$60,000,000 AGGREGATE PRINCIPAL AMOUNT
ANTHRACITE CAPITAL, INC.
11.75% CONVERTIBLE SENIOR NOTES
DUE 2027
PURCHASE AGREEMENT
DATED AUGUST 23, 2007
PURCHASE AGREEMENT
August 23, 2007
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
As Representatives of the several Initial Purchasers
c/o BANC OF AMERICA SECURITIES LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Anthracite Capital, Inc., a Maryland corporation (the "Company"), proposes
to issue and sell to the several purchasers named in Schedule A (the "Initial
Purchasers") $60,000,000 in aggregate principal amount of its 11.75% Convertible
Senior Notes due 2027 (the "Firm Notes"). In addition, the Company has granted
to the Initial Purchasers an option to purchase up to an additional $20,000,000
in aggregate principal amount of its 11.75% Convertible Senior Notes due 2027
(the "Optional Notes" and, together with the Firm Notes, the "Notes"). Banc of
America Securities LLC ("BAS") and Deutsche Bank Securities Inc. have agreed to
act as representatives of the several Initial Purchasers (in such capacity, the
"Representatives") in connection with the offering and sale of the Notes. To the
extent that there are no additional Initial Purchasers listed on Schedule A
other than you, the terms Representatives and Initial Purchasers as used herein
shall mean you, as Initial Purchasers. The terms Representatives and Initial
Purchasers shall mean either the singular or plural as the context requires.
The Notes will be convertible on the terms, and subject to the conditions,
set forth in the indenture (the "Indenture") to be entered into between the
Company and ▇▇▇▇▇ Fargo Bank, National Association, as trustee (the "Trustee"),
on the Closing Date (as defined herein). As used herein, "Conversion Shares"
means the shares of common stock, par value $0.001 per share, of the Company
(the "Common Stock") to be received by the holders of the Notes upon conversion
of the Notes pursuant to the terms of the Notes and the Indenture.
The Notes will be offered and sold to the Initial Purchasers without being
registered under the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (the "Securities Act"), in reliance upon an exemption therefrom.
Holders of the Notes (including the Initial Purchasers and their direct and
indirect transferees) will be entitled to the benefits of a Resale Registration
Rights Agreement, dated the Closing Date, between the Company and the Initial
Purchasers (the "Registration Rights Agreement"), pursuant to which the Company
will agree to file or have on file with the Commission a shelf registration
statement pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Registration Statement") covering the resale of the Notes and the Conversion
Shares. This Agreement, the Indenture, the Notes and the Registration Rights
Agreement are referred to herein collectively as the "Operative Documents."
The Company understands that the Initial Purchasers propose to make an
offering of the Notes on the terms and in the manner set forth herein and in the
Disclosure Package (as defined below), including the Preliminary Offering
Memorandum (as defined below), and the Final Offering Memorandum (as defined
below) and agrees that the Initial Purchasers may resell, subject to the
conditions set forth herein, all or a portion of the Notes to purchasers (the
"Subsequent Purchasers") at any time after the date of this Agreement.
The Company has prepared an offering memorandum, dated the date hereof,
setting forth information concerning the Company, the Notes, the Registration
Rights Agreement and the Common Stock, in form and substance reasonably
satisfactory to the Initial Purchasers. As used in this Agreement, "Offering
Memorandum" means, collectively, the Preliminary Offering Memorandum dated as of
August 23, 2007 (the "Preliminary Offering Memorandum") and the offering
memorandum dated the date hereof (the "Final Offering Memorandum"), each as then
amended or supplemented by the Company. As used herein, each of the terms
"Disclosure Package", "Offering Memorandum", "Preliminary Offering Memorandum"
and "Final Offering Memorandum" shall include in each case the documents
incorporated by reference therein.
The Company and BlackRock Financial Management, Inc., a corporation
organized and existing under the laws of Delaware and the manager of the Company
(in such capacity, the "Manager"), each hereby confirms its agreements with the
Initial Purchasers as follows:
SECTION 1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY AND THE
MANAGER.
(a) The Company hereby represents, warrants and covenants to each Initial
Purchaser as follows:
(i) No Registration. Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 6 and their
compliance with the agreements set forth therein, it is not necessary, in
connection with the issuance and sale of the Notes to the Initial
Purchasers, the offer, resale and delivery of the Notes by the Initial
Purchasers and the conversion of the Notes into Conversion Shares, in each
case in the manner contemplated by this Agreement, the Indenture, the
Disclosure Package and the Offering Memorandum, to register the Notes or
the Conversion Shares under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(ii) No Integration. None of the Company or any of its subsidiaries
has, directly or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any "security" (as
defined in the Securities Act) that is or will be integrated with the sale
of the Notes or the Conversion Shares in a manner that would require
registration under the Securities Act of the Notes or the Conversion
Shares.
(iii) Rule 144A. No securities of the same class (within the meaning
of Rule 144A(d)(3) under the Securities Act of 1933, as amended) as the
Notes are listed on any national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or quoted on an automated inter-dealer quotation system.
(iv) Exclusive Agreement. The Company has not paid or agreed to pay to
any person any compensation for soliciting another person to purchase any
securities of the
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Company in connection with the offer and sale of the Notes by the Initial
Purchasers (except as contemplated in this Agreement).
(v) Offering Memoranda. The Company hereby confirms that it has
authorized the use of the Disclosure Package, including the Preliminary
Offering Memorandum, and the Final Offering Memorandum in connection with
the offer and sale of the Notes by the Initial Purchasers. Each document,
if any, filed or to be filed pursuant to the Exchange Act and incorporated
by reference in the Disclosure Package or the Final Offering Memorandum
complied when it was filed, or will comply when it is filed, as the case
may be, in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder. The Preliminary Offering
Memorandum, at the date thereof, did not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. At the date of this Agreement, the Closing Date
and on any Subsequent Closing Date, the Final Offering Memorandum did not
and will not (and any amendment or supplement thereto, at the date thereof,
at the Closing Date and on any Subsequent Closing Date, will not) contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Company makes no representation or warranty as to information contained in
or omitted from the Preliminary Offering Memorandum or the Final Offering
Memorandum in reliance upon and in conformity with written information
furnished to the Company by or on the behalf of the Initial Purchasers
specifically for inclusion therein, it being understood and agreed that the
only such information furnished by or on the behalf of the Initial
Purchasers consists of the information described as such in Section 8
hereof.
(vi) Disclosure Package. The term "Disclosure Package" shall mean (i)
the Preliminary Offering Memorandum, as amended or supplemented at the
Applicable Time, (ii) the Final Term Sheet (as defined herein) and (iii)
any other writings that the parties expressly agree in writing to treat as
part of the Disclosure Package ("Issuer Written Information") as identified
on Exhibit A hereto. The Disclosure Package as of 6:00 a.m. (Eastern time)
on August 24, 2007 (the "Applicable Time") will not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The preceding sentence does not
apply to statements in or omissions from the Disclosure Package in reliance
upon and in conformity with written information furnished to the Company by
any Initial Purchaser through the Representatives specifically for use
therein, it being understood and agreed that the only such information
furnished by or on behalf of any Initial Purchaser consists of the
information described as such in Section 8 hereof.
(vii) Statements in Offering Memorandum. The statements in the
Disclosure Package and the Final Offering Memorandum under the headings
"Description of Notes", "Description of Capital Stock" and "Federal Income
Tax Considerations" insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, are accurate and
fair summaries of such legal matters, agreements, documents or proceedings
in all material respects.
(viii) Authorization of the Purchase Agreement. This Agreement has
been duly authorized, executed and delivered by the Company.
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(ix) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, upon the effectiveness of the Registration
Statement, will be qualified under the Trust Indenture Act; on the Closing
Date, the Indenture will have been duly executed and delivered by the
Company and, assuming due authorization, execution and delivery thereof by
the Trustee, will constitute a legally valid and binding agreement of the
Company enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles;
and the Indenture conforms in all material respects to the description
thereof contained in the Disclosure Package and the Final Offering
Memorandum.
(x) Authorization of the Notes. The Notes have been duly authorized by
the Company; when the Notes are executed, authenticated and issued in
accordance with the terms of the Indenture and delivered to and paid for by
the Initial Purchasers pursuant to this Agreement on the Closing Date or
any Subsequent Closing Date, as the case may be (assuming due
authentication of the Notes by the Trustee), such Notes will constitute
legally valid and binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in accordance
with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles; and the Notes will conform in all material respects
to the description thereof contained in the Disclosure Package and the
Final Offering Memorandum.
(xi) Authorization of the Conversion Shares. The Conversion Shares
have been duly authorized and reserved and, when issued upon conversion of
the Notes in accordance with the terms of the Notes and the Indenture, will
be validly issued, fully paid and non-assessable, and the issuance of such
shares will not be subject to any preemptive or similar rights.
(xii) Authorization of the Registration Rights Agreement. The
Registration Rights Agreement has been duly authorized, executed and
delivered by the Company.
(xiii) No Material Adverse Change. Except as otherwise disclosed in
the Disclosure Package and the Final Offering Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), subsequent to the respective dates as of which information is
given in the Disclosure Package: (i) there has been no material adverse
change, or any development that could reasonably be expected to result in a
material adverse change, in the condition (financial or otherwise), or in
the results of operations, properties, business or prospects of the Company
and its subsidiaries, considered as one entity (a "Material Adverse
Change"); (ii) the Company and its subsidiaries, considered as one entity,
have not incurred any material liability or obligation, indirect, direct or
contingent, nor entered into any material transaction or agreement; and
(iii) there has been no dividend or distribution of any kind declared, paid
or made by the Company or, except for dividends paid to the Company or
other subsidiaries, any of its subsidiaries on any class of capital stock
or repurchase or redemption by the Company or any of its subsidiaries of
any class of capital stock.
