Exhibit 10.1

 
 

PURCHASE AGREEMENT

among

PMC COMMERCIAL TRUST

PMC PREFERRED CAPITAL TRUST-A

and

TABERNA PREFERRED FUNDING I, LTD.

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Dated as of March 15, 2005

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PURCHASE AGREEMENT
($26,250,000 Trust Preferred Securities)

     THIS PURCHASE AGREEMENT, dated as of March 15, 2005 (this “Purchase
Agreement”), is entered into among PMC Commercial Trust, a Texas real estate
investment trust corporation (the “Company”), and PMC Preferred Capital Trust-A,
a Delaware statutory trust (the “Trust”, and together with the Company, the
“Sellers”), and TABERNA Preferred Funding I, Ltd. or its assignee (the
“Purchaser”).

WITNESSETH:

     WHEREAS, the Sellers propose to issue and sell twenty six thousand two
hundred fifty (26,250) Floating Rate Preferred Securities of the Trust, having a
stated liquidation amount of $1,000 per security, bearing a variable rate, reset
quarterly, equal to LIBOR (as defined in the Indenture (as defined below)) plus
3.25% (the “Preferred Securities”);

     WHEREAS, the entire proceeds from the sale of the Preferred Securities will
be combined with the entire proceeds from the sale by the Trust to the Company
of its common securities (the “Common Securities”), and will be used by the
Trust to purchase Twenty Seven Million Seventy Thousand Dollars ($27,070,000) in
principal amount of the unsecured junior subordinated deferrable interest notes
of the Company (the “Junior Subordinated Notes”);

     WHEREAS, the Preferred Securities and the Common Securities for the Trust
will be issued pursuant to the Amended and Restated Trust Agreement (the “Trust
Agreement”), dated as of the Closing Date, among the Company, as depositor,
JPMorgan Chase Bank, National Association, a national banking association, as
property trustee (in such capacity, the “Property Trustee”), Chase Bank USA,
National Association, a national banking association, as Delaware trustee (in
such capacity, the “Delaware Trustee”), the Administrative Trustees named
therein (in such capacities, the “Administrative Trustees”) and the holders from
time to time of undivided beneficial interests in the assets of the Trust; and

     WHEREAS, the Junior Subordinated Notes will be issued pursuant to a Junior
Subordinated Indenture, dated as of the Closing Date (the “Indenture”), between
the Company and JPMorgan Chase Bank, National Association, a national banking
association, as indenture trustee (in such capacity, the “Indenture Trustee”).

     NOW, THEREFORE, in consideration of the mutual agreements and subject to
the terms and conditions herein set forth, the parties hereto agree as follows:

          1. Definitions. The Preferred Securities, the Common Securities and
the Junior Subordinated Notes are collectively referred to herein as the
“Securities.” This Purchase Agreement, the Indenture, the Trust Agreement and
the Securities are collectively referred to herein as the “Operative Documents.”
All other capitalized terms used but not defined in this Purchase Agreement
shall have the respective meanings ascribed thereto in the Indenture.

 

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          2. Purchase and Sale of the Preferred Securities.

          (a) The Sellers agree to sell to the Purchaser, and the Purchaser
agrees to purchase from the Sellers the Preferred Securities for an amount (the
“Purchase Price”) equal to Twenty Six Million Two Hundred Fifty Thousand Dollars
($26,250,000). The Purchaser shall be responsible for the rating agency costs
and expenses. The Sellers shall use the Purchase Price, together with the
proceeds from the sale of the Common Securities, to purchase the Junior
Subordinated Notes.

          (b) Delivery or transfer of, and payment for, the Preferred Securities
shall be made at 10:00 A.M. Chicago time (11:00 A.M. New York time), on
March 15, 2005 or such later date (not later than April 14, 2005) as the parties
may designate (such date and time of delivery and payment for the Preferred
Securities being herein called the “Closing Date”). The Preferred Securities
shall be transferred and delivered to the Purchaser against the payment of the
Purchase Price to the Sellers made by wire transfer in immediately available
funds on the Closing Date to a U.S. account designated in writing by the Company
at least two business days prior to the Closing Date.

          (c) Delivery of the Preferred Securities shall be made at such
location, and in such names and denominations, as the Purchaser shall designate
at least two business days in advance of the Closing Date. The Company and the
Trust agree to have the Preferred Securities available for inspection and
checking by the Purchaser in Chicago, Illinois, not later than 1:00 P.M.,
Chicago time (2:00 P.M. New York time), on the business day prior to the Closing
Date. The closing for the purchase and sale of the Preferred Securities shall
occur at the offices of Mayer, Brown, Rowe & Maw LLP, 190 South LaSalle Street,
Chicago, Illinois 60603, or such other place as the parties hereto shall agree.

          3. Conditions. The obligations of the parties under this Purchase
Agreement are subject to the following conditions:

          (a) The representations and warranties contained herein shall be
accurate as of the date of delivery of the Preferred Securities.

          (b) [Reserved.]

          (c) Locke Liddell & Sapp LLP, counsel for the Company and the Trust
(the “Company Counsel”), shall have delivered an opinion, dated the Closing
Date, addressed to the Purchaser and JPMorgan Chase Bank, National Association,
in substantially the form set out in Annex A-I hereto and the Company shall have
furnished to the Purchaser the opinion of the Company’s General Counsel or a
certificate signed by the Company’s Chief Executive Officer, President, an
Executive Vice President, Chief Financial Officer, Treasurer or Assistant
Treasurer, dated the Closing Date, addressed to the Purchaser, in substantially
the form set out in Annex A-II hereto. In rendering their opinion, the Company
Counsel may rely as to factual matters upon certificates or other documents
furnished by officers, directors and trustees of the Company and the Trust and
by government officials (provided, however, that copies of any such certificates
or documents are delivered to the Purchaser) and by and upon such other
documents as such counsel may, in their reasonable opinion, deem appropriate as
a basis for the Company

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Counsel’s opinion. The Company Counsel may specify the jurisdictions in which
they are admitted to practice and that they are not admitted to practice in any
other jurisdiction and are not experts in the law of any other jurisdiction. If
the Company Counsel is not admitted to practice in the State of New York, the
opinion of the Company Counsel may assume, for purposes of the opinion, that the
laws of the State of New York are substantively identical, in all respects
material to the opinion, to the internal laws of the state in which such counsel
is admitted to practice. Such Company Counsel Opinion shall not state that they
are to be governed or qualified by, or that they are otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).

