-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RJWXbu2wmbt6eiGbsWu4T0V0ggw1VmS2dyfCCIp6jhJjTgrj278E0M0Twc8+n8BG f7JKUfEKNn8z9Efq19jKLg== 0000950172-98-000483.txt : 19980515 0000950172-98-000483.hdr.sgml : 19980515 ACCESSION NUMBER: 0000950172-98-000483 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANTHRACITE CAPITAL INC CENTRAL INDEX KEY: 0001050112 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 133978906 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13937 FILM NUMBER: 98620318 BUSINESS ADDRESS: STREET 1: 345 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2127545560 MAIL ADDRESS: STREET 1: 345 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10154 FORMER COMPANY: FORMER CONFORMED NAME: ANTHRACITE MORTGAGE CAPITAL INC DATE OF NAME CHANGE: 19971121 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 Commission File Number: 001-13937 ANTHRACITE CAPITAL, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Maryland 13-3978906 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 345 Park Avenue, New York, New York 10154 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number including area code): (212) 409-3333 NOT APPLICABLE ------------------------------------------------------- (Former name, former address, and former fiscal year if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes X No (2) Yes __ No X As of May 13, 1998, 21,378,531 shares of voting common stock ($.001 par value) were outstanding. ANTHRACITE CAPITAL, INC. FORM 10-Q INDEX PART I - FINANCIAL INFORMATION Page Item 1. Interim Financial Statements (Unaudited)........................3 Statement of Financial Condition at March 31, 1998..............3 Statement of Operations for the period March 24, 1998 (Commencement of Operations) through March 31, 1998.............4 Statement of Changes in Stockholders' Equity for the period March 24, 1998 (Commencement of Operations) through March 31, 1998..........................................5 Statement of Cash Flows for the period March 24, 1998 (Commencement of Operations) through March 31, 1998.............6 Notes to Financial Statements...................................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................11 Part II - OTHER INFORMATION Item 1. Legal Proceedings..............................................14 Item 2. Changes in Securities and Use of Proceeds......................14 Item 3. Defaults Upon Senior Securities................................15 Item 4. Submission of Matters to a Vote of Security Holders............15 Item 5. Other Information..............................................15 Item 6. Exhibits and Reports on Form 8-K...............................15 SIGNATURES Part I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) ANTHRACITE CAPITAL, INC. STATEMENT OF FINANCIAL CONDITION MARCH 31, 1998 (UNAUDITED) - ---------------------------------------------------------------------------- ASSETS Securities available for sale, at market value $ 382,890,695 Accrued interest receivable 2,950,673 -------------- Total Assets $ 385,841,368 ============== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Payable for securities purchased $ 72,724,868 Reverse repurchase agreements 14,787,375 Accrued expenses, payables and other liabilities 981,707 -------------- Total Liabilities 88,493,950 -------------- Stockholders' Equity: Preferred stock, par value $0.001 per share; 100,000,000 shares authorized; no shares issued - Common stock, par value $0.001 per share; 400,000,000 shares authorized; 21,378,531 shares issued and outstanding 21,379 Additional paid-in capital 297,150,513 Retained earnings 173,196 Unrealized gain on securities available for sale 2,330 -------------- Total Stockholders' Equity 297,347,418 -------------- Total Liabilities and Stockholders' Equity $ 385,841,368 ============== The accompanying notes are an integral part of these financial statements. ANTHRACITE CAPITAL, INC. STATEMENT OF OPERATIONS FOR THE PERIOD MARCH 24, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH MARCH 31, 1998 (UNAUDITED) - ---------------------------------------------------------------------------- Interest Income: Securities available for sale $ 117,907 Cash and cash equivalents 97,432 ------------ Total interest income 215,339 ------------ Expenses: Management fee 21,273 Other expenses 20,870 ------------ Total expenses 42,143 ------------ Net Income $ 173,196 ============ Net income per share: Basic $ 0.008 ============ Diluted $ 0.008 ============ Weighted average number of shares outstanding: Basic 21,378,531 ============ Diluted 21,388,456 ============ The accompanying notes are an integral part of these financial statements. ANTHRACITE CAPITAL, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD MARCH 24, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH MARCH 31, 1998 (UNAUDITED) - ----------------------------------------------------------------------------
Unrealized Gain Common Stock on --------------------------- Additional Securities Total Paid-In Retained Available Stockholders' Shares Amount Capital Earnings for Sale Equity ------------- ----------- -------------- ----------- ------------ --------------- Balance at March 24, 1998 13,333 $ 13 $ - - $ 200,000 199,987 Issuance of common stock 21,365,198 21,366 296,950,526 - - 296,971,892 Net Income - - - $173,196 - 173,196 Change in unrealized gain on securities available for sale - - - - $2,330 2,330 ------------- ----------- -------------- ----------- ------------ --------------- Balance at March 31, 1998 21,378,531 $21,379 $297,150,513 $173,196 $2,330 $297,347,418 ============= =========== ============== =========== ============ ===============
The accompanying notes are an integral part of these financial statements. ANTHRACITE CAPITAL, INC. STATEMENT OF CASH FLOWS FOR THE PERIOD MARCH 24, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH MARCH 31, 1998 (UNAUDITED) - ---------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 173,196 Adjustments to reconcile net income to net cash used by operating activities: Premium amortization (discount accretion), net (27,864) Increase in interest receivable (2,950,673) Increase in accrued expenses, payables and other liabilities 981,707 --------------- Net cash used in operating activities (1,823,634) --------------- Cash flows from investing activities: Purchase of securities available for sale (382,957,933) Purchase of cash equivalents (217,627,568) Maturities of cash equivalents 217,725,000 Payable for securities purchased 72,724,868 --------------- Net cash used in investing activities (310,135,633) --------------- Cash flows from financing activities: Proceeds from reverse repurchase agreements 16,219,094 Principal payments on reverse repurchase agreements (1,431,719) Proceeds from issuance of common stock, net of offering costs 296,971,892 --------------- Net cash provided by financing activities 311,759,267 --------------- Net decrease in cash and cash equivalents (200,000) Cash and cash equivalents, beginning of period 200,000 --------------- Cash and cash equivalents, end of period $ 0 =============== Supplemental disclosure of cash flow information: Interest paid $ 225 =============== The accompanying notes are an integral part of these financial statements. ANTHRACITE CAPITAL, INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 1998 - ---------------------------------------------------------------------------- NOTE 1 BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10, Rule 10-01 of Regulation S-X for interim financial statements. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of management, the accompanying financial statements contain all adjustments, consisting of normal and recurring accruals, necessary for a fair presentation of the financial condition of Anthracite Capital, Inc. (the "Company") at March 31, 1998 and the results of its operations, the changes in its stockholders' equity and its cash flows for the period March 24, 1998 (Commencement of Operations) through March 31, 1998. Operating results for the period ended March 31, 1998 are not necessarily indicative of the results that may be expected for any other interim periods or the period ended December 31, 1998. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the statements of financial condition and revenues and expenses for the periods covered. Actual results could differ from those estimates and assumptions. NOTE 2 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The Company was incorporated in Maryland in November 1997. The Company commenced its operations on March 24, 1998. A summary of the Company's significant accounting policies follows: SECURITIES AVAILABLE FOR SALE Certain U.S. Treasury securities, mortgage-backed securities and mortgage-related securities are designated as assets available for sale because the Company does not intend to hold them to maturity. Securities available for sale are carried at market value with the net unrealized gains or losses reported as a separate component of stockholders' equity. Unrealized losses on securities that reflect a decline in value which is other than temporary, if any, are charged to earnings. At disposition the realized net gain or loss is included in earnings on a specific identification basis. The amortization of premiums and accretion of discounts are computed using the effective yield method after considering actual and estimated prepayment rates, if applicable. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between prepayments originally anticipated and amounts actually received plus anticipated future prepayments. NET INCOME PER SHARE Net income per share is computed in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share, and is calculated on the basis of the weighted average number of common shares outstanding during each period plus the additional dilutive effect of common stock equivalents. The dilutive effect of outstanding stock options is calculated using the treasury stock method. INCOME TAXES The Company intends to elect to be taxed as a Real Estate Investment Trust ("REIT") and to comply with the provisions of the Internal Revenue Code of 1986, as amended, with respect thereto. Accordingly, the Company will not be subjected to Federal income tax to the extent of its distributions to shareholders and as long as certain asset, income and stock ownership tests are met. NOTE 3 SECURITIES AVAILABLE FOR SALE The Company's securities available for sale are carried at fair value and were comprised of the following at March 31, 1998: Securities available for sale: Single-family residential: FNMA adjustable rate $215,635,636 FHLMC interest only 14,202,351 FNMA interest only 2,443,279 Multi-family residential and commercial: AAA-rated interest only 78,836,070 FHA-insured project loans 24,779,549 U.S. Treasury 17,176,622 Non-U.S. sovereign 15,112,500 BBB-rated asset backed 14,704,688 ------------ Total $382,890,695 ============ The FHLMC interest only securities and the FNMA interest only securities are held primarily to reduce the interest rate sensitivity of the Company's portfolio of securities available for sale. During the period March 24, 1998 to March 31, 1998, the Company was in the process of acquiring its initial investment portfolio of securities available for sale. That process was not yet completed as of March 31, 1998 and, therefore, the composition of the portfolio of securities available for sale shown above should not be considered indicative of the composition of the portfolio that may be expected in the future. NOTE 4 COMMON STOCK The Company's common stock was sold through several transactions as follows: The Company was initially capitalized with the sale of 13,333 shares of common stock on March 5, 1998, for a total of $200,000. The Company received commitments on March 23, 1998 for the purchase, in private placements, of 1,365,198 shares of common stock at $13.95 per share for a total of $19,044,512. The sale of these shares was consummated at the time of the closing of the Company's initial public offering. On March 27, 1998, the Company completed its initial public offering of common stock. The Company issued 20,000,000 shares of common stock at a price of $15 per share and received proceeds of $279,000,000, net of underwriting discounts and commissions. Offering costs in connection with the public offering amounting to $1,072,620 have been charged against the proceeds of the offering. NOTE 5 TRANSACTIONS WITH AFFILIATES The Company has entered into a Management Agreement (the "Management Agreement") with BlackRock Financial Management, Inc. (the "Manager"), a majority owned indirect subsidiary of PNC Bank Corp. ("PNC") and the employer of certain directors and officers of the Company, under which the Manager manages the Company's day-to-day operations, subject to the direction and oversight of the Company's Board of Directors. The Company will pay the Manager an annual base management fee equal to a percentage of the Average Invested Assets of the Company as further defined in the Management Agreement. The base management fee is equal to 1% per annum of the Average Invested Assets rated less than BB- or not rated, 0.75% of Average Invested Assets rated BB- to BB+, and 0.35% of Average Invested Assets rated above BB+. The Company accrued $21,273 in base management fees in accordance with the terms of the Management Agreement for the period March 24, 1998 to March 31, 1998. The Company will also pay the Manager, as incentive compensation, an amount equal to 25% of the Funds from Operations of the Company plus gains (minus losses), before incentive compensation, in excess of the amount that would produce an annualized Return on Equity equal to 3.5% over the Ten-Year U.S. Treasury Rate as further defined in the Management Agreement. For purposes of the incentive compensation calculation, equity is generally defined as proceeds from issuance of common stock before underwriting discounts and commissions and other costs of issuance. The Company did not accrue for or pay the Manager any incentive compensation for the period March 24, 1998 to March 31, 1998. The Company may also grant stock options to the Manager, directors, officers and any key employees of the Company, directors, officers and key employees of the Manager and to any other individual or entity performing services for the Company. Options granted for the period March 24, 1998 to March 31, 1998 are disclosed in Note 6. The Company received a commitment from PNC Investment Corp., a wholly owned indirect subsidiary of PNC, on March 23, 1998 for the purchase, in a private placement, of 648,352 shares of common stock at $13.95 per share for a total of $9,044,510. The sale of these shares was consummated at the time of the closing of the Company's initial public offering. NOTE 6 STOCK OPTIONS The Company has adopted a stock option plan (the "1998 Stock Option Plan") that provides for the grant of both qualified incentive stock options that meet the requirements of Section 422 of the Code, and non-qualified stock options, stock appreciation rights and dividend equivalent rights. Stock options may be granted to the Manager, directors, officers and any key employees of the Company, directors, officers and key employees of the Manager and to any other individual or entity performing services for the Company. The exercise price for any stock option granted under the 1998 Stock Option Plan may not be less than 100% of the fair market value of the shares of common stock at the time the option is granted. Each option must terminate no more than ten years from the date it is granted. Subject to anti-dilution provisions for stock splits, stock dividends and similar events, the 1998 Stock Option Plan authorizes the grant of options to purchase an aggregate of up to 2,470,453 shares of common stock. On March 27, 1998, pursuant to the 1998 Stock Option Plan, options to purchase 1,313,967 shares of the Company's common stock were granted to certain officers, directors and employees of the Company and the Manager and options to purchase 324,176 shares of the Company's common stock were granted to PNC Investment Corp. The exercise price of these options is $15 per share. The remaining contractual life of each option is approximately ten years. The options vest in four equal installments on March 27, 1999, March 27, 2000, March 27, 2001 and March 27, 2002. In addition to the options granted pursuant to the 1998 Stock Option Plan, on March 27, 1998 options to purchase 246,544 shares of the Company's common stock were granted to certain officers, directors and employees of the Company and the Manager. The exercise price of these options is $13.95 per share. The remaining contractual life of each option is approximately one year. The options become exercisable on September 30, 1998. NOTE 7 EARNINGS PER SHARE (EPS) A reconciliation of the numerator and denominator of the basic EPS computation and the diluted EPS computation is as follows: For the Period March 24, 1998 to March 31, 1998 -------------------------------- Income Shares Per Share Numerator Denominator Amount --------- ----------- --------- Net Income $ 173,196 --------- Basic EPS 173,196 21,378,531 $0.008 ========= Effect of dilutive securities: Dilutive stock options 0 9,925 --------- ----------- Diluted EPS $ 173,196 21,388,456 $0.008 ========= =========== ========= Options to purchase 1,884,687 shares were outstanding beginning March 27, 1998 (see Note 6) and were dilutive as the exercise prices ($13.95 and $15) were less than the average stock price for the Company for the period March 24, 1998 to March 31, 1998 ($15.02). NOTE 8 REVERSE REPURCHASE AGREEMENTS The Company has entered into and has committed to enter into reverse repurchase agreements to finance a portion of its securities. At March 31, 1998, the Company had outstanding a reverse repurchase agreement in the amount of $14,787,375, with a current borrowing rate of 6.00% and a maturity of one day. The reverse repurchase agreement was collateralized by U.S. Treasury securities with an estimated fair value of $17,176,622. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL: The Company was organized in November 1997 to invest in a diversified portfolio of multifamily, commercial and residential mortgage loans, mortgage-backed securities and other real estate related assets in the U.S. and non-U.S. markets. All of the $297.0 million of net proceeds received from the sale of 21,365,198 shares of its common stock in March 1998 has been used to acquire the Company's investment portfolio of securities available for sale. The Company is currently performing due diligence on a variety of assets including CMBS subordinate interests and mezzanine loans and participating debt opportunities on both stabilized properties and construction projects. The following discussion of the Company's financial condition, results from operations, and capital resources and liquidity should be read in conjunction with the Interim Financial Statements and related Notes included in Item 1 hereof. FUNDS FROM OPERATIONS: Most industry analysts, including the Company, consider FFO an appropriate supplementary measure of operating performance of a REIT. In general, FFO adjusts net income for non-cash charges such as depreciation, certain amortization expenses and most non-recurring gains and losses. However, FFO does not represent cash provided by operating activities in accordance with GAAP and should not be considered an alternative to net income as an indication of the results of the Company's performance or to cash flows as a measure of liquidity. In 1995, the National Association of Real Estate Investment Trusts ("NAREIT") established new guidelines clarifying its definition of FFO and requested that REITs adopt this new definition beginning in 1996. The Company computes FFO in accordance with the definition recommended by NAREIT. For the period March 24, 1998 to March 31, 1998, the Company's FFO was the same as its reported net income of $173,196, or $0.008 per share. RESULTS OF OPERATIONS: The Company began operations on March 24, 1998. Net income for the period March 24, 1998 to March 31, 1998 amounted to $173,196 or $0.008 per share. Management fees of $21,273 were comprised solely of the base management fee paid to the Manager for the period (as provided pursuant to the management agreement between the Manager and the Company), as the Manager earned no incentive fee for such period. CHANGES IN FINANCIAL CONDITION GENERAL: From March 24, 1998 to March 31, 1998 total assets increased by $385.6 million. This increase was primarily due to a $382.9 million increase in securities available for sale and a $2.9 million increase in interest receivable. Total liabilities increased by $88.5 million during the period, primarily due to a $72.7 million increase in payable for securities purchased and a $14.8 million increase in reverse repurchase agreements. SECURITIES AVAILABLE FOR SALE: At March 31, 1998, an aggregate of $2,330 of net unrealized gains/losses on securities available for sale as included in stockholders' equity. The increase in securities available for sale of $382.9 million during the period from March 24, 1998 to March 31, 1998 is primarily due to net purchases in the amount of $383.0 million, which resulted in $117,907 of interest income from securities available for sale for the reported period. ACCRUED EXPENSES, PAYABLES AND OTHER LIABILITIES: At March 31, 1998, accrued expenses, payables and other liabilities of $981,707 were primarily comprised of unpaid costs incurred in connection with the organization and capitalization of the Company. STOCKHOLDERS' EQUITY: Stockholders' equity increased by $297.1 million from March 24, 1998 to March 31, 1998. The increase in stockholders' equity during this period was attributable to net income of $173,196, an increase of $2,330 in the unrealized gain on securities available for sale and an increase in common stock and additional paid-in capital of $297.0 million from the issuance of 21,365,198 shares of common stock in March 1998. See the Statement of Changes in Stockholders' Equity in the Interim Financial Statements included in Item 1 hereof. CAPITAL RESOURCES AND LIQUIDITY: Liquidity is a measurement of the Company's ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund investments, loan acquisition and lending activities and for other general business purposes. The primary sources of funds for liquidity consist of reverse repurchase agreements and maturities and principal payments on securities and loans, and proceeds from sales thereof. The Company's operating activities used cash flows of $1.8 million during the period March 24, 1998 to March 31, 1998. During the foregoing period cash flows from operating activities were used primarily to purchase securities available for sale. The Company's investing activities used cash flows totaling $310.1 million during the period March 24, 1998 to March 31, 1998. During the foregoing period, cash flows from investing activities were used primarily to purchase securities available for sale. The Company's financing activities provided $311.8 million during the period March 24, 1998 to March 31, 1998 and consisted primarily of net proceeds from the issuance of 21,365,198 shares of common stock. As discussed above, the Company is engaged in due diligence with respect to a variety of investments. In addition, the Company is engaged in discussions with respect to obtaining various third-party borrowings. To the extent that either of these two activities come to fruition, the Company's liquidity and capital resources could be materially affected. FORWARD-LOOKING STATEMENTS: Certain statements contained herein are not, and certain statements contained in future filings by the Company with the SEC, in the Company's press releases or in the Company's other public or shareholder communications may not be, based on historical facts and are "Forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements which are based on various assumptions (some of which are beyond the Company's control), may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset/liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. Part II - OTHER INFORMATION Item 1. Legal Proceedings At March 31, 1998 there were no pending legal proceedings to which the Company was a party or of which any of its property was subject. Item 2. Changes in Securities and Use of Proceeds Changes in Securities On March 27, 1998, the Company sold (1) 648,352 shares of Common Stock to PNC Investment Corp., a Delaware corporation, at a price of $13.95 per share of Common Stock or $9,044,510 in the aggregate and (2) 716,846 shares of Common Stock to FBR Asset Investment Corporation, a Virginia corporation, at a price of $13.95 per share of Common Stock or $10,000,000 in the aggregate. The foregoing shares were sold without registration under the Securities Act in reliance on one or more exemptions therefrom. Use of Proceeds of Initial Public Offering Effective Date of the Company's Registration Statement: March 23, 1998. Commission File Number: 333-40813 Date the Offering Commenced: March 24, 1998 Names of Managing Underwriters: Friedman, Billings, Ramsey & Co., Inc., Lehman Brothers Inc. and Prudential Securities Incorporated Class of Securities Registered: Common Stock Amount Registered and Sold: See below Amount registered - 20,000,000 shares Aggregate price of offering amount registered - $300,000,000 Amount sold - 20,000,000 shares Aggregate offering price of amount sold - $300,000,000 Expenses: The expenses incurred in connection with the Offering were as follows: Underwriting Discounts and Commissions* $ 21,000,000 Finders Fees* $ 0 Expenses Paid to or for Underwriters** $ 0 Other Expenses** $ 1,000,000 Total Expenses** $ 22,000,000 * Actual amount of expense ** Reasonable estimate for amount of expense None of the expenses of the Offering consisted of direct or indirect payments to (i) directors, officers, general partners of the Company or their associates, (ii) persons owning 10 percent or more of any class of equity securities of the Company, or (iii) affiliates of the Company. Net Proceeds: The net offering proceeds to the Company from the Offering after deducting the total expenses described above was $278,000,000. All of the net proceeds of the Offering has been used to acquire the Company's investment portfolio of securities available for sale. Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of Matters to a Vote of Security Holders Not applicable Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 10.1 - Stock Purchase Agreement dated March 23, 1998 between the Company and PNC Investment Corp. Exhibit 10.2 - Stock Purchase Agreement dated March 23, 1998 between the Company and FBR Asset Investment Corporation Exhibit 27.1 - Financial Data Schedule (b) Reports on Form 8-K None EXHIBIT INDEX EXHIBIT NO. ----------- 10.1 Stock Purchase Agreement dated March 23, 1998 between the Company and PNC Investment Corp. 10.2 Stock Purchase Agreement dated March 23, 1998 between the Company and FBR Asset Investment Corporation. 27.1 Financial Data Schedule SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ANTHRACITE CAPITAL, INC. Dated: May 14, 1998 By: /s/ Hugh R. Frater ---------------------------------------- Name: Hugh R. Frater Title: President and Chief Executive Officer (authorized officer of registrant) Dated: May 14, 1998 By: /s/ Richard M. Shea ---------------------------------------- Name: Richard M. Shea Title: Chief Operating Officer and Chief Financial Officer (principal accounting officer) EX-10 2 EXHIBIT 10.1 - STOCK PURCHASE AGREEMENT Exhibit 10.1 STOCK PURCHASE AGREEMENT Stock Purchase Agreement ("Agreement"), dated as of March 23, 1998, by and between Anthracite Capital, Inc., a Maryland corporation (the "Company"), and PNC Investment Corp., a Delaware corporation (the "Purchaser"). 