(xiv) Independent Accountants. Deloitte & Touche LLP, which has
expressed their opinion with respect to certain financial statements (which
term as used in this
4
Agreement includes the related notes thereto) and any supporting schedules
included or incorporated by reference in the Disclosure Package and the
Final Offering Memorandum, is an independent registered public accounting
firm with respect to the Company as required by the Securities Act and the
Exchange Act and the applicable published rules and regulations thereunder.
(xv) Preparation of the Financial Statements. The financial statements
included or incorporated by reference in the Disclosure Package and the
Final Offering Memorandum present fairly the consolidated financial
position of the Company and its consolidated subsidiaries as of and at the
dates indicated and the results of their operations and cash flows for the
periods specified. Such financial statements comply as to form in all
material respects with the applicable accounting requirements of Regulation
S-X and have been prepared in conformity with generally accepted accounting
principles as applied in the United States applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
related notes thereto. The financial data set forth in the Disclosure
Package and the Final Offering Memorandum under the captions
"Summary--Summary Financial Data" and "Capitalization" fairly present the
information set forth therein on a basis consistent with that of the
audited financial statements contained or incorporated by reference in the
Disclosure Package and the Final Offering Memorandum. The Company's ratios
of earnings to combined fixed charges and preferred stock dividends set
forth in the Disclosure Package and the Final Offering Memorandum have been
calculated in compliance with Item 503(d) of Regulation S-K.
(xvi) Statistical and Market-Related Data. The statistical and
market-related data included under the captions "Summary", "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and "Business" in the documents incorporated by reference in the Disclosure
Package and the consolidated financial statements of the Company and its
subsidiaries included or incorporated by reference in the Disclosure
Package are based on or derived from sources that the Company believes to
be both reliable and accurate in all material respects.
(xvii) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
organized, is validly existing and in good standing (to the extent the
concept exists) as a corporation or other business entity under the laws of
its jurisdiction of organization and is duly qualified to do business and
in good standing as a foreign corporation or other business entity in each
jurisdiction in which its ownership or lease of property or the conduct of
its businesses requires such qualification, except where the failure to be
so qualified or in good standing (or the failure of a subsidiary that is
not a significant subsidiary (as defined below) to be duly organized) could
not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), results
of operations, properties, business or prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"); each of the
Company and its subsidiaries has all power and authority necessary to own
or hold its properties and to conduct the businesses in which it is engaged
and, in the case of the Company, to enter into and perform its obligations
under this Agreement. Exhibit 21 to the Company's Annual Report on Form
10-K for the most recent fiscal year lists all of the Company's
subsidiaries as of such date. All of the issued and outstanding shares of
capital stock of each subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable and are owned
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by the Company, directly or through subsidiaries, free and clear of all
liens, encumbrances, equities or claims, except for such liens,
encumbrances, equities or claims ("Encumbrances") as could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect or such
Encumbrances as described in the Disclosure Package and the Final Offering
Memorandum.
(xviii) Capitalization and Other Capital Stock Matters. The Company
has an authorized capitalization as set forth in the Disclosure Package and
the Final Offering Memorandum under the caption "Capitalization", and all
of the issued shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable, conform
to the description thereof contained in the Disclosure Package and the
Final Offering Memorandum and were issued in compliance with federal and
state securities laws and not in violation of any preemptive right, resale
right, right of first refusal or similar right. All of the Company's
options, warrants and other rights to purchase or exchange any securities
for shares of the Company's capital stock have been duly authorized and
validly issued, conform to the description thereof contained in the
Disclosure Package and the Final Offering Memorandum and were issued in
compliance with federal and state securities laws.
(xix) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. (i) Neither the Company nor any of
its "significant subsidiaries" (as defined by Rule 1-02 of Regulation S-X)
is in violation of its charter or by-laws (or similar organizational
documents). (ii) Neither the Company nor any of its subsidiaries (A) is in
default, and no event has occurred that, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties or
assets is subject (each, an "Existing Instrument") or (B) is in violation
of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over it or its property or
assets, except in the case of clauses (ii)(A) and (B) above, to the extent
any such conflict, breach, violation or default could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
The execution and delivery of and performance of its obligations under
the Operative Documents by the Company, the consummation of the
transactions contemplated hereby and the application of the proceeds from
the sale of the Notes as described under "Use of Proceeds" in the
Disclosure Package and the Final Offering Memorandum (i) will not conflict
with or result in a breach or violation of any of the terms or provisions
of, impose any lien, charge or encumbrance upon any property or assets of
the Company and its subsidiaries, or constitute a default under, any
Existing Instrument; (ii) have been duly authorized by all necessary
corporate action and will not result in any violation of the provisions of
the charter or by-laws (or similar organizational documents) of (A) the
Company or (B) any of its subsidiaries; or (iii) will not result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets, except in the case
of clauses (i) and (ii)(B) above as would not have a Material Adverse
Effect or interfere with the transactions contemplated by this Agreement.
For purposes of the Ownership Limit contained in the Company's charter,
ownership of the Notes will not be treated as
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ownership of the shares of Common Stock that are potentially issuable upon
conversion of the Notes, but any shares of Common Stock that are received
following a conversion will be subject to the Ownership Limit and the other
provisions of the Company's charter, and such shares would be subject to
the remedies for violation as contained in the Company's charter.
No consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets is required for the execution and delivery of and
performance its obligations under the Operative Documents by the Company,
the consummation of the transactions contemplated hereby or the application
of the proceeds from the sale of the Notes as described under "Use of
Proceeds" in the Disclosure Package and the Final Offering Memorandum,
except (i) with respect to the transactions contemplated by the
Registration Rights Agreement, as may be required under the Securities Act,
the Trust Indenture Act and the rules and regulations promulgated
thereunder, and (ii) such as have been obtained or made by the Company and
are in full force and effect under the Securities Act, applicable state
securities or blue sky laws and from the National Association of Securities
Dealers, Inc. (the "NASD").
(xx) No Stamp or Transfer Taxes. To the Company's knowledge, there are
no stamp or other issuance or transfer taxes or other similar fees or
charges under federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution
and delivery of this Agreement or the issuance by the Company or sale by
the Company of the Notes or upon the issuance of Common Stock upon the
conversion thereof.
(xxi) No Material Actions or Proceedings. Except as otherwise
disclosed in the Disclosure Package and the Final Offering Memorandum,
there are no legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is the subject that could, in the
aggregate, reasonably be expected to have a Material Adverse Effect or
could, in the aggregate, reasonably be expected to have a material adverse
effect on the performance of this Agreement or the consummation of the
transactions contemplated hereby; and to the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
others.
(xxii) Labor Matters. Neither the Company nor any of its subsidiaries
has any employees.
(xxiii) Intellectual Property Rights. The Company and each of its
subsidiaries own or possess adequate license or other rights to use all
patents, trademarks, service marks, trade names, copyrights, software and
design licenses, trade secrets, and other intangible property rights
(collectively, "Intangibles") necessary to entitle the Company and each of
its subsidiaries to conduct their respective businesses as described in the
Disclosure Package and the Final Offering Memorandum except where the
failure to own or possess such licenses or rights would not in the
aggregate have a Material Adverse Effect, and neither the Company nor any
subsidiary has received written notice of any infringement of or conflict
with (and the Company does not know of any such infringement of or conflict
with) asserted rights of others with respect to any Intangibles that would
have a Material Adverse Effect.
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(xxiv) All Necessary Permits, etc. The Company and each of its
subsidiaries have such permits, licenses, franchises, certificates and
other approvals or authorizations of governmental or regulatory authorities
("Permits") as are necessary under applicable law to own their properties
and conduct their businesses in the manner described in the Disclosure
Package and the Final Offering Memorandum, except for any of the foregoing
that could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect; each of the Company and its subsidiaries has fulfilled and
performed all of its obligations with respect to the Permits, except where
the failure to fulfill or perform would not have a Material Adverse Effect,
and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other
impairment of the rights of the holder or any such Permits, except for any
of the foregoing that could not reasonably be expected to have a Material
Adverse Effect.
(xxv) Title to Properties. The Company and its subsidiaries have good
and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case free
and clear of any and all Liens except such as are described in the
Disclosure Package and the Final Offering Memorandum or such as would not
have, individually or in the aggregate, a Material Adverse Effect; and any
real property and buildings held under lease or sublease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material to, and do not materially
interfere with, the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries. Neither the Company nor any
subsidiary has received any notice of any claim adverse to its ownership of
any real or personal property or of any claim against the continued
possession of any real property, whether owned or held under lease or
sublease by the Company or any subsidiary.