          (d) The Purchaser and Sellers shall have been furnished the opinion of
Mayer, Brown, Rowe & Maw LLP, special tax counsel for the Purchaser, dated the
Closing Date, addressed to the Purchaser, the Sellers and JPMorgan Chase Bank,
National Association, in substantially the form set out in Annex B hereto.

          (e) The Purchaser shall have received the opinion of Richards, Layton
& Finger, P.A., special Delaware counsel for the Delaware Trustee, dated the
Closing Date, addressed to the Purchaser, JPMorgan Chase Bank, National
Association, a national banking association, the Delaware Trustee and the
Company, in substantially the form set out in Annex C hereto.

          (f) The Purchaser shall have received the opinion of Gardere Wynne
Sewell LLP, special counsel for the Property Trustee and the Indenture Trustee,
dated the Closing Date, addressed to the Purchaser, in substantially the form
set out in Annex D hereto.

          (g) The Purchaser shall have received the opinion of Richards, Layton
& Finger, P.A., special Delaware counsel for the Delaware Trustee, dated the
Closing Date, addressed to the Purchaser and JPMorgan Chase Bank, National
Association, in substantially the form set out in Annex E hereto.

          (h) The Company shall have furnished to the Purchaser a certificate of
the Company, signed by the Chief Executive Officer, President or an Executive
Vice President, and Chief Financial Officer, Treasurer or Assistant Treasurer of
the Company, and the Trust shall have furnished to the Purchaser a certificate
of the Trust, signed by an Administrative Trustee of the Trust, in each case
dated the Closing Date, and, in the case of the Company, as to (i) and
(ii) below and, in the case of the Trust, as to (i) below.

               (i) the representations and warranties in this Purchase Agreement
are true and correct on and as of the Closing Date with the same effect as if
made on the Closing Date, and the Company and the Trust have complied with all
the agreements and satisfied all the conditions on either of their part to be
performed or satisfied at or prior to the Closing Date; and

               (ii) since the date of the Interim Financial Statements (as
defined below), there has been no material adverse change in the condition
(financial or other), earnings, business or assets of the Company and its
subsidiaries, whether or not arising

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from transactions occurring in the ordinary course of business (a “Material
Adverse Change”).

          (i) Subsequent to the execution of this Purchase Agreement, there
shall not have been any change, or any development involving a prospective
change, in or affecting the condition (financial or other), earnings, business
or assets of the Company and its subsidiaries, whether or not occurring in the
ordinary course of business, the effect of which is, in the Purchaser’s
judgment, so material and adverse as to make it impractical or inadvisable to
proceed with the purchase of the Preferred Securities.

          (j) Prior to the Closing Date, the Company and the Trust shall have
furnished to the Purchaser and its counsel such further information,
certificates and documents as the Purchaser or its counsel may reasonably
request.

     If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as provided in this Purchase Agreement, or if any of the
opinions, certificates and documents mentioned above or elsewhere in this
Purchase Agreement shall not be reasonably satisfactory in form and substance to
the Purchaser or its counsel, this Purchase Agreement and all the Purchaser’s
obligations hereunder may be canceled at, or at any time prior to, the Closing
Date by the Purchaser. Notice of such cancellation shall be given to the Company
and the Trust in writing or by telephone or facsimile confirmed in writing.

     Each certificate signed by any trustee of the Trust or any officer of the
Company and delivered to the Purchaser or the Purchaser’s counsel in connection
with the Operative Documents and the transactions contemplated hereby and
thereby shall be deemed to be a representation and warranty of the Trust and/or
the Company, as the case may be, and not by such trustee or officer in any
individual capacity.

               4. Representations and Warranties of the Company and the Trust.
The Company and the Trust jointly and severally represent and warrant to, and
agree with the Purchaser, as follows:

               (a) Neither the Company nor the Trust, nor any of their
“Affiliates” (as defined in Rule 501(b) of Regulation D (“Regulation D”) under
the Securities Act (as defined below)), nor any person acting on its or their
behalf, has, directly or indirectly, made offers or sales of any security, or
solicited offers to buy any security, under circumstances that would require the
registration of any of the Securities under the Securities Act of 1933, as
amended (the “Securities Act”).

               (b) Neither the Company nor the Trust, nor any of their
Affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of any of the Securities.

               (c) The Securities (i) are not and have not been listed on a
national securities exchange registered under section 6 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or quoted on a U.S.
automated inter-dealer quotation system and (ii) are not of

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an open-end investment company, unit investment trust or face-amount certificate
company that are, or are required to be, registered under section 8 of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), and
the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3)
promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”).

               (d) Neither the Company nor the Trust, nor any of their
Affiliates, nor any person acting on its or their behalf, has engaged, or will
engage, in any “directed selling efforts” within the meaning of Regulation S
under the Securities Act with respect to the Securities.

               (e) Neither the Company nor the Trust is, and, immediately
following consummation of the transactions contemplated hereby and the
application of the net proceeds therefrom, will not be, an “investment company”
or an entity “controlled” by an “investment company,” in each case within the
meaning of section 3(a) of the Investment Company Act.