1. Sale and Purchase of Stock. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties contained herein, the Company agrees to issue and sell to the Purchaser and the Purchaser agrees to purchase 648,352 shares (the "Shares") of the Company's par value $.001 per share (the "Common Stock") Common Stock (or such other amount as shall constitute approximately 3% of the Company's Common Stock, to be issued and outstanding immediately after the closing of the IPO), and in the event that the underwriter's overallotment option is exercised in full or in part, Purchaser shall purchase, additional shares, such that Purchaser shall own 3% of the shares of Common Stock to be issued and outstanding on such date. The Shares shall be purchased, with the rights, restrictions, privileges and preferences as set forth in the Company's Articles of Amendment and Restatement (the "Articles") as in effect on the date hereof, for an aggregate initial purchase price equal to $9,044,510, which amount shall be increased by $13.95 per share for any shares purchased in connection with the underwriter's exercise of the overallotment option (as so adjusted, the "Purchase Price"), and which is equal to the initial public offering price, net of any underwriting discounts and commissions, as set forth in the Company's Registration Statement on Form S-11, as amended (Registration No. 333-40813) (the "Registration Statement"). 2. Closing. 2.1. Closing Date. The sale and purchase of the Shares (the "Closing") shall occur at the time and place of the closing of the initial public offering ("the IPO") of the Company pursuant to the Registration Statement. 2.2. Transactions at Closing. At the Closing, the Company will deliver to the Purchaser, at such place as the Purchaser shall designate prior to the Closing, a share certificate or certificates evidencing the Shares, duly executed and registered in the name of the Purchaser, against the receipt from the Purchaser of the Purchase Price in federal funds. 2.3. Registration Rights. As an inducement for the Purchaser to enter into this Agreement, the Company shall, contemporaneously with the execution of this Agreement, enter into a Registration Rights Agreement granting the Purchaser certain registration rights with respect to the Shares (the "Registration Rights Agreement"). 3. Representations and Warranties of the Company. The Company represents and warrants that: 3.1. Organization and Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland. 3.2. Capitalization. The Company's Articles provide that the Company may issue up to 400,000,000 shares of Common Stock and up to 100,000,000 shares of preferred stock ("Preferred Stock"). After the Closing, the Company will have authorized and issued 20,000,000 shares of Common Stock pursuant to the IPO (or, if the underwriters' overallotment is exercised, 23,000,000), will have authorized and issued, pursuant to the 1998 Stock Option Plan, outstanding options ("Stock Options"), to acquire 1,711,525 shares of Common Stock, will have authorized and issued 144,000 options (the "Additional Options," and, together with the Stock Options, the "Options"), to certain directors, officers and employees of the Company and the Manager, will have authorized and issued 716,846 shares of Common Stock to FBR Asset Investment Corporation, pursuant to a stock purchase agreement as of the Closing and will have authorized and issued 648,352 shares of Common Stock (or such other amount as shall constitute approximately 3% of the shares of Common Stock to be issued and outstanding immediately after the closing of the IPO) pursuant to this Agreement. In the event that the underwriter's overallotment option is exercised in full or in part, the Company shall authorize and issue to the Purchaser, additional shares, such that Purchaser shall own 3% of the shares of Common Stock to be issued and outstanding on such date. Other than the Options, there are no outstanding options, warrants, subscription rights (including any preemptive rights), calls or commitments of any character whatsoever to which the Company or any of its subsidiaries is a party or may be bound, requiring the issuance or sale of shares of any capital stock or other equity securities of the Company or securities or rights convertible into or exchangeable for such shares or other equity securities, and there are no contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of its capital stock or other equity securities or options, warrants or rights to purchase or acquire any additional shares of its capital stock or other equity securities or securities convertible into or exchangeable for such shares or other equity securities. The Company has no shares of Preferred Stock outstanding. 3.3. Authorization. The Company has the corporate power and authority to execute and deliver this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Registration Rights Agreement and the issuance and sale of the Shares have been duly authorized by the Board of Directors of the Company. No further approval or authorization of the Board of Directors or the shareholders of the Company will be required for the issuance and sale of the Shares as contemplated herein. This Agreement and the Registration Rights Agreement have been duly and validly executed and delivered by the Company, and each constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditors' rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.4. Legality of the Common Stock. Upon receipt by the Company of the Purchase Price, the Shares will be duly authorized, validly issued, fully paid and nonassessable. No party has any preemptive or similar rights in connection with the issuance of the Common Stock hereunder. All of the outstanding shares of Common Stock have been validly issued and are fully paid and non-assessable and were duly registered under the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws or were issued in reliance on exemptions therefrom and were not issued in violation of any preemptive rights. 3.5. No Violation. Neither the Company's execution and delivery of this Agreement or the Registration Rights Agreement nor the consummation by the Company of the transactions contemplated hereby or thereby will violate the Company's Articles of Incorporation or Bylaws or breach a material agreement to which the Company or any subsidiary of the Company is a party or by which its or any of its subsidiaries' assets are bound, or cause any such violation or breach, or accelerate or allow any person to accelerate, terminate, modify or cancel any material rights under any such agreement, or will result in the creation of any material lien on the assets or properties of the Company or any of its subsidiaries. Such execution, delivery and consummation will not violate or breach or constitute a default under any law, judgment, order, or decree to which the Company or any of its subsidiaries is subject or by which the properties or assets of the Company or any of its subsidiaries are bound. 3.6. Consents and Approvals. No consent, authorization, order, license, permit, or approval of, or filing with, any governmental authority or person is required in connection with the Company's execution, delivery and performance of this Agreement or the Registration Rights Agreement, except (i) such as must be made or obtained by the Purchaser, and (ii) such as shall have been made or obtained by the Company prior to the Closing. 3.7. Registration Statement. As of the date hereof, the Registration Statement does 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 light of the circumstances under which they were made, not misleading. 3.8. Litigation, etc. There is no action, proceeding or investigation pending or, to the best of the Company's knowledge, threatened (or any basis therefor known to the Company), that questions the validity of this Agreement, the Registration Rights Agreement, the Shares to be issued pursuant to this Agreement or which could have a material adverse effect on the financial condition, results of operations, business or properties of the Company and its subsidiaries, taken as a whole. 3.9. Brokers, Intermediaries and Finder's Fees. The Company represents that no finder, broker, agent, financial advisor or other intermediary has acted on behalf of the Company in connection with the offering and sale of the Common Stock to be issued and sold pursuant to this Agreement or the negotiation or consummation of this Agreement or any of the transactions contemplated hereby. 3.10. REIT Status. The Company is organized in a manner intended to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), and the Company intends to elect to be taxed as a REIT for its taxable year ended December 31, 1998. 4. Representations and Warranties of the Purchaser. The Purchaser represents and warrants that: 4.1. Organization and Standing. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware. 4.2. Authorization. The Purchaser has the corporate power and authority to execute and deliver this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Registration Rights Agreement and the purchase of the Shares hereunder have been duly authorized by the Purchaser. No further approval or authorization of the Board of Directors or the shareholders of the Purchaser will be required for the Purchaser's purchase of the Shares pursuant to the terms of this Agreement or the Registration Rights Agreement. This Agreement and the Registration Rights Agreement have been duly executed and delivered by the Purchaser, and each constitutes a, valid and binding obligation of the Purchaser enforceable against each of them in accordance with its terms, except to the extent that such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditor's rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). 4.3. No Violation. Neither the Purchaser's execution and delivery of this Agreement or the Registration Rights Agreement nor the consummation by it of the transactions contemplated hereby or thereby will violate the Articles of Incorporation or Bylaws of the Purchaser or breach or a material agreement to which it is a party or by which its assets are bound, or cause any such violation or breach, or accelerate or allow any person to accelerate, terminate, modify or cancel any material rights under any such agreement, or will result in the creation of any material lien on the assets or properties of the Purchaser. Such execution, delivery and consummation will not violate or breach or constitute a default under any material law, judgment, order, or decree to which the Purchaser is subject or by which the Purchaser or its material subsidiaries' properties or assets are bound. 4.4. Consents and Approvals. No consent, authorization, order, license, permit, or approval of, or filing with, any governmental authority or any person is required in connection with the Purchaser's execution, delivery and performance of this Agreement or the Registration Rights Agreement except (i) such as must be made or obtained by the Company, and (ii) such as shall have been made or obtained by the Purchaser prior to the Closing. 4.5. Litigation, etc. There is no action, proceeding or investigation pending or, to the best of the Purchaser's knowledge, threatened (or any basis therefor known to the Purchaser), that questions the validity of this Agreement or the Registration Rights Agreement, or any action contemplated, taken or to be taken pursuant hereto or thereto. 4.6. Brokers, Intermediaries and Finder's Fees. The Purchaser represents that no finder, broker, agent, financial advisor or other intermediary has acted on behalf of the Purchaser in connection with the purchase of the Common Stock pursuant to this Agreement or the negotiation or consummation of this Agreement or any of the transactions contemplated hereby. 4.7. Investment Representations of the Purchaser. The Purchaser represents and warrants to and agrees with the Company as follows: (a) The Purchaser is acquiring the Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same, and it has no obligation, indebtedness or commitment providing for the disposition thereof. (b) The Purchaser acknowledges that it has been advised and is aware that (i) the Company is relying upon one or more exemptions under the Securities Act, and applicable state securities laws in connection with the offer, sale and issuance of the Shares and (ii) the Shares in the hands of the Purchaser will be restricted securities within the meaning of Rule 144 promulgated by the Securities Exchange Commission ("SEC") pursuant to the Securities Act, and unless and until registered under the Securities Act, may be subject to limitations on resale (including, among others, limitations on the amount of securities that can be resold and the timing and manner of resale) set forth in Rule 144 or in administrative interpretations of the Securities Act by the SEC or in other rules and regulations promulgated thereunder by the SEC, in effect at the time of the proposed sale or other disposition of the Shares. (c) The Purchaser has received a copy of the Registration Statement and has independently examined and investigated the Company in connection with the decision to purchase the Shares. The Purchaser or its representatives have made inquiries deemed by them to be satisfactory concerning the Company, its business, its officers and its personnel and have had access to its books and records. In making this investment, the Purchaser has relied solely upon information made available to it by the Company, and not upon information supplied by any other person. The Purchaser and its officers, directors and other representatives have substantial knowledge and experience in financial and business matters such that the Purchaser and its representatives are capable of evaluating the merits and risks of investment in the Company, and the Purchaser is able to bear the economic risks of its investment in the Company. (d) The Purchaser certifies that it is an accredited investor as defined in Rule 501(a)(3) promulgated under the Securities Act because it is a corporation not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000. 5. Transfer Restrictions; Legends. (a) In addition to the legends required by the Company's Articles of Incorporation, each certificate or instrument representing the Shares shall bear a legend in substantially the following form: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THOSE LAWS. Such legend shall be removed by the Company upon delivery to it of an opinion of counsel satisfactory to the Company and its counsel that a registration statement under the Securities Act is at the time effective with respect to the transfer of the legended security or that such security can be transferred without such registration statement being in effect and without the requirements of a legend on the certificate in the hands of the transferee. For a period of one hundred eighty (180) days following the commencement of the Company's IPO, the Purchaser agrees not to offer, sell, dispose of or otherwise transfer, directly or indirectly, the Shares or any interest in the Shares to any person in any manner. The Company agrees that the Purchaser may, at any time on or after the date hereof, pledge the shares of Common Stock to or for the benefit of any institutional lender or debt financing source to the Purchaser. 6. Covenants of the Company. The Company agrees: (a) for so long as it is required to file periodic reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to file all required reports thereunder on or prior to the due date therefor; and (b) to indemnify and hold harmless the Purchaser from and against any liability for commission or compensation in the nature of a finder's fee to any broker or other person or firm and the costs and expenses of defending against such liability or asserted liability, for which the Company, or any of its employees or representatives, is responsible. 7. Covenants of the Purchaser. The Purchaser agrees: (a) to indemnify and hold harmless the Company from and against any liability for commission or compensation in the nature of a finder's fee to any broker or other person or firm and the costs and expenses of defending against such liability or asserted liability, for which the Purchaser, or any of its employees or representatives, is responsible; and (b) to notify the Company in writing not less than 30 days in advance of any transfer, conveyance, assignment or pledge of the Common Stock permitted under the terms of this Agreement or the Articles. 8. Conditions to Closing. 8.1. Conditions of Purchaser's Obligations. The Purchaser's obligation to purchase the Shares is subject to the fulfillment, before or at the Closing, of all of the following conditions: (a) Representations and Warranties Correct. The representations and warranties of the Company made or contained herein in connection with the transactions contemplated hereby shall be correct in all material respects at and as of the Closing Date as if made on and as of the Closing Date, except as affected by the transactions contemplated hereby. (b) Performance. The Company shall have performed and complied with all agreements and conditions contained herein required to be performed or complied with by it before or at the Closing. (c) IPO. The IPO shall be consummated simultaneously with the Closing. (d) Opinion of Counsel. The Purchaser shall have received one or more opinions dated the Closing Date, reasonably satisfactory to the Purchaser's counsel in form and substance, from Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden Arps"), counsel for the Company, and/or Miles & Stockbridge, special counsel to the Company, to the effect that: (i) the Company has been duly organized and is validly existing as a corporation under the laws of the State of Maryland; (ii) all of the issued shares of capital stock of the Company have been validly issued and are fully paid and nonassessable as of the Closing Date, and were not issued in violation of or subject to any statutory preemptive rights or, to counsel's knowledge, other preemptive rights or other rights to subscribe for or purchase securities; (iii) the Shares have been duly authorized by all necessary corporate action and when issued, paid for and delivered pursuant to this Agreement, will be validly issued, fully paid