(xxvi) Tax Law Compliance. The Company and each subsidiary have
accurately prepared in all material respects and timely filed all federal,
state, foreign and other tax returns that are required to be filed by it
and have paid or made provision for the payment of all taxes, assessments,
governmental or other similar charges, including without limitation, all
sales and use taxes and all taxes which the Company or any subsidiary is
obligated to withhold from amounts owing to employees, creditors and third
parties, with respect to the periods covered by such tax returns (whether
or not such amounts are shown as due on any tax return), except, in all
cases, for any such amounts that the Company is contesting in good faith
and except in any case in which the failure to so prepare, file or pay
would not in the aggregate have a Material Adverse Effect. No deficiency
assessment with respect to a proposed adjustment of the Company's or any
subsidiary's federal, state, local or foreign taxes is pending or, to the
Company's knowledge, threatened, which could reasonably be expected in the
aggregate to have a Material Adverse Effect. There is no tax lien, whether
imposed by any federal, state, foreign or other taxing authority,
outstanding against the assets, properties or business of the Company or
any subsidiary, except for any such liens that would not, individually or
in the aggregate, have a Material Adverse Effect.
(xxvii) Company Not an "Investment Company". The Company is not, and
after receipt of payment for the Notes and application of the proceeds
therefrom as described under "Use of Proceeds" in the Disclosure Package
and the Final Offering Memorandum will not be, an "investment company"
within the meaning of the
8
Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder.
(xxviii) Compliance with Reporting Requirements. The Company is
subject to and in full compliance with the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act.
(xxix) Insurance. Except as otherwise disclosed in the Disclosure
Package and the Final Offering Memorandum, the Company and its significant
subsidiaries are insured by recognized, financially sound and reputable
institutions with policies in such amounts and with such deductibles and
covering such risks as are generally deemed adequate and customary for
their businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company and its significant
subsidiaries against theft, damage, destruction, acts of terrorism or
vandalism and earthquakes, it being understood that the only insurance held
by the Company and its significant subsidiaries are directors and officers
insurance policies. The Company and its subsidiaries are in compliance with
the terms of such policies and instruments in all material respects. None
of the Company nor any of its significant subsidiaries has reason to
believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect. Within the past twelve
months, neither the Company nor any of it significant subsidiaries has been
denied any insurance coverage that it has sought or for which it has
applied.
(xxx) No Restriction on Distributions. No significant subsidiary of
the Company is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution on such
subsidiary's capital stock, from repaying to the Company any loans or
advances to such subsidiary from the Company or from transferring any of
such subsidiary's property or assets to the Company or any other subsidiary
of the Company, except as described in or contemplated by the Disclosure
Package and the Final Offering Memorandum.
(xxxi) No Price Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action designed to or
that has constituted or that could reasonably be expected to cause or
result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Notes. The Company
acknowledges that the Initial Purchasers may engage in passive market
making transactions in the Common Stock on the New York Stock Exchange in
accordance with Regulation M under the Exchange Act.
(xxxii) Related Party Transactions. No relationship, direct or
indirect, exists between or among the Company, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company,
on the other hand, that is required to be described by the Securities Act,
Exchange Act or the rules and regulations thereunder in the Disclosure
Package or the Final Offering Memorandum which is not so described.
(xxxiii) No General Solicitation. Assuming the accuracy of
representations and covenants of the Initial Purchasers herein, none of the
Company or any of its affiliates (as defined in Rule 501(b) of Regulation D
under the Securities Act of 1933, as amended ("Regulation D")), has,
directly or through an agent, engaged in any form of general
9
solicitation or general advertising in connection with the offering of the
Notes or the Conversion Shares (as those terms are used in Regulation D)
under the Securities Act or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act; the Company has
not entered into any contractual arrangement with respect to the
distribution of the Notes or the Conversion Shares except for this
Agreement, and the Company will not enter into any such arrangement except
for the Registration Rights Agreement and as may be contemplated thereby.
(xxxiv) No Unlawful Contributions or Other Payments. Neither the
Company nor any of its subsidiaries, nor, to the knowledge of the Company,
any director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries, has, while
acting on behalf of the Company or any of its subsidiaries, (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; or (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended,
and the rules and regulations thereunder.
(xxxv) No Conflict with Money Laundering Laws. (i) To the best of the
Company's knowledge, the operations of the Company and its subsidiaries
are, and have been conducted at all times, in compliance with applicable
financial recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency (collectively,
the "Money Laundering Laws") and (ii) no action, suit or proceeding by or
before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries with respect to
the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.
(xxxvi) No Conflict with OFAC Laws. Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director, officer,
agent or affiliate of the Company or any of its subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department ("OFAC"); and the Company will not
directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(xxxvii) Compliance with Environmental Laws. The Company and each of
its subsidiaries are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances
or wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses
or approvals would not, singly or in the aggregate, have a Material Adverse
Effect.
10
(xxxviii) Costs of Environmental Compliance. There are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(xxxix) No Outstanding Loans or Other Indebtedness. There are no
outstanding loans, advances (except normal advances for business expenses
in the ordinary course of business) or guarantees or indebtedness by the
Company to or for the benefit of any of the officers or directors of the
Company or any of the members of any of their families, except as disclosed
in the Disclosure Package and the Final Offering Memorandum.
(xl) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Compliance. There is and has been no failure on
the part of the Company, and to the Company's knowledge, any of the
Company's directors or officers, in their capacities as such, to comply
with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and
regulations promulgated in connection therewith.
(xli) Internal Controls and Procedures. The Company maintains a system
of internal control over financial reporting (as such term is defined in
Rule 13a-15(f) under the Exchange Act) that complies with the requirements
of the Exchange Act and has been designed by the Company's principal
executive officer and principal financial officer, or under their
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles. The Company's internal control over financial reporting is
effective and the Company is not aware of any material weaknesses in its
internal control over financial reporting. Since the date of the latest
audited financial statements included or incorporated by reference in the
Disclosure Package and the Final Offering Memorandum, there has been no
change in the Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
(xlii) Disclosure Controls. The Company maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) under the
Exchange Act) that comply with the requirements of the Exchange Act; such
disclosure controls and procedures have been designed to ensure that
material information relating to the Company and its subsidiaries is made
known to the Company's principal executive officer and principal financial
officer by others within those entities; and such disclosure controls and
procedures are effective to perform the functions for which they were
established.
(xliii) Stock Options. Except as described in each of the Disclosure
Package and the Offering Memorandum, with respect to the stock options (the
"Stock Options") granted pursuant to the stock-based compensation plans of
the Company and its subsidiaries (the "Company Stock Plans"), (i) each
Stock Option designated by the Company or the relevant subsidiary of the
Company at the time of grant as an "incentive stock option" under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), so
qualifies, (ii) each grant of a Stock Option was duly authorized no later
than the date on which the grant of such Stock Option was by its terms to
be effective (the "Grant Date") by all necessary corporate action,
including, as applicable, approval by the
11
board of directors of the Company or the relevant subsidiary of the Company
(or a duly constituted and authorized committee thereof) and any required
stockholder approval by the necessary number of votes or written consents,
and the award agreement governing such grant (if any) was duly executed and
delivered by each party thereto, (iii) each such grant was made in
accordance with the terms of the Company Stock Plans, the Exchange Act and
all other applicable laws and regulatory rules or requirements, including
the rules of the New York Stock Exchange and any other exchange on which
the securities of the Company or the relevant subsidiary of the Company are
traded, (iv) the per share exercise price of each Stock Option was equal to
or greater than the fair market value of a share of Common Stock on the
applicable Grant Date and (v) each such grant was properly accounted for in
accordance with GAAP in the consolidated financial statements (including
the related notes) of the Company and disclosed in the Company's filings
with the Commission in accordance with the Exchange Act and all other
applicable laws. Neither the Company nor any of its subsidiaries has
knowingly granted, and there is no and has been no policy or practice of
the Company or any of its subsidiaries of granting, Stock Options prior to,
or otherwise coordinating the grant of Stock Options with, the release or
other public announcement of material information regarding the Company or
its subsidiaries or their results of operations or prospects.
(xliv) Subsidiaries. The subsidiaries listed on Schedule E attached
hereto are the only significant subsidiaries of the Company as defined by
Rule 1-02 of Regulation S-X.
(xlv) Lending Relationship. Except as disclosed in the Disclosure
Package and the Final Offering Memorandum, the Company does not have any
material lending or other relationship with any bank or lending affiliate
of any Initial Purchaser.
(xlvi) PORTAL. The Company has been advised by the NASD's PORTAL
Market that the Notes have been designated PORTAL-eligible securities in
accordance with the rules and regulations of the NASD.
(xlvii) REIT Status. The Company has been, and upon the sale of the
Notes pursuant to this Agreement will continue to be, organized and
operated in conformity with the requirements for qualification and taxation
as a "real estate investment trust" ("REIT") under Sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the "Code"), for all
taxable years commencing with its taxable year ended December 31, 2004. The
proposed method of operation of the Company as described in the Disclosure
Package and the Final Offering Memorandum will enable the Company to
continue to meet the requirements for qualification and taxation as a REIT
under the Code. The Company currently intends to continue to operate in a
manner which would permit it to qualify as a real estate investment trust
under the Code.
(b) The Manager represents, warrants and covenants to each Initial
Purchaser as follows:
(i) The Manager has been duly organized and is validly existing as a
corporation and is in good standing under the laws of Delaware. The Manager
is duly qualified to do business and is in good standing in each
jurisdiction in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in
good standing which would not in the aggregate have a material adverse
effect on the business, condition (financial or otherwise), results of
operations, properties
12
or prospects of the Manager and its subsidiaries, taken as a whole (a
"Manager Material Adverse Effect"). The Manager has all requisite power and
authority, and all necessary governmental licenses, to own, lease and
operate its properties and conduct its business as it is now being
conducted, except where the failure to possess such governmental licenses
will not in the aggregate have a Manager Material Adverse Effect.