               (f) Neither the Company nor the Trust has paid or agreed to pay
to any person any compensation for soliciting another to purchase any of the
Securities, except for the Preferred Securities Commission and/or the sales
commission the Company has agreed to pay to Cohen Bros. & Company (or to the
Company’s introducing agent on behalf of Cohen Bros. & Company) pursuant to the
letter agreement between the Company and Cohen Bros. & Company, dated
October 20, 2005.

               (g) The Trust has been duly created and is validly existing in
good standing as a statutory trust under the Delaware Statutory Trust Act, 12
Del. C. §3801, et seq. (the “Statutory Trust Act”) with all requisite power and
authority to own property and to conduct the business it transacts and proposes
to transact and to enter into and perform its obligations under the Operative
Documents to which it is a party. The Trust is duly qualified to transact
business as a foreign entity and is in good standing in each jurisdiction in
which such qualification is necessary, except where the failure to so qualify or
be in good standing would not have a material adverse effect on the condition
(financial or otherwise), earnings, business or assets of the Trust, whether or
not occurring in the ordinary course of business. The Trust is not a party to or
otherwise bound by any agreement other than the Operative Documents.

               (h) The Trust Agreement has been duly authorized by the Company
and, on the Closing Date specified in Section 2(b), will have been duly executed
and delivered by the Company and the Administrative Trustees of the Trust, and,
assuming due authorization, execution and delivery by the Property Trustee and
the Delaware Trustee, will be a legal, valid and binding obligation of the
Company and the Administrative Trustees, enforceable against them in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity. Each
of the Administrative Trustees of the Trust is an employee of the Company and
has been duly authorized by the Company to execute and deliver the Trust
Agreement.

               (i) The Indenture has been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company,
and, assuming due authorization, execution and delivery by the Indenture
Trustee, will be a legal, valid and binding

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obligation of the Company enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity.

               (j) The Preferred Securities and the Common Securities have been
duly authorized by the Trust and, when issued and delivered against payment
therefor on the Closing Date in accordance with this Purchase Agreement, in the
case of the Preferred Securities, and in accordance with the Common Securities
Subscription Agreement, in the case of the Common Securities, will be validly
issued, fully paid and non-assessable and will represent undivided beneficial
interests in the assets of the Trust entitled to the benefits of the Trust
Agreement, enforceable against the Trust in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors’
rights generally and to general principles of equity. The issuance of the
Securities is not subject to any preemptive or other similar rights. On the
Closing Date, all of the issued and outstanding Common Securities will be
directly owned by the Company free and clear of any pledge, security interest,
claim, lien or other encumbrance of any kind (each, a “Lien”).

               (k) The Junior Subordinated Notes have been duly authorized by
the Company and, on the Closing Date, will have been duly executed and delivered
to the Indenture Trustee for authentication in accordance with the Indenture
and, when authenticated in the manner provided for in the Indenture and
delivered to the Trust against payment therefor in accordance with the Junior
Subordinated Note Purchase Agreement, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity.

               (l) This Purchase Agreement has been duly authorized, executed
and delivered by the Company and the Trust.

               (m) Neither the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, nor the purchase of the
Junior Subordinated Notes by the Trust, nor the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust, nor the
consummation of the transactions contemplated herein or therein, (i) will
conflict with or constitute a violation or breach of the Trust Agreement or the
charter or bylaws of the Company or any subsidiary of the Company or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, governmental authority, agency or instrumentality or court,
domestic or foreign, having jurisdiction over the Trust or the Company or any of
its subsidiaries or their respective properties or assets (collectively, the
“Governmental Entities”), (ii) will conflict with or constitute a violation or
breach of, or a default or Repayment Event (as defined below) under, or result
in the creation or imposition of any Lien upon any property or assets of the
Trust, the Company or any of the Company’s subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which (A) the Trust, the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or (B) to which any of the
property or assets of any of them is subject, or any judgment, order or decree
of any court,

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Governmental Entity or arbitrator, except, in the case of this clause (ii), for
such conflicts, breaches, violations, defaults, Repayment Events (as defined
below) or Liens which (X) would not, singly or in the aggregate, adversely
affect the consummation of the transactions contemplated by the Operative
Documents and (Y) would not, singly or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, business,
liabilities and assets (taken as a whole) or business prospects of the Company
and its subsidiaries taken as a whole, whether or not occurring in the ordinary
course of business (a “Material Adverse Effect”) or (iii) require the consent,
approval, authorization or order of any court or Governmental Entity. As used
herein, a “Repayment Event” means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder’s behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Trust or the Company
or any of its subsidiaries prior to its scheduled maturity.

               (n) The Company has been duly formed and is validly existing as a
real estate investment trust under the laws of Texas, with all requisite power
and authority to own, lease and operate its properties and conduct the business
it transacts and proposes to transact, and is duly qualified to transact
business and is in good standing as a foreign corporation in each jurisdiction
where the nature of its activities requires such qualification, except where the
failure of the Company to be so qualified would not, singly or in the aggregate,
have a Material Adverse Effect.

               (o) The Company has no subsidiaries that are material to its
business, financial condition or earnings other than those subsidiaries listed
in Schedule 1 attached hereto (collectively, the “Significant Subsidiaries”).
Each Significant Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction in which it
is chartered or organized, with all requisite corporate power and authority to
own, lease and operate its properties and conduct the business it transacts and
proposes to transact. Each Significant Subsidiary is duly qualified to transact
business and is in good standing as a foreign corporation in each jurisdiction
where the nature of its activities requires such qualification, except where the
failure to be so qualified would not, singly or in the aggregate, have a
Material Adverse Effect.