and nonassessable; (iv) the execution and delivery of this Agreement and the Registration Rights Agreement have been duly and validly authorized by all necessary corporate action of the Company, this Agreement and the Registration Rights Agreement have been duly executed and delivered by the Company, and each Agreement is the valid and binding agreement of the Company, enforceable against the Company in accordance with its respective terms; and (v) registration of the Shares under the Securities Act is not required; (e) Officer's Certificate. The Purchaser shall have received an officer's certificate, dated the Closing Date and signed by the Company's President, certifying that the representations and warranties of the Company contained in this Agreement are true and correct in all material respects. (f) Opinions Delivered to Underwriter. The Purchaser shall have received opinions, addressed to the Purchaser dated the Closing Date, from Skadden Arps, counsel to the Company, in the same form as any opinions delivered to the underwriters as a condition to the closing of the IPO. (g) Certificates Delivered to Underwriter. The Purchaser shall have received certificates, dated the Closing Date, from the Company, in the same form as any certificates delivered to the underwriter as a condition to the closing of the IPO. (h) Registration Rights Agreement. The Company shall have executed the Registration Rights Agreement, dated the date hereof, relating to the Purchaser's registration rights with respect to the Shares. 8.2. Conditions of Company's Obligations. The Company's obligation to issue the Shares to the Purchaser at Closing is subject to the fulfillment, before or at the Closing, of all of the following conditions: (a) Representations and Warranties Correct. The representations and warranties of the Purchaser made or contained herein in connection with the transactions contemplated hereby shall be correct in all material respects at and as of the Closing Date as if made on and as of the Closing Date, except as affected by the transactions contemplated hereby. (b) Performance. The Purchaser shall have performed and complied with all agreements and conditions contained herein required to be performed or complied with by it before or at the Closing. (c) IPO. The IPO shall be consummated simultaneously with the Closing. (d) Officer's Certificate. The Company shall have received an officer's certificate, dated the Closing Date and signed by a duly authorized vice president, certifying that the representations and warranties of the Company contained in this Agreement are true and correct in all material respects. 9. Notices. All notices, requests, consents and other communications to any party hereunder shall be in writing and shall be delivered by facsimile, reliable courier or first-class registered or certified mail, postage prepaid, at such party's address as set forth below, marked for attention as there indicated, or at such other address as may have been furnished to the other parties by such party in writing: TO THE COMPANY: Anthracite Capital, Inc. 345 Park Avenue New York, NY 10154 Telephone: (212) 754-5560 Facsimile: (212) [754-5397] Attention: Secretary TO THE PURCHASER: PNC Investment Corp. 300 Delaware Avenue Suite 304, Wilmington, DE 19801 Telephone: ( ) Facsimile: ( ) Attention: Secretary 10. Miscellaneous. 10.1. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware without regard to its conflict of laws principles or rules. 10.2. Successors and Assignees. All of the terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assignees of the parties hereto. 10.3. Entire Agreement. This Agreement and the Registration Rights Agreement embody the entire agreement and understanding among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof. 10.4. Headings of the Agreement. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 10.5. Counterparts of the Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.6. Severability of the Agreement. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 10.7. Termination. This Agreement shall terminate and be of no further force and effect if the Closing shall not have occurred on or prior to June 30, 1998. 10.8. Expenses. Each party shall bear its own expenses in connection with this Agreement, whether or not the transactions contemplated hereunder are consummated. IN WITNESS WHEREOF, the parties have caused this Stock Purchase Agreement to be duly executed and delivered as of the day and year first written above. THE COMPANY: ANTHRACITE CAPITAL, INC. By:_______________________________________ Name:_____________________________________ Title:____________________________________ THE PURCHASER: PNC INVESTMENT CORP. By:________________________________________ Name: Brian F. Lilly Title: Vice President EX-10 3 EXHIBIT 10.2 - STOCK PURCHASE AGREEMENT Exhibit 10.2 STOCK PURCHASE AGREEMENT Stock Purchase Agreement ("Agreement"), dated as of March 23, 1998, by and between Anthracite Capital, Inc., a Maryland corporation (the "Company"), and FBR Asset Investment Corporation, a Virginia corporation (the "Purchaser"). 1. Sale and Purchase of Stock. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties contained herein, the Company agrees to issue and sell to the Purchaser and the Purchaser agrees to purchase 716,846 shares (the "Shares") of the Company's Common Stock, par value $.001 per share (the "Common Stock"), with the rights, restrictions, privileges and preferences as set forth in the Company's Restated and Amended Articles of Incorporation (the "Articles") as in effect on the date hereof, for an aggregate purchase price equal to $10,000,000 (the "Purchase Price"), which is equal to the initial public offering price, net of any underwriting discounts and commissions, as set forth in the Company's Registration Statement on Form S-11, as amended (Registration No. 333-40813) (the "Registration Statement"). 2. Closing. 2.1. Closing Date. The sale and purchase of the Shares (the "Closing") shall occur at the time and place of the closing of the initial public offering ("the IPO") of the Company pursuant to the Registration Statement. 2.2. Transactions at Closing. At the Closing, the Company will deliver to the Purchaser, at such place as the Purchaser shall designate prior to the Closing, a share certificate or certificates evidencing the Shares, duly executed and registered in the name of the Purchaser, against the receipt from the Purchaser of the Purchase Price in federal funds. 2.3. Registration Rights. As an inducement for the Purchaser to enter into this Agreement, the Company shall, contemporaneously with the execution of this Agreement, enter into a Registration Rights Agreement granting the Purchaser certain registration rights with respect to the Shares (the "Registration Rights Agreement"). 3. Representations and Warranties of the Company. The Company represents and warrants that: 3.1. Organization and Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland. 3.2. Capitalization. The Company's Articles provide that the Company may issue up to 400,000,000 shares of Common Stock and up to 100,000,000 shares of preferred stock ("Preferred Stock"). After the Closing, the Company will have authorized and issued 20,000,000 shares of Common Stock pursuant to the IPO (or, if the underwriters' overallotment is exercised, 23,000,000), will have authorized and issued, pursuant to the 1998 Stock Option Plan, outstanding options ("Stock Options"), to acquire 1,711,525 shares of Common Stock, will have authorized and issued 144,000 options (the "Additional Options," and, together with the Stock Options, the "Options"), to certain directors, officers and employees of the Company and the Manager, will have authorized and issued 640,727 shares of Common Stock (assuming that the underwriters' overallotment is not exercised) to PNC Bank Corp. pursuant to a stock purchase agreement as of the Closing and will have authorized and issued 716,846 shares of Common Stock pursuant to this Agreement. Other than the Options, there are no outstanding options, warrants, subscription rights (including any preemptive rights), calls or commitments of any character whatsoever to which the Company or any of its subsidiaries is a party or may be bound, requiring the issuance or sale of shares of any capital stock or other equity securities of the Company or securities or rights convertible into or exchangeable for such shares or other equity securities, and there are no contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of its capital stock or other equity securities or options, warrants or rights to purchase or acquire any additional shares of its capital stock or other equity securities or securities convertible into or exchangeable for such shares or other equity securities. The Company has no shares of Preferred Stock outstanding. 3.3. Authorization. The Company has the corporate power and authority to execute and deliver this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Registration Rights Agreement and the issuance and sale of the Shares have been duly authorized by the Board of Directors of the Company. No further approval or authorization of the Board of Directors or the shareholders of the Company will be required for the issuance and sale of the Shares as contemplated herein. This Agreement and the Registration Rights Agreement have been duly and validly executed and delivered by the Company, and each constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditors' rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.4. Legality of the Common Stock. Upon receipt by the Company of the Purchase Price, the Shares will be duly authorized, validly issued, fully paid and nonassessable. No party has any preemptive or similar rights in connection with the issuance of the Common Stock hereunder. All of the outstanding shares of Common Stock have been validly issued and are fully paid and non-assessable and were duly registered under the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws or were issued in reliance on exemptions therefrom and were not issued in violation of any preemptive rights. 3.5. No Violation. Neither the Company's execution and delivery of this Agreement or the Registration Rights Agreement nor the consummation by the Company of the transactions contemplated hereby or thereby will violate the Company's Articles of Incorporation or Bylaws or breach a material agreement to which the Company or any subsidiary of the Company is a party or by which its or any of its subsidiaries' assets are bound, or cause any such violation or breach, or accelerate or allow any person to accelerate, terminate, modify or cancel any material rights under any such agreement, or will result in the creation of any material lien on the assets or properties of the Company or any of its subsidiaries. Such execution, delivery and consummation will not violate or breach or constitute a default under any law, judgment, order, or decree to which the Company or any of its subsidiaries is subject or by which the properties or assets of the Company or any of its subsidiaries are bound. 3.6. Consents and Approvals. No consent, authorization, order, license, permit, or approval of, or filing with, any governmental authority or person is required in connection with the Company's execution, delivery and performance of this Agreement or the Registration Rights Agreement, except (i) such as must be made or obtained by the Purchaser, and (ii) such as shall have been made or obtained by the Company prior to the Closing. 3.7. Registration Statement. As of the date hereof, the Registration Statement does 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 light of the circumstances under which they were made, not misleading. 3.8. Litigation, etc. There is no action, proceeding or investigation pending or, to the best of the Company's knowledge, threatened (or any basis therefor known to the Company), that questions the validity of this Agreement, the Registration Rights Agreement, the Shares to be issued pursuant to this Agreement or which could have a material adverse effect on the financial condition, results of operations, business or properties of the Company and its subsidiaries, taken as a whole. 3.9. Brokers, Intermediaries and Finder's Fees. The Company represents that no finder, broker, agent, financial advisor or other intermediary has acted on behalf of the Company in connection with the offering and sale of the Common Stock to be issued and sold pursuant to this Agreement or the negotiation or consummation of this Agreement or any of the transactions contemplated hereby. 3.10. REIT Status. The Company is organized in a manner intended to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), and the Company intends to elect to be taxed as a REIT for its taxable year ended December 31, 1998. 4. Representations and Warranties of the Purchaser. The Purchaser represents and warrants that: 4.1. Organization and Standing. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Virginia. 4.2. Authorization. The Purchaser has the corporate power and authority to execute and deliver this Agreement and the Registration Rights Agreement and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Registration Rights Agreement and the purchase of the Shares hereunder have been duly authorized by the Purchaser. No further approval or authorization of the Board of Directors or the shareholders of the Purchaser will be required for the Purchaser's purchase of the Shares pursuant to the terms of this Agreement or the Registration Rights Agreement. This Agreement and the Registration Rights Agreement have been duly and validly executed and delivered by the Purchaser, and each constitutes a legal, valid and binding obligation of the Purchaser enforceable against each of them in accordance with its terms, except to the extent that such enforceability may be limited by bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditor's rights generally or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). 4.3. No Violation. Neither the Purchaser's execution and delivery of this Agreement or the Registration Rights Agreement nor the consummation by it of the transactions contemplated hereby or thereby will violate the Articles of Incorporation or Bylaws of the Purchaser or breach a material agreement to which it is a party or by which its assets are bound, or cause any such violation or breach, or accelerate or allow any person to accelerate, terminate, modify or cancel any material rights under any such agreement, or will result in the creation of any material lien on the assets or properties of the Purchaser. Such execution, delivery and consummation will not violate or breach or constitute a default under any material law, judgment, order, or decree to which the Purchaser is subject or by which the Purchaser or its subsidiaries' properties or assets are bound. 4.4. Consents and Approvals. No consent, authorization, order, license, permit, or approval of, or filing with, any governmental authority or any person is required in connection with the Purchaser's execution, delivery and performance of this Agreement or the Registration Rights Agreement except (i) such as must be made or obtained by the Company, and (ii) such as shall have been made or obtained by the Purchaser prior to the Closing. 4.5. Litigation, etc. There is no action, proceeding or investigation pending or, to the best of the Purchaser's knowledge, threatened (or any basis therefor known to the Purchaser), that questions the validity of this Agreement or the Registration Rights Agreement, or any action contemplated, taken or to be taken pursuant hereto or thereto. 4.6. Brokers, Intermediaries and Finder's Fees. The Purchaser represents that no finder, broker, agent, financial advisor or other intermediary has acted on behalf of the Purchaser in connection with the purchase of the Common Stock pursuant to this Agreement or the negotiation or consummation of this Agreement or any of the transactions contemplated hereby. 4.7. Investment Representations of the Purchaser. The Purchaser represents and warrants to and agrees with the Company as follows: (a) The Purchaser is acquiring the Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same, and it has no obligation, indebtedness or commitment providing for the disposition thereof. (b) The Purchaser acknowledges that it has been advised and is aware that (i) the Company is relying upon one or more exemptions under the Securities Act, and applicable state securities laws in connection with the offer, sale and issuance of the Shares and (ii) the Shares in the hands of the Purchaser will be restricted securities within the meaning of Rule 144 promulgated by the Securities Exchange Commission ("SEC") pursuant to the Securities Act, and unless and until registered under the Securities Act, may be subject to limitations on resale (including, among others, limitations on the amount of securities that can be resold and the timing and manner of resale) set forth in Rule 144 or in administrative interpretations of the Securities Act by the SEC or in other rules and regulations promulgated thereunder by the SEC, in effect at the time of the proposed sale or other disposition of the Shares. (c) The Purchaser has received a copy of the Registration Statement and has independently examined and investigated the Company in connection with the decision to purchase the Shares. The Purchaser or its representatives have made inquiries deemed by them to be satisfactory concerning the Company, its business, its officers and its personnel and have had access to its books and records. In making this investment, the Purchaser has relied solely upon information made available to it by the Company, and not upon information supplied by any other person. The Purchaser and its officers, directors and other representatives have substantial knowledge and experience in financial and business matters such that the Purchaser and its representatives are capable of evaluating the merits and risks of investment in the Company, and the Purchaser is able to bear the economic risks of its investment in the Company. (d) The Purchaser certifies that it is an accredited investor as defined in Rule 501(a)(3) promulgated under the Securities Act because it is a corporation not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000. 