consummation of the
transactions contemplated by this Agreement shall have been obtained;
and
(b) No
Orders. No statute, rule, regulation, order, decree or
injunction shall have been enacted, entered, promulgated or enforced by a
Governmental Authority that prohibits the consummation of the transactions
contemplated by this Agreement shall be in effect.
Section
6.2. Conditions Precedent to the
Obligations of Seller at Closing. Seller’s obligation to
complete the sale of the Purchased Membership Interests at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, which conditions may be waived, in whole or in part, at the option
of Seller to the extent permitted by law:
(a) Representations and
Warranties Correct. The representations and warranties made by
Purchaser and the Company in Article IV hereof shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects on and as of the Closing Date, except those representations and
warranties of Purchaser and the Company that speak as of a certain date or time,
provided such representations and warranties shall have been true and correct in
all material respects as of such date;
(b) Covenants. All
covenants, agreements and conditions contained in this Agreement to be performed
by Purchaser and the Company on or prior to the Closing Date shall have been
performed or complied with in all material respects;
(c) Repayment of Loan.
All amounts due Seller under the Master Repurchase Agreement and Supplemental
Terms and Conditions thereto (together the “Repurchase
Agreement”), each dated as of November 3, 2005 by and between HS Special
Purpose, LLC and Citigroup Global Markets Realty Corp., as amended, shall have
been repaid and there shall be no outstanding obligations of any nature owed by
any party to Seller pursuant to the terms of the Repurchase Agreement, the
Parent Guaranty, dated as of December 21, 2006, by Purchaser in favor of Seller
(the “Parent
Guaranty”), or the Amended and Restated Guaranty, dated as of December
21, 2006, by the Company in favor of Seller (the “Amended and Restated
Guaranty”), and HS Special Purpose, LLC, the Purchaser and the Company
shall have executed a termination agreement with respect to the Repurchase
Agreement, the Parent Guaranty and the Amended and Restated Guaranty in the form
attached hereto as Exhibit B;
(d) Payment of Legal
Fees. Purchaser shall have paid all legal fees and expenses due to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ llp in connection with the drafting and negotiation
of this Agreement and the consummation of the transactions contemplated herein;
and
(e) Closing Deliveries by
Purchaser. Purchaser shall have paid the Purchase Price by
wire transfer of immediately available funds to the account set forth on
Schedule 1 to this Agreement.
Section
6.3. Conditions to the
Obligations of Purchaser at Closing. Purchaser’s obligation to
complete the acquisition of the Purchased Membership Interests at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, which conditions may be waived, in whole or in part, at the option
of Purchaser to the extent permitted by law:
(a) Representations and
Warranties Correct. The representations and warranties made by
Seller in Article III hereof shall be true and correct in all material respects
when made, and shall be true and correct in all material respects on and as of
the Closing Date, except those representations and warranties of Seller that
speak as of a certain date or time, provided such representations and warranties
shall have been true and correct in all material respects as of such
date;
(b) Covenants. All
covenants, agreements and conditions contained in this Agreement to be performed
by Seller on or prior to the Closing Date shall have been performed or complied
with in all material respects.
(c) Purchased Membership
Interests. On the Closing Date, Seller shall have delivered to
Purchaser a certificate representing the Purchased Membership Interests acquired
from Seller pursuant to this Agreement together with such instruments of
transfer and assignment as Purchaser may reasonably request or, in the event
such certificate shall have been lost, stolen or destroyed, the Seller shall
make an affidavit of that fact, which affidavit shall include an indemnification
agreement against any claim that may be made against Purchaser with respect to
ownership of such certificate.
(d) Delivery of
Collateral. Assuming the condition set forth in Section 6.2(c)
above has been satisfied, the Seller shall deliver or cause to be delivered to
Purchaser or its designee all of the collateral securing the Repurchase
Agreement, including without limitation all of the certificates representing
residual interests and each of the promissory notes pledged
thereunder. In the event any of the certificates, promissory notes or
other documents with respect to such collateral shall have been lost, stolen or
destroyed, the Seller shall make an affidavit of that fact, which affidavit
shall include an indemnification agreement against any claim that may be made
against Purchaser with respect to ownership of such certificate or certificates,
promissory note or promissory notes or other documents that have been lost,
stolen or destroyed.
(e) Termination
Agreement. Seller shall have executed a termination agreement
with respect to the Repurchase Agreement, the Parent Guaranty and the Amended
and Restated Guaranty in the form attached hereto as Exhibit B.
(f) Payment Direction
Letter. Seller shall have executed a payment direction letter
with respect to the Repurchase Agreement in the form attached as Exhibit
C.
ARTICLE
VII
DISPUTE
RESOLUTION
Section
7.1. Survival of Representations
and Warranties.