               (p) Each of the Trust, the Company and each of the Company’s
subsidiaries hold all necessary approvals, authorizations, orders, licenses,
consents, registrations, qualifications, certificates and permits (collectively,
the “Governmental Licenses”) of and from Governmental Entities necessary to
conduct their respective businesses as now being conducted, and neither the
Trust, the Company nor any of the Company’s subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such Government
License, except where the failure to be so licensed or approved or the receipt
of an unfavorable decision, ruling or finding, would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except where the invalidity or the failure
of such Governmental Licenses to be in full force and effect, would not, singly
or in the aggregate, have a Material Adverse Effect; and the Company and its
subsidiaries are in compliance with all applicable laws, rules, regulations,
judgments, orders, decrees and

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consents, except where the failure to be in compliance would not, singly or in
the aggregate, have a Material Adverse Effect.

               (q) All of the issued and outstanding shares of beneficial
interest in the Company and the capital stock or other interests in each of its
subsidiaries are validly issued, fully paid and non-assessable; all of the
issued and outstanding capital stock of each subsidiary of the Company (other
than PMC Investment Corporation) is owned by the Company, directly or through
subsidiaries, free and clear of any Lien, claim or equitable right; and none of
the issued and outstanding shares of beneficial interest of the Company or
capital stock or other interests in any subsidiary was issued in violation of
any preemptive or similar rights arising by operation of law, under the charter
or by-laws of such entity or under any agreement to which the Company or any of
its subsidiaries is a party.

               (r) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws or similar organizational
documents or (ii) in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which the
Company or any such subsidiary is a party or by which it or any of them may be
bound or to which any of the property or assets of any of them is subject,
except, in the case of clause (ii), where such violation or default would not,
singly or in the aggregate, have a Material Adverse Effect.

               (s) There is no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court, domestic or foreign, now pending or,
to the knowledge of the Company or the Trust after due inquiry, threatened
against or affecting the Trust or the Company or any of the Company’s
subsidiaries, except for such actions, suits or proceedings that, if adversely
determined, would not, singly or in the aggregate, adversely affect the
consummation of the transactions contemplated by the Operative Documents or have
a Material Adverse Effect; and the aggregate of all pending legal or
governmental proceedings to which the Trust or the Company or any of its
subsidiaries is a party or of which any of their respective properties or assets
is subject, including ordinary routine litigation incidental to the business,
are not expected to result in a Material Adverse Effect.

               (t) The accountants of the Company who certified the Financial
Statements (as defined below) are independent public accountants of the Company
and its subsidiaries within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the “Commission”)
thereunder.

               (u) The audited consolidated financial statements (including the
notes thereto) and schedules of the Company and its consolidated subsidiaries
for the fiscal year ended December 31, 2003 (the “Financial Statements”) and the
interim unaudited consolidated financial statements of the Company and its
consolidated subsidiaries for the quarter ended September 30, 2004 (the “Interim
Financial Statements”) provided to the Purchaser are the most recent available
audited and unaudited consolidated financial statements of the Company and its
consolidated subsidiaries, respectively, and fairly present in all material
respects, in accordance with U.S. generally accepted accounting principles, the
financial position of the Company and its

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consolidated subsidiaries, and the results of operations and changes in
financial condition as of the dates and for the periods therein specified,
subject, in the case of Interim Financial Statements, to year-end adjustments
(which are expected to consist solely of normal recurring adjustments). Such
consolidated financial statements and schedules have been prepared in accordance
with U.S. generally accepted accounting principles (“GAAP”)consistently applied
throughout the periods involved (except as otherwise noted therein).

               (v) None of the Trust, the Company nor any of its subsidiaries
has any material liability, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes (and to the
Company’s knowledge there is no past or present fact, situation, circumstance,
condition or other basis for any present or future action, suit, proceeding,
hearing, charge, complaint, claim or demand against the Company or its
subsidiaries that could give rise to any such liability), except for
(i) liabilities set forth in the Financial Statements or the Interim Financial
Statements and (ii) normal fluctuations in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business of
the Trust, the Company and all of its subsidiaries since the date of the most
recent balance sheet included in such Financial Statements.

               (w) Since the respective dates of the Financial Statements and
the Interim Financial Statements, there has not been (A) any Material Adverse
Change or (B) any dividend or distribution of any kind declared, paid or made by
the Company on any shares of its beneficial interest other than regular
quarterly dividends on the Company’s common shares of beneficial.

               (x) The documents of the Company filed with the Commission in
accordance with the Exchange Act, from and including the commencement of the
fiscal year covered by the Company’s most recent Annual Report on Form 10-K, at
the time they were or hereafter are filed by the Company with the Commission
(collectively, the “1934 Act Reports”), complied and will comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder (the “1934 Act Regulations”), and, at the date of
this Purchase Agreement and on the Closing Date, do not and will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and other than
such instruments, agreements, contracts and other documents as are filed as
exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form
10-Q or Current Reports on Form 8-K, there are no instruments, agreements,
contracts or documents of a character described in Item 601 of Regulation S-K
promulgated by the Commission to which the Company or any of its subsidiaries is
a party. To its knowledge the Company is in compliance with all currently
applicable requirements of the Exchange Act that were added by the
Sarbanes-Oxley Act of 2002.

               (y) No labor dispute with the employees of the Trust, the Company
or any of its subsidiaries exists or, to the knowledge of the executive officers
of the Trust or the Company, is imminent, except those which would not, singly
or in the aggregate, have a Material Adverse Effect.

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               (z) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Governmental Entity, other
than those that have been made or obtained, is necessary or required for the
performance by the Trust or the Company of their respective obligations under
the Operative Documents, as applicable, or the consummation by the Trust and the
Company of the transactions contemplated by the Operative Documents.

               (aa) Each of the Trust, the Company and each subsidiary of the
Company has good and marketable title to all of its respective real and personal
properties, in each case free and clear of all Liens and defects, except for
those that would not, singly or in the aggregate, have a Material Adverse
Effect; and all of the leases and subleases under which the Trust, the Company
or any subsidiary of the Company holds properties are in full force and effect,
except where the failure of such leases and subleases to be in full force and
effect would not, singly or in the aggregate, have a Material Adverse Effect,
and none of the Trust, the Company or any subsidiary of the Company has any
notice of any claim of any sort that has been asserted by anyone adverse to the
rights of the Trust, the Company or any subsidiary of the Company under any such
leases or subleases, or affecting or questioning the rights of such entity to
the continued possession of the leased or subleased premises under any such
lease or sublease, except for such claims that would not, singly or in the
aggregate, have a Material Adverse Effect.

               (bb) The Company has no present intention to exercise its option
to defer payments of interest on the Junior Subordinated Notes as provided in
the Indenture. The Company believes that the likelihood that it would exercise
its rights to defer payments of interest on the Junior Subordinated Notes as
provided in the Indenture at any time during which the Junior Subordinated Notes
are outstanding is remote because of the restrictions that would be imposed on
the Company’s ability to declare or pay dividends or distributions on, or to
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Company’s capital stock and on the Company’s ability to make any payments of
principal, interest or premium, if any, on, or repay, repurchase or redeem, any
of its debt securities that rank pari passu in all respects with or junior in
interest to the Junior Subordinated Notes.

               (cc) Commencing with its taxable year ended December 31, 1994 the
Company has been, and upon the completion of the transactions contemplated
hereby, the Company will continue to be, organized and operated in conformity
with the requirements for qualification and taxation as a real estate investment
trust (a “REIT”) under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the “Code”), and the Company’s proposed method of operation
will enable it to continue to meet the requirements for qualification and
taxation as a REIT under the Code, and no actions have been taken (or not taken
which are required to be taken) which would cause such qualification to be lost.
The Company expects to continue to be organized and to operate in a manner so as
to qualify as a REIT in the taxable year ending December 31, 2005 and succeeding
taxable years.

               (dd) The Company and each of the Significant Subsidiaries have
timely and duly filed all Tax Returns required to be filed by them, and all such
Tax Returns are true, correct and complete in all material respects. The Company
and each of the Significant Subsidiaries have timely and duly paid in full all
material Taxes required to be paid by them (whether or not such amounts are
shown as due on any Tax Return except for Taxes being contested in good

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faith). There are no federal, state, or other Tax audits or deficiency
assessments proposed or pending with respect to the Company or any of the
Significant Subsidiaries, and to the Company’s knowledge no such audits or
assessments are threatened. As used herein, the terms “Tax” or “Taxes” mean
(i) all federal, state, local, and foreign taxes, and other assessments of a
similar nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, imposed by any
Governmental Entity, and (ii) all liabilities in respect of such amounts arising
as a result of being a member of any affiliated, consolidated, combined, unitary
or similar group, as a successor to another person or by contract. As used
herein, the term “Tax Returns” means all federal, state, local, and foreign Tax
returns, declarations, statements, reports, schedules, forms, and information
returns and any amendments thereto filed or required to be filed with any
Governmental Entity.

               (ee) The Trust is not, or will not be within ninety (90) days of
the date hereof, subject to more than a de minimis amount of other taxes, duties
or other governmental charges. To the Company’s knowledge, there are no
rulemaking or similar proceedings before the United States Internal Revenue
Service or comparable federal, state, local or foreign government bodies which
involve or affect the Company or any subsidiary, which, if the subject of an
action unfavorable to the Company or any subsidiary, could result in a material
adverse effect on the Company and the Significant Subsidiaries, taken as a
whole.

               (ff) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

               (gg) The Company and the Significant Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts in all material respects as are customary in the businesses
in which they are engaged or propose to engage after giving effect to the
transactions contemplated hereby including but not limited to, real or personal
property owned or leased against theft, damage, destruction, act of vandalism
and all other risks customarily insured against. All policies of insurance and
fidelity or surety bonds insuring the Company or any of the Significant
Subsidiaries or the Company’s or Significant Subsidiaries’ respective
businesses, assets, employees, officers and directors are in full force and
effect. The Company and each of the subsidiaries are in compliance with the
terms of such policies and instruments in all material respects. Neither the
Company nor any Significant Subsidiary 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 on
the Company and the Significant Subsidiaries, taken as a whole. Within the past
twelve

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months, neither the Company nor any Significant Subsidiary has been unable to
obtain any insurance coverage which it has sought or for which it has applied.

               (hh) The Company and its subsidiaries or any person acting on
behalf of the Company and its subsidiaries including, without limitation, any
director, officer, agent or employee of the Company or its subsidiaries has not,
directly or indirectly, while acting on behalf of the Company and its
subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity;
(ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any other unlawful payment.

               (ii) The information provided in writing by the Company and the
Trust pursuant to this Purchase Agreement and the transactions contemplated
hereby does not, as of the date hereof, and will not as of the Closing Date,
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