(ii) This Agreement and the Amended and Restated Investment Advisory
Agreement dated as of March 15, 2007 between the Company and the Manager
(the "Management Agreement") have been duly and validly authorized,
executed and delivered by the Manager. The Management Agreement constitutes
a valid and binding agreement of the Manager, enforceable in accordance
with its terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other
laws affecting enforcement of creditors' rights or by general equitable
principles.
(iii) Except as described in the Disclosure Package and the Final
Offering Memorandum, there are no legal or governmental proceedings to
which the Manager or any of its subsidiaries is a party, or of which any
property of the Manager or any of its subsidiaries is the subject which,
singularly or in the aggregate, if determined adversely to the Manager or
any of its subsidiaries, are reasonably likely to have a Material Adverse
Effect, and to the best of the Manager's knowledge, no such proceedings are
overtly threatened or contemplated by governmental authorities or overtly
threatened or contemplated by others.
(iv) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency having jurisdiction over the Manager is necessary or
required for the performance by the Manager of its obligations hereunder
which has not been obtained or made or the failure of which to have been
obtained or made in the aggregate would not have a Material Adverse Effect.
Any certificate signed by an officer of the Company or the Manager and
delivered to the Representatives or to counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company or the Manager to
each Initial Purchaser as to the matters set forth therein.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE NOTES
(a) The Firm Notes. The Company agrees to issue and sell to the several
Initial Purchasers the Firm Notes upon the terms herein set forth. On the basis
of the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Initial Purchasers
agree, severally and not jointly, to purchase from the Company the respective
principal amount of Firm Notes set forth opposite their names on Schedule A at a
purchase price of 97% of the aggregate principal amount thereof.
(b) The Closing Date. Delivery of the Firm Notes to be purchased by the
Initial Purchasers and payment therefor shall be made at the offices of ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or such other place
as may be agreed to by the Company and the Representatives) at 9:00 a.m. New
York City time, on August 29, 2007, or such other time and date not later than
September 12, 2007 as the Representatives shall designate by notice to the
Company (the time and date of such closing are called the "Closing Date").
13
(c) The Optional Notes; Any Subsequent Closing Date. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Initial Purchasers to purchase, severally
and not jointly, up to $20,000,000 aggregate principal amount of Optional Notes
from the Company at the same price as the purchase price to be paid by the
Initial Purchasers for the Firm Notes. The option granted hereunder may be
exercised at any time and from time to time upon notice by the Representatives
to the Company, which notice may be given at any time within 13 days from the
date of this Agreement. Such notice shall set forth (i) the amount (which shall
be an integral multiple of $1,000 in aggregate principal amount) of Optional
Notes as to which the Initial Purchasers are exercising the option, (ii) the
names and denominations in which the Optional Notes are to be registered and
(iii) the time, date and place at which such Notes will be delivered (which time
and date may be simultaneous with, but not earlier than, the Closing Date; and
in such case the term "Closing Date" shall refer to the time and date of
delivery of the Firm Notes and the Optional Notes). Such time and date of
delivery, if subsequent to the Closing Date, is called a "Subsequent Closing
Date" and shall be determined by the Representatives. Such date may be the same
as the Closing Date but not earlier than the Closing Date nor later than 10
business days after the date of such notice. If any Optional Notes are to be
purchased, each Initial Purchaser agrees, severally and not jointly, to purchase
the principal amount of Optional Notes (subject to such adjustments to eliminate
fractional amount as the Representatives may determine) that bears the same
proportion to the total principal amount of Optional Notes to be purchased as
the principal amount of Firm Notes set forth on Schedule A opposite the name of
such Initial Purchaser bears to the total principal amount of Firm Notes.
(d) Payment for the Notes. Payment for the Notes shall be made at the
Closing Date (and, if applicable, at any Subsequent Closing Date) by wire
transfer of immediately available funds to the order of the Company.
It is understood that the Representatives have been authorized, for their
own account and the accounts of the several Initial Purchasers, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Notes and any Optional Notes the Initial Purchasers have agreed to
purchase. BAS, individually and not as the Representative of the Initial
Purchasers, may (but shall not be obligated to) make payment for any Notes to be
purchased by any Initial Purchaser whose funds shall not have been received by
the Representatives by the Closing Date or any Subsequent Closing Date, as the
case may be, for the account of such Initial Purchaser, but any such payment
shall not relieve such Initial Purchaser from any of its obligations under this
Agreement.
(e) Delivery of the Notes. The Company shall deliver, or cause to be
delivered, to the Representatives for the accounts of the several Initial
Purchasers the Firm Notes at the Closing Date, against the irrevocable release
of a wire transfer of immediately available funds for the amount of the purchase
price therefor. The Company shall also deliver, or cause to be delivered, to the
Representatives for the accounts of the several Initial Purchasers, the Optional
Notes the Initial Purchasers have agreed to purchase at the Closing Date or any
Subsequent Closing Date, as the case may be, against the irrevocable release of
a wire transfer of immediately available funds for the amount of the purchase
price therefor. Delivery of the Notes shall be made through the facilities of
The Depository Trust Company unless the Representatives shall otherwise
instruct. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Initial Purchasers.
14
SECTION 3. COVENANTS OF THE COMPANY
The Company covenants and agrees with each Initial Purchaser as follows:
(a) Representatives' Review of Proposed Amendments and Supplements. During
such period beginning on the date hereof and ending on the date of the
completion of the resale of the Notes by the Initial Purchasers (as notified by
the Initial Purchasers to the Company), prior to amending or supplementing the
Disclosure Package or the Final Offering Memorandum, the Company shall furnish
to the Representatives for review a copy of each such proposed amendment or
supplement, and the Company shall not print, use or distribute such proposed
amendment or supplement to which the Representatives reasonably object.
(b) Amendments and Supplements to the Offering Memorandum and Other
Securities Act Matters. If, at any time prior to the completion of the resale of
the Notes by the Initial Purchasers (as notified by the Initial Purchasers to
the Company), any event or development shall occur or condition exist as a
result of which it is necessary to amend or supplement the Disclosure Package or
the Final Offering Memorandum in order that the Disclosure Package or the Final
Offering Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made or then prevailing,
as the case may be, not misleading, or if in the opinion of the Representatives
it is otherwise necessary to amend or supplement the Disclosure Package or the
Final Offering Memorandum to comply with law, the Company shall promptly notify
the Initial Purchasers and prepare, subject to Section 3(a) hereof, such
amendment or supplement as may be necessary to correct such untrue statement or
omission.
(c) Copies of Disclosure Package and the Offering Memorandum. The Company
agrees to furnish to the Representatives, without charge, until the earlier of
nine months after the date hereof or the completion of the resale of the Notes
by the Initial Purchasers (as notified by the Initial Purchasers to the Company)
as many copies of the materials contained in the Disclosure Package and the
Final Offering Memorandum and any amendments and supplements thereto as the
Representatives may request.
(d) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Initial Purchasers, as the Initial
Purchasers may reasonably request from time to time, to qualify or register the
Notes for sale under (or obtain exemptions from the application of) the state
securities or blue sky laws or Canadian provincial securities laws of those
jurisdictions designated by the Representatives, shall comply with such laws and
shall continue such qualifications, registrations and exemptions in effect so
long as required for the distribution of the Notes. The Company shall not be
required to qualify as a foreign corporation or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not presently qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise the Representatives promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Notes for offering, sale or trading in any jurisdiction or any
initiation or threat of any proceeding for any such purpose, and in the event of
the issuance of any order suspending such qualification, registration or
exemption, the Company shall use its best efforts to obtain the withdrawal
thereof at the earliest possible moment.
(e) Rule 144A Information. For so long as any of the Notes are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act of
1933, as amended, the Company shall provide to any holder of the Notes or to any
prospective purchaser of the Notes designated by any holder, upon request of
such holder or prospective purchaser, information required to be
15
provided by Rule 144A(d)(4) of the Securities Act of 1933, as amended, if, at
the time of such request, the Company is not subject to the reporting
requirements under Section 13 or 15(d) of the Exchange Act.
(f) Compliance with Securities Law. The Company will comply with all
applicable securities and other laws, rules and regulations, including, without
limitation, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and use its best efforts to cause the
Company's directors and officers, in their capacities as such, to comply with
such laws, rules and regulations, including, without limitation, the provisions
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(g) Legends. Each of the Notes will bear, to the extent applicable, the
legend contained in "Notice to Investors; Transfer Restrictions" in the
Disclosure Package and the Final Offering Memorandum for the time period and
upon the other terms stated therein.
(h) Written Information Concerning the Offering. Without the prior written
consent of the Representatives, the Company will not give to any prospective
purchaser of the Notes or any other person not in its employ any written
information concerning the offering of the Notes other than the Disclosure
Package, the Final Offering Memorandum or any other offering materials prepared
by or with the prior consent of the Representatives.
(i) No General Solicitation. Except following the effectiveness of the
Registration Statement, the Company will not, and will cause its subsidiaries
not to, solicit any offer to buy or offer to sell the Notes by means of any form
of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act of 1933, as amended) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act.
(j) No Integration. The Company will not, and will cause its subsidiaries
not to, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Securities Act) in a transaction
that could be integrated with the sale of the Notes in a manner that would
require the registration under the Securities Act of the Notes.
(k) Information to Publishers. Any information provided by the Company to
publishers of publicly available databases about the terms of the Notes and the
Indenture shall include a statement that the Notes have not been registered
under the Act and are subject to restrictions under Rule 144A of the Securities
Act of 1933, as amended.
(l) DTC. The Company will cooperate with the Representatives and use its
best efforts to permit the Notes to be eligible for clearance and settlement
through The Depository Trust Company.
(m) Rule 144 Tolling. During the period of two years after the last Closing
Date, the Company will not, and will not permit any of its "affiliates" (as
defined in Rule 144 under the Securities Act of 1933, as amended) to, resell any
of the Notes that constitute "restricted securities" under Rule 144 that have
been reacquired by any of them.
(n) Use of Proceeds. The Company shall apply the net proceeds from the sale
of the Notes sold by it in the manner described under the caption "Use of
Proceeds" in the Disclosure Package and the Final Offering Memorandum.
16
(o) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Common Stock.
(p) Available Conversion Shares. The Company will keep available at all
times, free of pre-emptive rights, the full number of Conversion Shares.
(q) Conversion Price. Between the date hereof and the Closing Date, the
Company will not do or authorize any act or thing that would result in an
adjustment of the conversion price.
(r) Company to Provide Interim Financial Statements and Other Information.
Prior to the Closing Date, the Company will furnish the Initial Purchasers, as
soon as they have been prepared by or are available to the Company, a copy of
any unaudited interim financial statements of the Company for any period
subsequent to the period covered by the most recent financial statements
appearing in the Disclosure Package and the Final Offering Memorandum.
(s) Agreement Not to Offer or Sell Additional Securities. During the period
commencing on the date hereof and ending on the 60th day following the date of
the Final Offering Memorandum (the "Lock-Up Period"), the Company will not,
without the prior written consent of the Representatives (which consent may be
withheld at the sole discretion of the Representatives), directly or indirectly,
sell, offer, contract or grant any option to sell, pledge, transfer or establish
an open "put equivalent position" or liquidate or decrease a "call equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer (or enter into any transaction that is designed
to, or might reasonably be expected to, result in the disposition of), or
announce the offering of, or file any registration statement under the
Securities Act in respect of, any shares of Common Stock, options or warrants to
acquire shares of the Common Stock or securities exchangeable or exercisable for
or convertible into shares of Common Stock (other than as contemplated by this
Agreement and the Registration Rights Agreement with respect to the Notes and
the Conversion Shares); provided, however, that the foregoing restrictions do
not apply to (i) shares of Common Stock issued upon the exercise of options
granted under stock option plans existing on the date hereof, (ii) grants of
Common Stock, restricted common stock or restricted stock units in accordance
with the terms of a plan in effect on the date hereof, (iii) shares of Common
Stock (or options, warrants or convertible securities relating to shares of
Common Stock) issued in connection with a bona fide merger or acquisition
transaction, (iv) the offer, issuance or sale of securities pursuant to the
Company's Dividend Reinvestment and Stock Purchase Plan existing on the date
hereof (the "DRIP") (provided that the Company agrees not to permit investments
greater than $20,000 by any single investor under the DRIP during the Lock-Up
Period) or (v) shares of Common Stock issued pursuant to the Management
Agreement.
(t) Future Reports to Stockholders. The Company will make available to its
stockholders as soon as practicable after the end of each fiscal year an annual
report (including a balance sheet and statements of income, stockholders' equity
and cash flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the date of the Final Offering Memorandum), to make
available to its stockholders consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail.
(u) Future Reports to the Representatives. Except as are available at
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇, during the period of five years after the Closing Date the
Company will furnish to the Representatives at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (i) as soon as
17
practicable after the end of each fiscal year, copies of the annual report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
or certified public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other report filed by the
Company with the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
(v) Investment Limitation. The Company shall not invest or otherwise use
the proceeds received by the Company from its sale of the Notes in such a manner
as would require the Company or any of its subsidiaries to register as an
investment company under the Investment Company Act.
(w) No Manipulation of Price. The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any securities of
the Company to facilitate the sale or resale of the Notes.
(x) New Lock-Up Agreements. The Company will enforce all agreements between
the Company and any of its security holders to be entered into pursuant to this
Agreement that prohibit the sale, transfer, assignment, pledge or hypothecation
of any of the Company's securities. In addition, the Company will direct the
transfer agent to place stop transfer restrictions upon any such securities of
the Company that are bound by such "lock-up" agreements for the duration of the
periods contemplated in such agreements.
(y) Final Term Sheet. The Company will prepare or cause to be prepared a
final term sheet, containing solely a description of the Notes and the offering
thereof, in the form approved by you and attached as Schedule B hereto (the
"Final Term Sheet").
SECTION 4. PAYMENT OF EXPENSES
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Notes (including all
printing and engraving costs), (ii) all fees and expenses of the Trustee under
the Indenture, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Notes to the Initial Purchasers,
(iv) all fees and expenses of the Company's counsel, independent public or
certified public accountants and other advisors, (v) all costs and expenses
incurred in connection with the preparation, printing, shipping and distribution
of the materials contained in the Disclosure Package, including the Preliminary
Offering Memorandum, and the Final Offering Memorandum, all amendments and
supplements thereto and this Agreement, (vi) all filing fees, attorneys' fees
and expenses incurred by the Company or the Initial Purchasers in connection
with qualifying or registering (or obtaining exemptions from the qualification
or registration of) all or any part of the Notes for offer and sale under the
state securities or blue sky laws, and, if requested by the Representatives,
preparing and printing a "Blue Sky Survey" or memorandum, and any supplements
thereto, advising the Initial Purchasers of such qualifications, registrations
and exemptions, (vii) the expenses of the Company and the Initial Purchasers in
connection with the marketing and offering of the Notes, including all
transportation and other expenses incurred in connection with presentations to
prospective purchasers of the Notes, (viii) the fees and expenses associated
with listing the Conversion Shares
18
on the New York Stock Exchange and (ix) all expenses and fees in connection with
admitting the Notes for trading in the PORTAL Market. Except as provided in this
Section 4, Section 7, Section 10 and Section 11 hereof, the Initial Purchasers
shall pay their own expenses, including the fees and disbursements of their
counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL PURCHASERS
The obligations of the several Initial Purchasers to purchase and pay for
the Notes as provided herein on the Closing Date and, with respect to the
Optional Notes, any Subsequent Closing Date, shall be subject to the accuracy of
the representations, warranties and agreements on the part of the Company and
the Manager set forth in Section 1 hereof as of the date hereof and as of the
Closing Date as though then made and, with respect to the Optional Notes, as of
the related Subsequent Closing Date as though then made, to the accuracy of the
statements of the Company and the Manager made in any certificates pursuant to
the provisions hereof, to the timely performance by the Company and the Manager
of its covenants and other obligations hereunder, and to each of the following
additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Representatives
shall have received from Deloitte & Touche LLP, independent public accountants
for the Company, a letter dated the date hereof addressed to the Initial
Purchasers, in form and substance satisfactory to the Representatives (i)
confirming that they are an independent registered public accounting firm within
the meaning of the Securities Act and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Disclosure
Package, as of a date not more than three days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants' "comfort letters" to
initial purchasers in connection with similar transactions.
(b) No Material Adverse Change or Rating Agency Change. For the period from
and after the date of this Agreement and prior to the Closing Date and, with
respect to the Optional Notes, any Subsequent Closing Date:
(i) in the judgment of the Representatives there shall not have
occurred any Material Adverse Change;
(ii) there shall not have been any change or decrease specified in the
letter or letters referred to in paragraph (a) of this Section 5 which is,
in the sole judgment of the Representatives, so material and adverse as to
make it impractical or inadvisable to proceed with the offering or delivery
of the Notes as contemplated by the Disclosure Package and the Final
Offering Memorandum; and
(iii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of the Company or
any of its subsidiaries by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act of 1933, as amended.
(c) Opinion of New York Counsel for the Company. On each of the Closing
Date and any Subsequent Closing Date, the Representatives shall have received
the favorable opinions and
19
letter of ▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, New York counsel for the
Company, dated as of such Closing Date, in form and substance reasonably
satisfactory to the Representatives.
(d) Opinion of Maryland Counsel for the Company. On each of the Closing
Date and any Subsequent Closing Date, the Representatives shall have received
the favorable opinion of ▇▇▇▇▇ & Stockbridge P.C., Maryland counsel for the
Company, dated as of such Closing Date, in form and substance reasonably
satisfactory to the Representatives.
(e) Opinion of Counsel for the Initial Purchasers. On each of the Closing
Date and any Subsequent Closing Date, the Representatives shall have received
the favorable opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Initial
Purchasers, dated as of such Closing Date, in form and substance satisfactory
to, and addressed to, the Representatives, with respect to the issuance and sale
of the Notes, the Registration Statement, the Disclosure Package, the
Preliminary Offering Memorandum, the Final Offering Memorandum and such other
related matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(f) Officers' Certificate from the Company. On each of the Closing Date and
any Subsequent Closing Date, the Representatives shall have received a written
certificate executed by the Chief Executive Officer or President of the Company
and the Chief Financial Officer or Chief Accounting Officer of the Company,
dated as of such Closing Date, to the effect that the signers of such
certificate have carefully examined the Disclosure Package, including the
Preliminary Offering Memorandum, and the Final Offering Memorandum, any
amendments or supplements thereto and this Agreement, to the effect set forth in
subsection (b)(iii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement and prior
to such Closing Date or such Subsequent Closing Date, as the case may be,
there has not occurred any Material Adverse Change;
(ii) the representations and warranties of the Company set forth in
Section 1(a) of this Agreement are true and correct on and as of the
Closing Date or the Subsequent Closing Date, as the case may be, with the
same force and effect as though expressly made on and as of such Closing
Date or such Subsequent Closing Date, as the case may be; and
(iii) the Company has complied with all the agreements hereunder and
satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date or such Subsequent Closing Date,
as the case may be.