5. Transfer Restrictions; Legends. (a) In addition to the legends required by the Company's Articles of Incorporation, each certificate or instrument representing the Shares shall bear a legend in substantially the following form: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THOSE LAWS. Such legend shall be removed by the Company upon delivery to it of an opinion of counsel satisfactory to the Company and its counsel that a registration statement under the Securities Act is at the time effective with respect to the transfer of the legended security or that such security can be transferred without such registration statement being in effect and without the requirements of a legend on the certificate in the hands of the transferee. For a period of one hundred eighty (180) days following the commencement of the Company's IPO, the Purchaser agrees not to offer, sell, dispose of or otherwise transfer, directly or indirectly, the Shares or any interest in the Shares to any person in any manner. The Company agrees that the Purchaser may, at any time on or after the date hereof, pledge the shares of Common Stock to or for the benefit of any institutional lender or debt financing source to the Purchaser. 6. Covenants of the Company. The Company agrees: (a) for so long as it is required to file periodic reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to file all required reports thereunder on or prior to the due date therefor; and (b) to indemnify and hold harmless the Purchaser from and against any liability for commission or compensation in the nature of a finder's fee to any broker or other person or firm and the costs and expenses of defending against such liability or asserted liability, for which the Company, or any of its employees or representatives, is responsible. 7. Covenants of the Purchaser. The Purchaser agrees: (a) to indemnify and hold harmless the Company from and against any liability for commission or compensation in the nature of a finder's fee to any broker or other person or firm and the costs and expenses of defending against such liability or asserted liability, for which the Purchaser, or any of its employees or representatives, is responsible; and (b) to notify the Company in writing not less than 30 days in advance of any transfer, conveyance, assignment or pledge of the Common Stock permitted under the terms of this Agreement or the Articles. 8. Conditions to Closing. 8.1. Conditions of Purchaser's Obligations. The Purchaser's obligation to purchase the Shares is subject to the fulfillment, before or at the Closing, of all of the following conditions: (a) Representations and Warranties Correct. The representations and warranties of the Company made or contained herein in connection with the transactions contemplated hereby shall be correct in all material respects at and as of the Closing Date as if made on and as of the Closing Date, except as affected by the transactions contemplated hereby. (b) Performance. The Company shall have performed and complied with all agreements and conditions contained herein required to be performed or complied with by it before or at the Closing. (c) IPO. The IPO shall be consummated simultaneously with the Closing. (d) Opinion of Counsel. The Purchaser shall have received one or more opinions dated the Closing Date, reasonably satisfactory to the Purchaser's counsel in form and substance, from Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden Arps"), counsel for the Company, and/or Miles & Stockbridge, special counsel to the Company, to the effect that: (i) the Company has been duly organized and is validly existing as a corporation under the laws of the State of Maryland; (ii) all of the issued shares of capital stock of the Company have been validly issued and are fully paid and nonassessable as of the Closing Date, and were not issued in violation of or subject to any statutory preemptive rights or, to counsel's knowledge, other preemptive rights or other rights to subscribe for or purchase securities; (iii) the Shares have been duly authorized by all necessary corporate action and when issued, paid for and delivered pursuant to this Agreement, will be validly issued, fully paid and nonassessable; (iv) the execution and delivery of this Agreement and the Registration Rights Agreement have been duly and validly authorized by all necessary corporate action of the Company, this Agreement and the Registration Rights Agreement have been duly executed and delivered by the Company, and each Agreement is the valid and binding agreement of the Company, enforceable against the Company in accordance with its respective terms; and (v) registration of the Shares under the Securities Act is not required. (e) Officer's Certificate. The Purchaser shall have received an officer's certificate, dated the Closing Date and signed by the Company's President, certifying that the representations and warranties of the Company contained in this Agreement are true and correct in all material respects. (f) Opinions Delivered to Underwriter. The Purchaser shall have received opinions, addressed to the Purchaser dated the Closing Date, from Skadden Arps, counsel to the Company, in the same form as any opinions delivered to the underwriters as a condition to the closing of the IPO. (g) Certificates Delivered to Underwriter. The Purchaser shall have received certificates, dated the Closing Date, from the Company, in the same form as any certificates delivered to the underwriter as a condition to the closing of the IPO. (h) Registration Rights Agreement. The Company shall have executed the Registration Rights Agreement, dated the date hereof, relating to the Purchaser's registration rights with respect to the Shares. 8.2. Conditions of Company's Obligations. The Company's obligation to issue the Shares to the Purchaser at Closing is subject to the fulfillment, before or at the Closing, of all of the following conditions: (a) Representations and Warranties Correct. The representations and warranties of the Purchaser made or contained herein in connection with the transactions contemplated hereby shall be correct in all material respects at and as of the Closing Date as if made on and as of the Closing Date, except as affected by the transactions contemplated hereby. (b) Performance. The Purchaser shall have performed and complied with all agreements and conditions contained herein required to be performed or complied with by it before or at the Closing. (c) IPO. The IPO shall be consummated simultaneously with the Closing. (d) Officer's Certificate. The Company shall have received an officer's certificate, dated the Closing Date and signed by the Purchaser's President, certifying that the representations and warranties of the Company contained in this Agreement are true and correct in all material respects. 9. Notices. All notices, requests, consents and other communications to any party hereunder shall be in writing and shall be delivered by facsimile, reliable courier or first-class registered or certified mail, postage prepaid, at such party's address as set forth below, marked for attention as there indicated, or at such other address as may have been furnished to the other parties by such party in writing: TO THE COMPANY: Anthracite Capital, Inc. 345 Park Avenue New York, NY 10154 Telephone: (212) 754-5560 Facsimile: (212) [754-5397] Attention: Secretary TO THE PURCHASER: FBR Asset Investment Corp. 1001 19th Street North Arlington, VA 22209 Telephone: (703) 312-9500 Facsimile: (703) 312-9602 Attention: Secretary 10. Miscellaneous. 10.1. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to its conflict of laws principles or rules. 10.2. Successors and Assignees. All of the terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assignees of the parties hereto. 10.3. Entire Agreement. This Agreement and the Registration Rights Agreement embody the entire agreement and understanding among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof. 10.4. Headings of the Agreement. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 10.5. Counterparts of the Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.6. Severability of the Agreement. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 10.7. Termination. This Agreement shall terminate and be of no further force and effect if the Closing shall not have occurred on or prior to June 30, 1998. 10.8. Expenses. Each party shall bear its own expenses in connection with this Agreement, whether or not the transactions contemplated hereunder are consummated. IN WITNESS WHEREOF, the parties have caused this Stock Purchase Agreement to be duly executed and delivered as of the day and year first written above. THE COMPANY: ANTHRACITE CAPITAL, INC. By:_____________________________ Name:___________________________ Title:__________________________ THE PURCHASER: FBR ASSET INVESTMENT CORPORATION By:_____________________________ Name:___________________________ Title:__________________________ EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31, 1998 QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH. 3-MOS DEC-31-1998 MAR-24-1998 MAR-31-1998 0 382,890,695 2,950,673 0 0 0 0 0 385,841,368 88,493,950 0 0 0 297,171,892 175,526 385,841,368 0 215,339 0 0 42,143 0 0 173,196 0 173,196 0 0 0 173,196 0.008 0.008
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