               (jj) Except as would not, individually or in the aggregate,
result in a Material Adverse Change, (i) the Company and its subsidiaries have
been and are in compliance with applicable Environmental Laws (as defined
below), (ii) none of the Company, any of its subsidiaries or, to the best of the
Company’s knowledge, any other owners of any of the Properties at any time or
any other party, has at any time released (as such term is defined in CERCLA (as
defined below)) or otherwise disposed of Hazardous Materials (as defined below)
on, to, in, under or from the Properties or any other real properties previously
owned, leased or operated by the Company or any of its subsidiaries,
(iii) neither the Company nor any of its subsidiaries intends to use the
Properties or any subsequently acquired properties, other than in compliance
with applicable Environmental Laws, (iv) neither the Company nor any of its
subsidiaries has received any notice of, or has any knowledge of any occurrence
or circumstance which, with notice or passage of time or both, would give rise
to a claim under or pursuant to any Environmental Law with respect to the
Properties, any other real properties previously owned, leased or operated by
the Company or any of its subsidiaries, or their respective assets or arising
out of the conduct of the Company or its subsidiaries, (v) none of the
Properties are included or, to the best of the Company’s knowledge, proposed for
inclusion on the National Priorities List issued pursuant to CERCLA by the
United States Environmental Protection Agency or, to the best of the Company’s
knowledge, proposed for inclusion on any similar list or inventory issued
pursuant to any other Environmental Law or issued by any other Governmental
Entity, (vi) none of the Company, any of its subsidiaries or agents or, to the
best of the Company’s knowledge, any other person or entity for whose conduct
any of them is or may be held responsible, has generated, manufactured, refined,
transported, treated, stored, handled, disposed, transferred, produced or
processed any Hazardous Material at any of the Properties, except in compliance
with all applicable Environmental Laws, and has not transported or arranged for
the transport of any Hazardous Material from the Properties or any other real
properties previously owned, leased or operated by the Company or any of its
subsidiaries to another property, except in compliance with all applicable
Environmental Laws, (vii) no lien has been imposed on the

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Properties by any Governmental Entity in connection with the presence on or off
such Property of any Hazardous Material, and (viii) none of the Company, any of
its subsidiaries or, to the best of the Company’s knowledge, any other person or
entity for whose conduct any of them is or may be held responsible, has entered
into or been subject to any consent decree, compliance order, or administrative
order with respect to the Properties or any facilities or improvements or any
operations or activities thereon.

     As used herein, “Hazardous Material” shall include, without limitation, any
flammable materials, explosives, radioactive materials, hazardous materials,
hazardous substances, hazardous wastes, toxic substances or related materials,
asbestos, petroleum, petroleum products and any hazardous material as defined by
any federal, state or local environmental law, statute, ordinance, rule or
regulation, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§
9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as amended, 49
U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42
U.S.C. §§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances Control Act, 15 U.S.C. §§
2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§
136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the Clean Water Act
(Federal Water Pollution Control Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking
Water Act, 42 U.S.C. §§ 300f-300j-26, and the Occupational Safety and Health
Act, 29 U.S.C. §§ 651-678, and any analogous state laws, as any of the above may
be amended from time to time and in the regulations promulgated pursuant to each
of the foregoing (including environmental statutes and laws not specifically
defined herein) (individually, an “Environmental Law” and collectively, the
“Environmental Laws”) or by any Governmental Entity.

               (kk) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, and periodically
identifies and evaluates associated costs and liabilities (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). On the basis of such reviews and the amount of
its established reserves, the Company has reasonably concluded that such
associated costs and liabilities would not, individually or in the aggregate,
result in a Material Adverse Change.

               5. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to, and agrees with, the Company and the Trust as
follows:

               (a) The Purchaser is aware that the Securities have not been and
will not be registered under the Securities Act and may not be offered or sold
within the United States or to “U.S. persons” (as defined in Regulation S under
the Securities Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act.

               (b) The Purchaser is an “accredited investor,” as such term is
defined in Rule 501(a) of Regulation D under the Securities Act.

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               (c) Neither the Purchaser, nor any of the Purchaser’s affiliates,
nor any person acting on the Purchaser’s or the Purchaser’s Affiliate’s behalf
has engaged, or will engage, in any form of “general solicitation or general
advertising” (within the meaning of Regulation D under the Securities Act) in
connection with any offer or sale of the Preferred Securities.

               (d) The Purchaser understands and acknowledges that (i) no public
market exists for any of the Securities and that it is unlikely that a public
market will ever exist for the Securities, (ii) the Purchaser is purchasing the
Securities for its own account, for investment and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of the
Securities Act or other applicable securities laws, subject to any requirement
of law that the disposition of its property be at all times within its control
and subject to its ability to resell such Securities pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption
therefrom or in a transaction not subject thereto, and the Purchaser agrees to
the legends and transfer restrictions applicable to the Securities contained in
the Indenture, and (iii) the Purchaser has had the opportunity to ask questions
of, and receive answers and request additional information from, the Company and
is aware that it may be required to bear the economic risk of an investment in
the Securities.

               (e) The Purchaser is a company with limited liability duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction in which it is organized with all requisite (i) power and authority
to execute, deliver and perform the Operative Documents to which it is a party,
to make the representations and warranties specified herein and therein and to
consummate the transactions contemplated herein and (ii) right and power to
purchase the Securities.

               (f) This Purchase Agreement has been duly authorized, executed
and delivered by the Purchaser and no filing with, or authorization, approval,
consent, license, order registration, qualification or decree of, any
governmental body, agency or court having jurisdiction over the Purchaser, other
than those that have been made or obtained, is necessary or required for the
performance by the Purchaser of its obligations under this Purchase Agreement or
to consummate the transactions contemplated herein.

               (g) The Purchaser is a “Qualified Purchaser” as such term is
defined in Section 2(a)(51) of the Investment Company Act.

               6. Covenants and Agreements of the Company and the Trust. The
Company and the Trust jointly and severally agree with the Purchaser as follows:

               (a) During the period from the date of this Agreement to the
Closing Date, the Company and the Trust shall use their commercially reasonable
efforts and take all action necessary or appropriate to cause their
representations and warranties contained in Section 4 hereof to be true as of
the Closing Date, after giving effect to the transactions contemplated by this
Purchase Agreement, as if made on and as of the Closing Date.

               (b) The Company and the Trust will arrange for the qualification
of the Preferred Securities for sale under the laws of such jurisdictions as the
Purchaser may designate and will maintain such qualifications in effect so long
as required for the sale of the Preferred

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Securities. The Company or the Trust, as the case may be, will promptly advise
the Purchaser of the receipt by the Company or the Trust, as the case may be, of
any notification with respect to the suspension of the qualification of the
Preferred Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.