(g) Officers' Certificate from the Manager. On each of the Closing Date and
any Subsequent Closing Date, the Representatives shall have received a written
certificate executed by two Managing Directors of the Manager, dated as of such
Closing Date, to the effect that the signers of such certificate have carefully
examined the Disclosure Package, including the Preliminary Offering Memorandum,
and the Final Offering Memorandum, any amendments or supplements thereto and
this Agreement, to the effect that:
(i) for the period from and after the date of this Agreement and prior
to such Closing Date or such Subsequent Closing Date, as the case may be,
there has not occurred any material adverse change in the condition
(financial or otherwise), or in the results of operations, properties,
business or prospects of the Manager and its subsidiaries
20
taken as a whole that could reasonably be expected in the aggregate to have
a Manager Material Adverse Effect;
(ii) the representations and warranties of the Manager set forth in
Section 1(b) of this Agreement are true and correct on and as of the
Closing Date or the Subsequent Closing Date, as the case may be, with the
same force and effect as though expressly made on and as of such Closing
Date or such Subsequent Closing Date, as the case may be; and
(iii) the Manager has complied with all the agreements hereunder and
satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date or such Subsequent Closing Date,
as the case may be.
(h) Bring-down Comfort Letter. On each of the Closing Date and any
Subsequent Closing Date, the Representatives shall have received from Deloitte &
Touche LLP, independent public accountants for the Company, a letter dated such
date, in form and substance satisfactory to the Representatives, to the effect
that they reaffirm the statements made in the letter furnished by them pursuant
to subsection (a) of this Section 5, except that the specified date referred to
therein for the carrying out of procedures shall be no more than three business
days prior to the Closing Date or Subsequent Closing Date, as the case may be.
(i) Registration Rights Agreement. The Company and the Initial Purchasers
shall have executed and delivered the Registration Rights Agreement (in form and
substance satisfactory to the Initial Purchasers), and the Registration Rights
Agreement shall be in full force and effect.
(j) Lock-Up Agreement from Certain Security Holders of the Company. On or
prior to the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of Exhibit B hereto from the Manager
and the officers and directors of the Company as set forth on Schedule D hereto,
and such agreement shall be in full force and effect on each of the Closing Date
and any Subsequent Closing Date.
(k) PORTAL Designation. The Notes shall have been designated
PORTAL-eligible securities in accordance with the rules and regulations of the
NASD.
(l) The Company shall have caused the Conversion Shares to be approved for
listing, subject to issuance, on the New York Stock Exchange.
(m) Additional Documents. On or before each of the Closing Date and any
Subsequent Closing Date, the Representatives and counsel for the Initial
Purchasers shall have received such information, documents and opinions as they
may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Notes as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the Closing
Date and, with respect to the Optional Notes, at any time prior to the
applicable Subsequent Closing Date, which termination shall be without liability
on the part of any party to any other party, except that Section 4, Section 7,
Section 8, Section 9 and Section 13 shall at all times be effective and shall
survive such termination.
21
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF INITIAL PURCHASERS
Each of the Initial Purchasers represents and warrants that it is a
"qualified institutional buyer", as defined in Rule 144A of the Securities Act
of 1933, as amended. Each Initial Purchaser agrees with the Company that:
(a) it has not offered or sold, and will not offer or sell, any Notes
within the United States or to, or for the account or benefit of, U.S. persons
(x) as part of their distribution at any time or (y) otherwise until one year
after the later of the commencement of the offering and the date of closing of
the offering except to those it reasonably believes to be "qualified
institutional buyers" (as defined in Rule 144A under the Act);
(b) neither it nor any person acting on its behalf has made or will make
offers or sales of the Notes in the United States by means of any form of
general solicitation or general advertising (within the meaning of Regulation D)
in the United States;
(c) in connection with each sale pursuant to Section 6(a), it has taken or
will take reasonable steps to ensure that the purchaser of such Notes is aware
that such sale is being made in reliance on Rule 144A;
(d) any information provided by the Initial Purchasers to publishers of
publicly available databases about the terms of the Notes and the Indenture
shall include a statement that the Notes have not been registered under the Act
and are subject to restrictions under Rule 144A under the Act;
(e) it acknowledges that additional restrictions on the offer and sale of
the Notes and the Common Stock issuable upon conversion thereof are described in
the Disclosure Package and the Final Offering Memorandum.
SECTION 7. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES
If this Agreement is terminated by the Representatives pursuant to Section
5, Section 10 or Section 11, or if the sale to the Initial Purchasers of the
Notes on the Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the
Representatives and the other Initial Purchasers (or such Initial Purchasers as
have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representatives and the Initial Purchasers in connection with the
proposed purchase and the offering and sale of the Notes, including but not
limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.
SECTION 8. INDEMNIFICATION
(a) Indemnification of the Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser, its directors, officers and
employees, agents, and each person, if any, who controls any Initial Purchaser
within the meaning of the Securities Act and the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which such Initial
Purchaser, director, officer, employee, agent or controlling person may become
subject, insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based upon any
untrue statement or alleged untrue
22
statement of a material fact contained in the Preliminary Offering Memorandum,
the Final Offering Memorandum, the Final Term Sheet, any Issuer Written
Information or any other written information that constitutes an offer to sell
or a solicitation of an offer to buy the Notes used by the Company, if any, in
connection with the offer or sale of the Notes (or any amendment or supplement
to the foregoing), or the omission or alleged omission therefrom of a material
fact, in each case, necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and to
reimburse each Initial Purchaser, its officers, directors, employees, agents and
each such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by the Representatives) as such expenses are
reasonably incurred by such Initial Purchaser, its officers, directors,
employees, agents or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Representatives expressly for use in the Preliminary Offering
Memorandum, the Final Offering Memorandum, the Final Term Sheet, any Issuer
Written Information or any other written information that constitutes an offer
to sell or a solicitation of an offer to buy the Notes used by the Company in
connection with the offer or sale of the Notes (or any amendment or supplement
to the foregoing). The indemnity agreement set forth in this Section 8(a) shall
be in addition to any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Initial Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Company, each of its directors, each of its officers and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, against any loss, claim, damage, liability or expense,
as incurred, to which the Company, or any such director, officer or controlling
person may become subject, insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum, the Final Offering Memorandum,
the Final Term Sheet, any Issuer Written Information or any other written
information that constitutes an offer to sell or a solicitation of an offer to
buy the Notes used by the Company in connection with the offer or sale of the
Notes (or any amendment or supplement to the foregoing), or arises out of or is
based upon the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, and only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Preliminary Offering
Memorandum, the Final Offering Memorandum, the Final Term Sheet, any Issuer
Written Information or any other written information that constitutes an offer
to sell or a solicitation of an offer to buy the Notes used by the Company in
connection with the offer or sale of the Notes (or any amendment or supplement
to the foregoing), in reliance upon and in conformity with written information
furnished to the Company by the Representatives expressly for use therein; and
to reimburse the Company, or any such director, officer or controlling person
for any legal and other expense reasonably incurred by the Company, or any such
director, officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The Company hereby acknowledges that the only
information that the Initial Purchasers have furnished to the Company expressly
for use in the Preliminary Offering Memorandum, the Final Offering Memorandum,
the Final Term Sheet, any Issuer Written Information or any other
23
written information that constitutes an offer to sell or a solicitation of an
offer to buy the Notes used by the Company in connection with the offer or sale
of the Notes (or any amendment or supplement to the foregoing) are the
statements set forth in Schedule C. The indemnity agreement set forth in this
Section 8(b) shall be in addition to any liabilities that each Initial Purchaser
may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the failure
to so notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a) or (b)
above. In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it shall elect, jointly with all other indemnifying parties similarly
notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel (other than local counsel),
reasonably approved by the indemnifying party (or by the Representatives in the
case of Section 8(b)), representing the indemnified parties who are parties to
such action) or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not be
liable for any settlement of any proceeding effected without its written
consent, which shall not be withheld unreasonably, but if settled with such
consent or if there is a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 8(c) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding
24
effected without its written consent if (i) such settlement is entered into more
than 30 days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent (x) includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding and (y) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
SECTION 9. CONTRIBUTION
If the indemnification provided for in Section 8 is for any reason
unavailable to or otherwise insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchasers, on the other hand, from
the offering of the Notes pursuant to this Agreement or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, on the one
hand, and the Initial Purchasers, on the other hand, in connection with the
statements or omissions or alleged statements or alleged omissions that resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Initial Purchasers, on the other hand, in
connection with the offering of the Notes pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of the Notes pursuant to this Agreement (before deducting expenses)
received by the Company, and the total discount received by the Initial
Purchasers bear to the aggregate initial offering price of the Notes. The
relative fault of the Company, on the one hand, and the Initial Purchasers, on
the other hand, shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company, on the one hand, or the Initial Purchasers, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Initial Purchaser
shall be required to contribute any amount in excess of the purchase discount or
commission received by such Initial Purchaser in connection with the Notes
purchased by it hereunder. No person guilty of fraudulent
25
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 9 are several, and not joint, in proportion to their
respective commitments as set forth opposite their names in Schedule A. For
purposes of this Section 9, each director, officer, employee and agent of an
Initial Purchaser and each person, if any, who controls an Initial Purchaser
within the meaning of the Securities Act and the Exchange Act shall have the
same rights to contribution as such Initial Purchaser, and each director of the
Company, each officer of the Company, and each person, if any, who controls the
Company within the meaning of the Securities Act and the Exchange Act shall have
the same rights to contribution as the Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL INITIAL PURCHASERS
If, on the Closing Date or any Subsequent Closing Date, as the case may be,
any one or more of the several Initial Purchasers shall fail or refuse to
purchase Notes that it or they have agreed to purchase hereunder on such date,
and the aggregate principal amount of Notes which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase does
not exceed 10% of the aggregate principal amount of the Notes to be purchased on
such date, the other Initial Purchasers shall be obligated, severally, in the
proportions that the principal amount of Firm Notes set forth opposite their
respective names on Schedule A bears to the aggregate principal amount of Firm
Notes set forth opposite the names of all such non-defaulting Initial
Purchasers, or in such other proportions as may be specified by the
Representatives with the consent of the non-defaulting Initial Purchasers, to
purchase the Notes which such defaulting Initial Purchaser or Initial Purchasers
agreed but failed or refused to purchase on such date. If, on the Closing Date
or any Subsequent Closing Date, as the case may be, any one or more of the
Initial Purchasers shall fail or refuse to purchase Notes and the aggregate
principal amount of Notes with respect to which such default occurs exceeds 10%
of the aggregate principal amount of Notes to be purchased on such date, and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Notes are not made within 48 hours after such default, this
Agreement shall terminate without liability of any party (other than a
defaulting Initial Purchaser) to any other party except that the provisions of
Section 4, Section 7, Section 8 and Section 9 shall at all times be effective
and shall survive such termination. In any such case either the Representatives
or the Company shall have the right to postpone the Closing Date or any
Subsequent Closing Date, as the case may be, but in no event for longer than
seven days in order that the required changes, if any, to the Final Offering
Memorandum or any other documents or arrangements may be effected.
As used in this Agreement, the term "Initial Purchaser" shall be deemed to
include any person substituted for a defaulting Initial Purchaser under this
Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Initial Purchaser from liability in respect of any default of such
Initial Purchaser under this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT
On or prior to the Closing Date this Agreement may be terminated by the
Representatives by notice given to the Company if at any time (i) trading or
quotation in any of the Company's securities shall have been suspended or
limited by the Commission or by the New York Stock Exchange, or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established by
the Commission or the NASD or on either such stock exchange; (ii) a general
banking moratorium shall have been declared by any federal or New York authority
or a material
26
disruption in commercial banking or securities settlement or clearance services
in the United States has occurred; or (iii) there shall have occurred any
outbreak or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States' or international political, financial or economic
conditions, as in the judgment of the Representatives is material and adverse
and makes it impracticable or inadvisable to market the Notes in the manner and
on the terms described in the Disclosure Package and the Final Offering
Memorandum or to enforce contracts for the sale of securities. Any termination
pursuant to this Section 11 shall be without liability on the part of (a) the
Company to any Initial Purchaser, except that the Company shall be obligated to
reimburse the expenses of the Representatives and the Initial Purchasers
pursuant to Sections 4 and 7 hereof or (b) any Initial Purchaser to the Company.
SECTION 12. NO ADVISORY OR FIDUCIARY RESPONSIBILITY
The Company acknowledges and agrees that: (i) the purchase and sale of the
Notes pursuant to this Agreement, including the determination of the offering
price of the Notes and any related discounts and commissions, is an arm's-length
commercial transaction between the Company, on the one hand, and the several
Initial Purchasers, on the other hand, and the Company is capable of evaluating
and understanding and understands and accepts the terms, risks and conditions of
the transactions contemplated by this Agreement; (ii) in connection with each
transaction contemplated hereby and the process leading to such transaction each
Initial Purchaser is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company or its affiliates,
stockholders, creditors or employees or any other party; (iii) no Initial
Purchaser has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Company with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether such
Initial Purchaser has advised or is currently advising the Company on other
matters) and no Initial Purchaser has any obligation to the Company with respect
to the offering contemplated hereby except the obligations expressly set forth
in this Agreement; (iv) the several Initial Purchasers and their respective
affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Company and that the several Initial
Purchasers have no obligation to disclose any of such interests by virtue of any
advisory, agency or fiduciary relationship; and (v) the Initial Purchasers have
not provided any legal, accounting, regulatory or tax advice with respect to the
offering contemplated hereby and the Company has consulted its own legal,
accounting, regulatory and tax advisors to the extent it deemed appropriate.
This Agreement supersedes all prior agreements and understandings (whether
written or oral) between the Company and the several Initial Purchasers, or any
of them, with respect to the subject matter hereof. The Company hereby waives
and releases, to the fullest extent permitted by law, any claims that the
Company may have against the several Initial Purchasers with respect to any
breach or alleged breach of agency or fiduciary duty.
27
SECTION 13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
The respective indemnities, contribution, agreements, representations,
warranties and other statements of the Company, of the Manager, of their
respective officers and of the several Initial Purchasers set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation, or statement as to the result hereof, made
by or on behalf of any Initial Purchaser or the Company or any of its or their
partners, officers, directors, employees, agents or any controlling person, as
the case may be, (ii) acceptance of the Notes and payment for them hereunder or
(iii) any termination of this Agreement.
SECTION 14. NOTICES
All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
Banc of America Securities LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Syndicate Department
with a copy to:
Banc of America Securities LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ECM Legal
Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Equity Capital Markets Syndicate
with a copy to:
Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: 212-797-4564
Attention: General Counsel
If to the Company:
Anthracite Capital, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
28
If to the Manager:
BlackRock Financial Management, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 15. SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the parties
hereto, including any substitute Initial Purchasers pursuant to Section 10
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8 and Section 9, and in each case
their respective successors, and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser of
the Notes as such from any of the Initial Purchasers merely by reason of such
purchase.
SECTION 16. PARTIAL UNENFORCEABILITY
The invalidity or unenforceability of any Section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
SECTION 17. GOVERNING LAW PROVISIONS
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
SECTION 18. GENERAL PROVISIONS
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto. The Section headings
herein are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
29
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.
Very truly yours,
ANTHRACITE CAPITAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Operating
Officer
BLACKROCK FINANCIAL MANAGEMENT, INC.,
solely with respect to Section 1(b)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
The foregoing Purchase Agreement is hereby confirmed and accepted by the
Representatives as of the date first above written.
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
Acting as Representatives of the
several Initial Purchasers named in
the attached Schedule A.
BANC OF AMERICA SECURITIES LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Authorized Representative
DEUTSCHE BANK SECURITIES INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Authorized Representative
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Authorized Representative
SCHEDULE A
AGGREGATE PRINCIPAL
AMOUNT OF FIRM NOTES
INITIAL PURCHASERS TO BE PURCHASED
Banc of America Securities LLC........................... $30,000,000
Deutsche Bank Securities Inc............................. 30,000,000
-----------
Total................................................. $60,000,000
===========
Schedule A-1
SCHEDULE B
ANTHRACITE CAPITAL, INC.
$60,000,000
SENIOR CONVERTIBLE NOTES
DUE 2027
PRICING SHEET
SECURITY INFORMATION
-----------------------------------------------------------------------------------------------
Company name Anthracite Capital, Inc.
Common stock ticker NYSE: "AHR"
Security Senior Convertible Notes
Registration format 144A with Registration Rights
CUSIP ▇▇▇▇▇▇▇▇▇
ISIN US037023AG31
Ranking Senior unsecured
INITIAL PURCHASERS ECONOMICS
-----------------------------------------------------------------------------------------------
Joint book-running managers Banc of America Securities 50.00%
Deutsche Bank Securities 50.00%
Gross spread 3.00%
ISSUANCE SIZE
-----------------------------------------------------------------------------------------------
BONDS PROCEEDS
Base deal 60,000 $60,000,000
Initial purchasers option (13-day) 20,000 $20,000,000
------ -----------
Total 80,000 $80,000,000
TERMS
-----------------------------------------------------------------------------------------------
Par amount per bond $1,000
Issue price $1,000
Coupon 11.750%
Conversion premium 17.50%
Last sale of common $9.18
Conversion price (approximate) $10.79
Conversion rate 92.7085
Contingent conversion threshold 130.00%
Contingent conversion price
(approximate) $14.02
CALL SCHEDULE
-----------------------------------------------------------------------------------------------
Call date 9/1/2012
Call price $1,000
PUT SCHEDULE
-----------------------------------------------------------------------------------------------
Put dates 9/1/2012, 9/1/2017, 9/1/2022
Put price $1,000
Schedule B-1
DATES
-----------------------------------------------------------------------------------------------
Trade date 08/24/07
Settlement date 08/29/07
Maturity 20 Years
Maturity date 9/1/2027
Coupon payment dates 03/01, 9/01
First coupon date 3/1/2008
NET PROCEEDS
-----------------------------------------------------------------------------------------------
Net Proceeds $57.925 million
(We estimate that the net proceeds from this offering will be approximately $77.325 million
if the initial purchasers exercise in full their option to purchase additional notes).
Share repurchase (approximate) $12 million
Shares repurchased 1.307189 million
-----------------------------------------------------------------------------------------------
The notes and the common stock issuable upon conversion of the notes have not
been registered under the Securities Act of 1933, as amended, or any other state
securities laws. Unless they are registered, the notes and the common stock
issuable upon conversion of the notes may be offered only in transactions exempt
from or not subject to registration under the Securities Act of 1933, as
amended, or any other state securities laws. Accordingly, we are offering the
notes only to qualified institutional buyers under Rule 144A.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy securities nor shall there be any sale of these securities in
any state in which such solicitation or sale would be unlawful prior to
registration or qualification of these securities under the laws of any such
state.
A copy of the offering memorandum for the offering of the convertible notes may
be obtained by contacting Banc of America Securities LLC Capital Markets
(Prospectus Fulfillment) by email to
▇▇.▇▇▇▇▇▇▇▇▇▇_▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇.▇▇▇
or by mail to Banc of America Securities LLC, Capital Markets Operations, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ or from the offices of Deutsche
Bank Securities Inc. by writing to Deutsche Bank Securities Prospectus
Department, ▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ or by calling
▇▇▇-▇▇▇-▇▇▇▇.
MAKE-WHOLE TABLE
Additional shares delivered upon conversion upon certain Fundamental Changes
ASSUMPTIONS
------------------
Stock price $9.18
Conversion premium 17.50%
Conversion price $10.79
Face value $1,000.00
Conversion rate 92.7085
Make-whole premium upon a change of control (as adjustment to conversion rate)
EFFECTIVE DATE $9.18 $10.00 $10.79 $12.00 $14.00 $16.00 $18.00 $20.00 $25.00 $30.00 $40.00
-------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
August 23, 2007 16.2239 12.2915 9.1451 5.8748 3.0558 1.7040 0.9971 0.6315 0.3715 0.3582 0.1140
September 1, 2008 16.2239 12.2415 9.0802 5.7998 2.9915 1.6228 0.9637 0.6165 0.3315 0.2582 0.0000
September 1, 2009 16.2239 12.0915 8.9134 5.5665 2.7129 1.5165 0.9304 0.4665 0.3235 0.1948 0.0000
September 1, 2010 16.2239 11.9815 8.4036 4.8665 2.0344 0.9978 0.5748 0.3815 0.1955 0.1048 0.0000
September 1, 2011 16.2239 10.2115 6.2072 2.5998 0.4772 0.0665 0.0000 0.0000 0.0000 0.0000 0.0000
September 1, 2012 16.2239 7.2915 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
The maximum number of additional shares is 16.2239 per $1,000 principal amount
of notes, subject to adjustment in the same manner as in the conversion rate as
set forth under " __ Conversion Rate Adjustments" and in no event will the
number of additional shares of our common stock issuable upon conversion as a
result of a fundamental change exceed that amount.
Schedule B-2
The exact stock prices and effective dates may not be set forth in the table
above, in which case:
If the stock price is between two stock prices in the table or the effective
date is between two effective dates in the table, the number of additional
shares will be determined by straight-line interpolation between the number of
additional shares set forth for the higher and lower stock prices and the two
effective dates, as applicable, based on a 365-day year;
If the stock price is in excess of $40.00 per share (subject to adjustment), no
additional shares will be added to the conversion rate.
If the stock price is less than $9.18 per share (subject to adjustment), no
additional shares will be added to the conversion rate.
ANY DISCLAIMER OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS
COMMUNICATION AND SHOULD BE DISREGARDED. SUCH
DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS
COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM
Schedule B-3
SCHEDULE C
Paragraphs 9 and 11 under the heading "Plan of Distribution" in the Preliminary
Offering Memorandum and the Final Offering Memorandum.
Schedule C-1
SCHEDULE D
PERSONS DELIVERING LOCK-UP AGREEMENTS
Officers
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President and Chief Operating Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer and Treasurer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Investment Officer and Vice President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President and General Counsel
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary
Directors
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Chairman of the Board of Directors
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
Entity
BlackRock Financial Management, Inc.
Schedule D-1
SCHEDULE E
Anthracite CDO I, Ltd., a Cayman company
Anthracite CDO II, Ltd., a Cayman company
Anthracite CDO III, Ltd., a Cayman company
Anthracite CRE CDO 2006-HY3 Ltd.
Anthracite Euro CRE CDO 2006-1 P.L.C.
LB-UBS Commercial Mortgage Trust 2004-2
Schedule E-1
EXHIBIT A
ISSUER WRITTEN INFORMATION
None.
Exhibit A-1
EXHIBIT B
[DIRECTORS AND OFFICERS LOCK-UP AGREEMENT]
August ____, 2007
Banc of America Securities LLC
Deutsche Bank Securities Inc.
c/o Banc of America Securities LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Anthracite Capital, Inc. (the "Company")
Ladies and Gentlemen:
The Company proposes to carry out an offering of convertible senior notes
(the "Offering"), for which you will act as the initial purchasers. The notes
will be convertible into the Company's common stock, $0.001 par value (the
"Common Stock") under certain circumstances. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company. The
undersigned acknowledges that you are relying on the representations and
agreements of the undersigned contained in this letter in carrying out the
Offering and in entering into purchase arrangements with the Company with
respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not (and will cause any spouse or immediate family member of
the spouse or the undersigned living in the undersigned's household not to),
without the prior written consent of Banc of America Securities LLC and Deutsche
Bank Securities Inc. (which consent may be withheld in their sole discretion),
directly or indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer, establish an
open "put equivalent position" or liquidate or decrease a "call equivalent
position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act
of 1934, as amended, or otherwise dispose of or transfer (or enter into any
transaction that is designed to, or might reasonably be expected to, result in
the disposition of) including the filing (or participation in the filing of) of
a registration statement with the Securities and Exchange Commission in respect
of, any shares of Common Stock, options or warrants to acquire shares of Common
Stock, or securities exchangeable or exercisable for or convertible into shares
of Common Stock currently or hereafter owned either of record or beneficially
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
by the undersigned (or such spouse or family member) (other than as contemplated
by the Registration Rights Agreement entered into by the Company and you in
connection with the Offering), or publicly announce an intention to do any of
the foregoing, for a period commencing on the date hereof and continuing through
the close of trading on the date 60 days after the date of the final offering
memorandum for the Offering. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock held by the
undersigned except in compliance with the foregoing restrictions.
Exhibit B-1
Notwithstanding the foregoing, the restrictions in the previous paragraph
will not prohibit (a) transfers of shares of Common Stock as a bona fide gift,
by will or by intestacy, and (b) dispositions to a trust, provided that the
shares of Common Stock so transferred are subject to restrictions described
above for the remainder of the 60-day restricted period
This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned.
Very truly yours,
----------------------------------------
(Signature)
----------------------------------------
(Printed Name)
----------------------------------------
(Address)
Exhibit B-2
[MANAGER LOCK-UP AGREEMENT]
August ____, 2007
Banc of America Securities LLC
Deutsche Bank Securities Inc.
c/o Banc of America Securities LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Anthracite Capital, Inc. (the "Company")
Ladies and Gentlemen:
The Company proposes to carry out an offering of convertible senior notes
(the "Offering"), for which you will act as the initial purchasers. The notes
will be convertible into the Company's common stock, $0.001 par value (the
"Common Stock"), under certain circumstances. The undersigned recognizes that
the Offering will be of benefit to the undersigned and will benefit the Company.
The undersigned acknowledges that you are relying on the representations and
agreements of the undersigned contained in this letter in carrying out the
Offering and in entering into purchase arrangements with the Company with
respect to the Offering.
In consideration of the foregoing, during the period commencing on the date
hereof and ending on the 60th day following the date of the final offering
memorandum for the Offering, the undersigned hereby agrees that the undersigned
will not, without the prior written consent of Banc of America Securities LLC
and Deutsche Bank Securities Inc. (which consent may be withheld in their sole
discretion), directly or indirectly, sell, offer, contract or grant any option
to sell, pledge, transfer or establish an open "put equivalent position" or
liquidate or decrease a "call equivalent position" within the meaning of Rule
16a-1(h) under the Securities Exchange Act of 1934, as amended, or otherwise
dispose of or transfer (or enter into any transaction that is designed to, or
might reasonably be expected to, result in the disposition of), or announce the
offering of, or file any registration statement under the Securities Act of
1933, as amended, in respect of, any shares of Common Stock, options or warrants
to acquire shares of Common Stock or securities exchangeable or exercisable for
or convertible into shares of Common Stock currently or hereafter owned either
of record or beneficially (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) by the undersigned.
Notwithstanding the foregoing, the restrictions in the previous paragraph
do not apply to (a) the filing of registration statements pursuant to the
Registration Rights Agreement entered into in connection with the Offering, (b)
transfers of shares of Common Stock by the undersigned to an affiliate of the
undersigned, provided that in the case of any such transfer pursuant to this
clause, any such transferee shall sign and deliver a lock-up letter
substantially in the form of this letter, and (c) transfers of shares, or
interests in shares, of Common Stock to employees of the undersigned or
affiliates of the undersigned, provided that in the case of any such transfer
pursuant to this clause, any such employee will not transfer any such shares or
interests during the 60-day lock-up period described above.
Exhibit B-3
This agreement is irrevocable and will be binding on the undersigned and
the respective successors and assigns of the undersigned.
Very truly yours,
----------------------------------------
(Signature)
----------------------------------------
(Printed Name)
----------------------------------------
(Address)
Exhibit B-4