exv10w1



 






Exhibit 10.1




 

 






PURCHASE AGREEMENT




among




PMC COMMERCIAL TRUST




PMC PREFERRED CAPITAL TRUST-A




and




TABERNA PREFERRED FUNDING I, LTD.










Dated as of March 15, 2005










 

 






 









 





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.



 









 





          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



12









 





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



13









 





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.



14









 





               (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



15









 





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



16









 





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



17









 





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



18









 





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



19









 





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.



20









 





     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






21









 






SCHEDULE 1




List of Significant Subsidiaries




1. PMC Investment Corporation




2. Western Financial Capital Corporation




3. First Western SBLC, Inc.





22