               (c) Neither the Company nor the Trust will, nor will either of
them permit any of its Affiliates to, nor will either of them permit any person
acting on its or their behalf (other than the Purchaser) to, resell any
Preferred Securities that have been acquired by any of them.

               (d) Neither the Company nor the Trust will, nor will either of
them permit any of their Affiliates or any person acting on their behalf to,
engage in any “directed selling efforts” within the meaning of Regulation S
under the Securities Act with respect to the Securities.

               (e) Neither the Company nor the Trust will, nor will either of
them permit any of their Affiliates or any person acting on their behalf to,
directly or indirectly, make offers or sales of any security, or solicit offers
to buy any security, under circumstances that would require the registration of
any of the Securities under the Securities Act.

               (f) Neither the Company nor the Trust will, nor will either of
them permit any of its Affiliates or any person acting on their behalf to,
engage in any form of “general solicitation or general advertising” (within the
meaning of Regulation D) in connection with any offer or sale of the any of the
Securities.

               (g) So long as any of the Securities are outstanding, (i) the
Securities shall not be listed on a national securities exchange registered
under section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system and (ii) neither the Company nor the Trust shall be an open-end
investment company, unit investment trust or face-amount certificate company
that is, or is required to be, registered under section 8 of the Investment
Company Act, and, the Securities shall otherwise satisfy the eligibility
requirements of Rule 144A(d)(3).

               (h) Each of the Company and the Trust shall furnish to (i) the
holders, and subsequent holders of the Preferred Securities, (ii) Cohen Bros. &
Company (at 450 Park, 23rd Floor, New York, NY 10022, or such other address as
designated by Cohen Bros. & Company) and (iii) any beneficial owner of the
Securities reasonably identified to the Company and the Trust (which
identification may be made by either such beneficial owner or by Cohen Bros. &
Company), a duly completed and executed certificate in the form attached hereto
as Annex F, including the financial statements referenced in such Annex, which
certificate and financial statements shall be so furnished by the Company and
the Trust not later than forty five (45) days after the end of each of the first
three fiscal quarters of each fiscal year of the Company and not later than
ninety (90) days after the end of each fiscal year of the Company.

               (i) Each of the Company and the Trust will, during any period in
which it is not subject to and in compliance with section 13 or 15(d) of the
Exchange Act, or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, shall provide to
each holder of the Securities and to each prospective purchaser (as designated
by such holder) of the Securities, upon the request of such holder or
prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the

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Securities Act. If the Company and the Trust are required to register under the
Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be
sufficient information as required above. This covenant is intended to be for
the benefit of the Purchaser, the holders of the Securities, and the prospective
purchasers designated by the Purchaser and such holders, from time to time, of
the Securities.

               (j) Neither the Company nor the Trust will, until one hundred
eighty (180) days following the Closing Date, without the Purchaser’s prior
written consent, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, directly or indirectly, (i) any Preferred Securities or
other securities substantially similar to the Preferred Securities other than as
contemplated by this Purchase Agreement or (ii) any other securities convertible
into, or exercisable or exchangeable for, any Preferred Securities or other
securities substantially similar to the Preferred Securities.

               (k) The Company will use its commercially reasonable efforts to
meet the requirements to qualify as a REIT under Sections 856 through 860 of the
Code, effective for the taxable year ending December 31, 2005 (and each fiscal
quarter of such year) and succeeding taxable years.

               (l) Neither the Company nor the Trust will identify any of the
Indemnified Parties (as defined below) in a press release or any other public
statement without the consent of such Indemnified Party.

               7. Payment of Expenses. The Company, as depositor of the Trust,
agrees to pay all costs and expenses incident to the performance of the
obligations of the Company and the Trust under this Purchase Agreement, whether
or not the transactions contemplated herein are consummated or this Purchase
Agreement is terminated, including all costs and expenses incident to (i) the
authorization, issuance, sale and delivery of the Preferred Securities and any
taxes payable in connection therewith; (ii) the fees and expenses of qualifying
the Preferred Securities under the securities laws of the several jurisdictions
as provided in Section 6(b); (iii) the fees and expenses of the counsel, the
accountants and any other experts or advisors retained by the Company or the
Trust; (iv) the fees and all reasonable expenses of the Property Trustee, the
Delaware Trustee, the Indenture Trustee and any other trustee or paying agent
appointed under the Operative Documents, including the fees and disbursements of
counsel for such trustees, which fees and disbursements shall not exceed a
$2,000 acceptance fee, $3,500 for the fees and expenses of Richards, Layton &
Finger, P.A., special Delaware counsel retained by the Delaware Trustee in
connection with the Closing, and $4,000 in administrative fees annually; (v) $
30,000 for the fees and expenses of Mayer, Brown, Rowe & Maw LLP, special
counsel retained by the Purchaser; and (vi) a due diligence fee to Cohen Bros. &
Company in the amount of $5,000 which will be offset by the $75,000 provided to
the Company by Cohen Bros. & Company on the Closing Date.

               If the sale of the Preferred Securities provided for in this
Purchase Agreement is not consummated because any condition set forth in
Section 3 hereof to be satisfied by either the Company or the Trust is not
satisfied, because this Purchase Agreement is terminated pursuant to Section 9
or because of any failure, refusal or inability on the part of the Company or
the Trust to

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perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default by the Purchaser, the
Company will reimburse the Purchaser upon demand for all reasonable
out-of-pocket expenses (including the fees and expenses of each of the
Purchaser’s counsel specified in subparagraphs (v) and (vi) of the immediately
preceding paragraph) that shall have been incurred by the Purchaser in
connection with the proposed purchase and sale of the Preferred Securities. The
Company shall not in any event be liable to the Purchaser for the loss of
anticipated profits from the transactions contemplated by this Purchase
Agreement.

               8. Indemnification. (a) The Company and the Trust agree jointly
and severally to indemnify and hold harmless the Purchaser, the Purchaser’s
affiliates, Cohen Bros. & Company and Merrill Lynch & Co. (collectively, the
“Indemnified Parties”), each person, if any, who controls any of the Indemnified
Parties within the meaning of the Securities Act, or the Exchange Act, and the
Indemnified Parties’ respective directors, officers, employees and agents and
each person who “controls” the Indemnified Parties within the meaning of either
the Securities Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any information or documents furnished or made
available to the Purchaser by or on behalf of the Company, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (iii) the breach or
alleged breach of any representation, warranty or agreement of either Seller
contained herein or (iv) the execution and delivery by the Company and/or the
Trust of this Purchase Agreement or any of the other Operative Documents and/or
the consummation of the transactions contemplated hereby and thereby, and agrees
to reimburse each such Indemnified Party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action provided, however,
no Indemnified Party shall be indemnified for any loss, claim, damage, liability
or action arising out of or based upon the willful misconduct of such
Indemnified Party. This indemnity agreement will be in addition to any liability
which the Company or the Trust may otherwise have.

               (b) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever due from the Trust under
paragraph (a) above.

               (c) 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 the indemnifying party
under this Section 8, promptly notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve the indemnifying party from liability under paragraph
(a) above unless and to the extent that such failure results in the forfeiture
by the indemnifying party of material 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) above. Purchaser shall be entitled to appoint counsel to represent
the Indemnified Party in any action for which indemnification is sought. An
indemnifying party may participate

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at its own expense in the defense of any such action; provided, that counsel to
the indemnifying party shall not (except with the consent of the Indemnified
Party) also be counsel to the Indemnified Party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. An indemnifying party will not, without the prior
written consent of the Indemnified Parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action, suit or proceeding.

               9. Termination; Representations and Indemnities to Survive. This
Purchase Agreement shall be subject to termination in the absolute discretion of
the Purchaser, by notice given to the Company and the Trust prior to delivery of
and payment for the Preferred Securities, if prior to such time (i) a
downgrading shall have occurred in the rating accorded the Company’s debt
securities or preferred stock by any “nationally recognized statistical rating
organization,” as that term is used by the Commission in
Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Company’s debt securities or preferred
stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser at
least $26,250,000 stated liquidation value of Preferred Securities, (iii) a
suspension or material limitation in trading in securities generally shall have
occurred on the New York Stock Exchange, (iv) a suspension or material
limitation in trading in any of the Company’s securities shall have occurred on
the exchange or quotation system upon which the Company’ securities are traded,
if any, (v) a general moratorium on commercial business activities shall have
been declared either by federal or Texas authorities or (vi) there shall have
occurred any outbreak or escalation of hostilities, or declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the Purchaser’s reasonable
judgment, impracticable or inadvisable to proceed with the offering or delivery
of the Preferred Securities. The respective agreements, representations,
warranties, indemnities and other statements of the Company and the Trust or
their respective officers or trustees and of the Purchaser set forth in or made
pursuant to this Purchase Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Purchaser, the
Company or the Trust or any of the their respective officers, directors,
trustees or controlling persons, and will survive delivery of and payment for
the Preferred Securities. The provisions of Sections 7 and 8 shall survive the
termination or cancellation of this Purchase Agreement.

               10. Amendments. This Purchase Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement by each of the parties hereto.

               11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered by hand or courier or sent

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by facsimile and confirmed to the Purchaser c/ o Cohen Bros. & Company, 450
Park, 23rd Floor, New York, NY 10022, Attention: Mitchell Kahn, Facsimile:
(212) 735-1499; with a copy to Mayer, Brown, Rowe & Maw LLP, 190 South LaSalle
Street, Chicago, Illinois 60603, Attention: J. Paul Forrester, Facsimile:
(312) 701-7711 or other address as the Purchaser shall designate for such
purpose in a notice to the Company and the Trust; and if sent to the Company or
the Trust, will be mailed, delivered by hand or courier or sent by facsimile and
confirmed to it at PMC Commercial Trust, 17950 Preston Road, Suite 600, Dallas,
Texas 75252, Attention: General Counsel, Facsimile: (972)349-3265.

               12. Successors and Assigns. This Purchase Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing expressed or mentioned in this
Purchase Agreement is intended or shall be construed to give any person other
than the parties hereto and the affiliates, directors, officers, employees,
agents and controlling persons referred to in Section 8 hereof and their
successors, assigns, heirs and legal representatives, any right or obligation
hereunder. None of the rights or obligations of the Company or the Trust under
this Purchase Agreement may be assigned, whether by operation of law or
otherwise, without the Purchaser’s prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned by
the Purchaser without the Company’s or the Trust’s consent; provided that the
assignee assumes the obligations of the Purchaser under this Purchase Agreement.

               13. Applicable Law. THIS PURCHASE AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW).

               14. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY
OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE
AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK,
IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF
MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
PURCHASE AGREEMENT.

               15. Counterparts and Facsimile. This Purchase Agreement may be
executed by any one or more of the parties hereto in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. This Purchase Agreement may be
executed by any one or more of the parties hereto by facsimile.

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     IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of the
date first written above.

              PMC Commercial Trust
 
       

  By:   /s/ Jan F. Salit

       

      Name: Jan F. Salit

      Title: Executive Vice President
 
            PMC Preferred Capital Trust-A
 
            By: PMC Commercial Trust, as Depositor
 
       

         
 
  By:   /s/ Jan F. Salit

       

      Name: Jan F. Salit

      Title: Executive Vice President

              Taberna Preferred Funding I, Ltd.
 
       

  By:   /s/ John Cullinane

       

      Name: John Cullinane

      Title: Director

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SCHEDULE 1

List of Significant Subsidiaries

1. PMC Investment Corporation

2. Western Financial Capital Corporation

3. First Western SBLC, Inc.

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