(a) The
representations and warranties of Seller, Purchaser and the Company contained in
this Agreement will survive the Closing for a period of eighteen months
commencing on the Closing Date. Except as otherwise expressly
provided in this Agreement, each covenant hereunder to be performed after the
Closing shall survive until fully performed.
(b) No
party’s rights hereunder (including rights under this ARTICLE VII) shall be
affected by any investigation conducted by or any knowledge acquired (or capable
of being acquired) by such party at any time, whether before or after the
execution or delivery of this Agreement.
Section
7.2. Damages.
(a) No party
shall be liable for any consequential damages, including loss of revenue, income
or profits, loss in value of assets or securities, punitive, special, treble,
remote, special or indirect damages, or loss of business reputation or
opportunity relating to the breach of this Agreement, including for any claim
based upon any multiplier of such party’s earnings before interest, Tax,
depreciation or amortization, or any similar valuation metric.
(b) The
parties shall treat any payments with respect to Losses arising from a breach or
violation of the representations and warranties contained in this Agreement as
an adjustment to the Purchase Price for all U.S. federal, state, local and
foreign Tax purposes, except as otherwise required by applicable
law.
ARTICLE
VIII
MISCELLANEOUS
Section
8.1. Notices. All
notices, requests and other communications under this Agreement must be in
writing and will be deemed to have been duly given upon receipt by the parties
at the following addresses or facsimiles (or at such other address or facsimile
for a party as shall be specified by notice):
If to
Seller:
Citigroup
Global Markets Realty Corp.
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
With a
copy to:
Attention: General
Counsel
Facsimile.: (▇▇▇)
▇▇▇-▇▇▇▇
With a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇ llp
Two World
Financial Center
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
If to
Purchaser or the Company:
Bimini
Capital Management Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General
Counsel
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
With a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇
Chance US LLP
▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Section
8.2. Entire
Agreement. This Agreement and the exhibits hereto supersede
all prior and contemporaneous discussions and agreements, both written and oral,
among the parties with respect to the subject matter of this Agreement and
constitute the sole and entire agreement among the parties to this Agreement
with respect to the subject matter of this Agreement.
Section
8.3. Expenses. Except
as otherwise expressly provided in this Agreement, whether or not the
transactions contemplated by this Agreement are consummated, each party will pay
its own costs and expenses incurred in connection with the negotiation,
execution and closing of this Agreement and the transactions contemplated by
this Agreement.
Section
8.4. Waiver. Any
term or condition of this Agreement may be waived at any time by the party that
is entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this
Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
Section
8.5. Amendment. This
Agreement may be amended, supplemented or modified only by a written instrument
duly executed by or on behalf of each party to this Agreement.
Section
8.6. No Third-Party
Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective heirs,
personal representatives, successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights upon any other
Person.
Section
8.7. Assignment; Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other parties hereto; provided, however, that
Purchaser may (i) assign any or all of its rights and interests hereunder
to one or more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which cases
Purchaser nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
Section
8.8. CONSENT TO JURISDICTION AND
SERVICE OF PROCESS. EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY COURT OF THE
STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK IN RESPECT OF ANY ACTION,
SUIT OR PROCEEDING ARISING IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AND AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE BROUGHT ONLY IN SUCH COURT (AND WAIVES ANY OBJECTION BASED
ON FORUM NON CONVENIENS
OR ANY OTHER OBJECTION TO VENUE THEREIN); PROVIDED, HOWEVER, THAT SUCH
CONSENT TO JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO IN THIS
SECTION 8.8 AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE
JURISDICTION OF SAID COURTS OR IN THE STATE OF NEW YORK OTHER THAN FOR SUCH
PURPOSE. Any and all process may be served in any action, suit or
proceeding arising in connection with this Agreement by complying with the
provisions of Section 8.1. Such service of process shall have
the same effect as if the party being served were a resident in the State of New
York and had been lawfully served with such process in such
jurisdiction. The parties hereby waive all claims of error by reason
of such service. Nothing herein shall affect the right of any party
to service of process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the other in any other jurisdiction to
enforce judgments or rulings of the aforementioned courts.
Section
8.9. Invalid
Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and enforceable provision as similar in terms
to such illegal, invalid or unenforceable provision as may be
possible.
Section
8.10. GOVERNING
LAW. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
Section
8.11. Counterparts. This
Agreement may be executed in any number of counterparts, including by facsimile
signature thereof, all of which will constitute one and the same
instrument.
Section
8.12. Interpretation. The
parties have participated jointly in negotiating and drafting this
Agreement. If an ambiguity or a question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this
Agreement.
Signatures
begin on the next page
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
BIMINI
CAPITAL MANAGEMENT INC.
|
By:
|
Name:
Title:
ORCHID
ISLAND TRS, LLC
|
By:
|
Name:
Title:
CITIGROUP
GLOBAL MARKETS REALTY CORP.
|
By:
|
Name:
Title: