ex10-1.htm


    Exhibit
10.1

     

     

    
      BLACKROCK
HOLDCO 2, INC.

      c/o
BlackRock Financial Management, Inc.

      40
East 52nd
Street

      New
York, NY  10022

       

      February
29, 2008

       

      Anthracite
Capital, Inc.

      c/o
BlackRock Financial Management, Inc.

      40
East 52nd
Street

      New
York, NY 10022

       

      Re:           Up to $60,000,000 Revolving
Credit Facility

       

       

      Gentlemen:

       

      BlackRock
HoldCo 2, Inc. or its affiliates (“Lender”) is pleased
to inform you that subject to the conditions herein set forth, it has approved
your request for a revolving credit facility (the “Credit Facility”) and
hereby commits to provide loans (each, a “Loan” and
collectively, the “Loans”), up to an
aggregate principal amount outstanding of $60,000,000, to Anthracite Capital,
Inc., a Maryland corporation (“Borrower”) for
general working capital purposes.  This letter of commitment (this
“Commitment
Letter”) will identify requirements that Borrower must satisfy prior to
the Closing Date (hereinafter defined) and funding of any Loan, it being
understood that except as otherwise provided herein when an earlier date is set
forth, all such requirements must be satisfied by March 21, 2008.

       

      The
Credit Facility, and each Loan made thereunder, shall be evidenced by Loan
Documents in form and substance as Lender may require, reasonably consistent
with the terms and conditions of this Commitment Letter, and the obligations of
Borrower to repay each Loan shall be secured by a first priority and perfected
pledge and security agreement (the “Pledge”) of
Borrower’s entire equity ownership interest (the “Carbon Stock”) in
Carbon Capital II, Inc., a Maryland corporation (“Carbon”) (subject to
the release set forth under “Amortization” below and with such exceptions as may
be agreed by the Lender).  Lender’s obligation to make any Loan is
subject to the terms and conditions contained in this Commitment
Letter.

       

      
        	
                Borrower:

                 

              	
                Anthracite
      Capital, Inc., a Maryland corporation.

                 

              
	
                Loan
      amount:

                 

              	
                Up
      to the lower of:

                 

              
	 	(A)	$60,000,000
      (the “Commitment
      Amount”); or
	 	 
      

                (B)

              	 
      

                            
      a maximum principal amount from time to time determined according to a
      borrowing base formula (the “Borrowing
      Base”) equal
      to the product of (x)the product of (i) the number of shares of Carbon
      Stock then pledged as Collateral under the Credit
      Facility and (ii) the value of such shares of Carbon Stock (determined by
      a valuation method to be agreed to between Lender and Borrower) (the
      “Share
      Price”), and (y) 0.6.

              


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	 
      	 	
                 

                 

              
	 	The
      Loan is a revolving loan, and principal amounts repaid during the Term (as
      defined below) may be reborrowed from to time during the Term subject to
      terms and conditions of the definitive documents.
	 	 
	
                Sale
      of Carbon Stock (in lieu

                of
      Loans):

                 

              	
                Lender
      shall have the option to purchase shares of Carbon Stock from Borrower at
      the Share Price described below in lieu of funding all or any portion of a
      requested advance amount by delivering written notice to Borrower of its
      election to exercise such option (a “Share Funding
      Notice”), which notice shall specify the amount Lender desires to
      fund through the purchase of shares of Carbon Stock. The number of shares
      of Carbon Stock that would be purchased by Lender would be equal to (x)
      the principal amount of the Loan requested by Borrower that Lender elects
      to fund through the purchase of shares of Carbon Stock (as set forth in
      the Share Purchase Notice), divided by (y) the Share Price, determined as
      of the date of the Share Funding Notice. The Commitment Amount shall be
      reduced, on a dollar-for-dollar basis, by the aggregate purchase price of
      the shares of Carbon Stock.

                 

              
	
                Carbon
      Stock purchase 

                option:

                 

              	
                At
      any time, Lender shall also have the option to purchase all (or any
      portion) of the Carbon Stock at the then-outstanding Share Price by
      delivering written notice to Borrower of its election to exercise such
      option (a “Share
      Purchase Notice”), which notice shall set forth the number of
      shares elected to be purchased by Lender. If Lender delivers a Share
      Purchase Notice, the purchase price for the shares of Carbon Stock (the
      “Share Purchase
      Price”) set forth therein shall be equal to the product of (x) the
      total number of shares of Carbon Stock to be purchased and (y) the Share
      Price, determined as of the date of the Share Purchase Notice. If any
      Loans are outstanding at the time of purchase of the shares of Carbon
      Stock, the Share Purchase Price shall be reduced by the amount, and
      applied towards the repayment, of all outstanding Loans (and the reduction
      of the Commitment Amount) in the same manner as if Borrower had prepaid
      such Loans, and the balance of the Share Purchase Price available after
      repayment of such Loans, if any, shall be paid to Borrower.  In
      addition, in the event Lender elects to purchase all of the shares of
      Carbon Stock, upon consummation of the purchase of such shares, the
      Commitment Amount shall automatically be reduced to zero.  The
      Lender may not elect to purchase Carbon Stock in an amount such that the
      Share

                 

              


      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

       

      
        	 
      	
                Purchase
      Price would exceed the greater of the Commitment Amount or an amount which
      would be required to repay the Loans in full.  If Lender elects
      to purchase shares of Carbon Stock, Borrower does not have to sell any
      Carbon Stock if, within a number of days to be agreed upon, (a) Borrower
      terminates the Credit Facility and prepays in full all amounts outstanding
      or (b) Borrower prepays the outstanding Loans in an amount equal the Share
      Purchase Price and reduces the Commitment Amount by the same
      amount.

              
	 	 
	
                Use
      of proceeds:

                 

              	
                Borrower
      shall apply the net proceeds of the Loans for general working capital
      purposes.

                 

              
	
                Interest
      Rate:

                 

              	
                “LIBOR” means
      the rate of interest determined on the basis of the offered rates for
      deposits in U.S. Dollars (in the amount and for a maturity corresponding
      to that of the relevant interest period) (expressed as an annual rate)
      equal to the simple average (rounded up to the nearest 1/100 of 1%) of the
      rates shown on the display referred to as the “Reuters Screen LIBOR01” (or
      any display substituted therefor) of the Reuters U.S. Domestic Money
      Service transmitted through the Reuters monitor system as being the
      respective rates at which deposits in U.S. Dollars would be offered by the
      principal London offices of each of the banks named thereon to major banks
      in the London interbank market at approximately 11:00 a.m. (London time)
      on the second London banking day before the first day of such Interest
      Period for a period substantially coextensive with such Interest
      Period.  The Interest Period shall be 1, 2 or 3 months from the
      date of a Loan, as selected by Borrower (the “Interest
      Period”).

                 

                The
      Interest Rate for each Loan shall equal LIBOR plus 2.5%, however, if
      Borrower should deliver a Loan Request Notice (as defined below) on less
      than four (4) business days notice (and Lender agrees to make such Loan on
      such shorter notice), in lieu of the Interest Rate set forth above, Lender
      shall have the right to cause the Interest Rate for such Loan to be equal
      to the Prime Rate plus 2.5%.  With respect to any Loan, LIBOR
      shall be determined at the time such Loan is made and reset at the
      commencement of each Interest Period.

                 

              
	
                Calculation
      and payment of interest:

                 

              	
                Interest
      shall be calculated on the basis of a 360-day year for the actual number
      of days elapsed.  Interest shall be payable to Lender in arrears
      (a) at the end of each Interest Period with respect to any Loans relating
      to such Interest Period, (b) on the date of any prepayment for any Loans
      prepaid and (c) on the Maturity Date.  All payments shall be
      credited, when

                 

              


      

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

      
        	 
      	
                collected,
      first to expenses of the Lender reimbursable by Borrower under the Credit
      Facility, second to fees, third to interest and thereafter to
      principal.

                 

              
	
                Amortization:

                 

              	
                The
      Commitment Amount shall not amortize during its term (except as described
      above under “Sale of Carbon Stock (in lieu of Loans)” and “Carbon Stock
      Purchase Option”).  The entire outstanding principal balance and
      all accrued and unpaid interest under the Credit Facility shall be paid in
      full on the Maturity Date; however, Borrower shall have the right to make
      any prepayments of the Loan required on account of any reduction in the
      Borrowing Base as of such date.

                 

                Borrower
      shall use commercially reasonable efforts to obtain other financing to
      replace the Credit Facility, provided that
      Borrower shall not be required to use the proceeds of other financing
      obtained for other purposes to repay and reduce the outstanding balance of
      the Loan and the Credit Facility; provided, further, that
      Borrower shall not voluntarily prepay any other financing prior to its
      scheduled maturity date unless the Credit Facility has been repaid in full
      and the Commitment Amount has been terminated. Lender shall release its
      lien under the Pledge (as hereinafter defined) with respect to shares of
      Carbon Stock that are to be pledged to another lender as part of another
      financing, provided no such release would cause the Borrowing Base to be
      less than 115% of the Commitment Amount (it being understood that Borrower
      may reduce the Commitment Amount and make any corresponding required
      prepayments of the Loans from time to time).

                 

              
	
                Default
      interest and Late charges:

                 

              	
                After
      the occurrence, and during the continuance, of an Event of Default (as
      hereinafter defined), the unpaid principal amounts shall bear interest,
      payable on demand, at a rate per annum equal to three percent (3%) above
      the interest rate that would otherwise be in effect.  In
      addition, any payment (other than the final payment due on the Maturity
      Date) not paid within five (5) days after the date it is due shall be
      assessed a late charge of five percent (5%) of the amount of such overdue
      payment.

                 

              
	
                Prepayment:

                 

              	
                Each
      Loan may be prepaid (in whole or in part) prior to the Maturity Date at
      Borrower’s option on not less than four (4) business days’ prior written
      notice to Lender, provided that
      (x) any prepayment shall be in minimum amount of not less than $250,000,
      (y) in connection with any prepayment, Borrower shall also pay any accrued
      and unpaid interest on

                 

              


      

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
 

      
        	 
      	
                the
      amount being prepaid and (z) Borrower shall indemnify each Indemnified
      Person (as hereinafter defined), and hold each such Indemnified Person
      harmless, from and against any and all Losses (as hereinafter defined)
      that any such Indemnified Person may  sustain or incur arising
      out of or relating to any such prepayment.

                 

                Borrower
      shall be entitled to reduce the number of shares of Carbon Stock pledged
      as Collateral, provided that Borrower makes a corresponding prepayment of
      the Loan on account of the reduction of the Borrowing Base and after any
      such reduction, the Borrowing Base shall be no less than 115% of the
      Commitment Amount.

                 

              
	
                Fees:

                 

              	
                Borrower
      shall pay the fees set forth in the separate fee letter, dated as of the
      date hereof (the “Fee
      Letter”).

                 

              
	
                Guarantor:

                 

              	
                None.

                 

              
	
                Term:

                 

              	
                The
      term of the Credit Facility shall be 364 days after the Closing Date (the
      “Maturity
      Date”). Borrower shall be entitled to request two 364 day
      extensions of the Maturity Date. The Lender shall have the right to decide
      in its sole discretion whether or not to extend the Maturity
      Date.  If Lender decides to extend the Maturity Date, the
      Maturity Date shall be extended if and only if (a) no Event of Default
      exists at the time of the commencement of the relevant extension period;
      (b) Borrower gives to Lender not less than 60 days’ advance written notice
      of such request for extension; and (c) prior to the commencement of each
      extension period, Borrower pays to Lender an extension fee equal to as set
      forth in the Fee Letter.

                 

              
	
                Security
      for the Loan:

                 

              	
                The
      Loan shall be secured by:

              
	 	(A) 	
                A
      first priority perfected security interest and pledge of the Collateral
      (the “Pledge”).  The
      Pledge shall be a perfected first lien on the Collateral;
      and

                 

              
	 	(B)  	
                A
      consent and control agreement among Lender, Borrower and
      Carbon.

                 

              
	
                Loan
      Documents:

                 

              	
                The
      consummation of the transactions contemplated hereunder will be subject to
      the negotiation, execution and delivery of loan documents customary for a
      credit facility of this type, including security documents (collectively,
      the “Loan
      Documents”).  The Loan Documents shall contain such
      terms, conditions, covenants, warranties, representations and

                 

              


      

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
 

      
        	 
      	
                indemnities
      as Lender and its counsel deem necessary or appropriate even if not set
      forth herein, provided they
      are reasonably consistent with the terms and conditions of this Commitment
      Letter and are customary for a credit facility of this
      type.  Without limiting the generality of the foregoing, all
      instruments and documents required hereby or affecting the Collateral, or
      relating to Borrower’s capacity and authority to request Loans and execute
      the Loan Documents and such other documents, instruments, opinions
      (including from local counsel, if required by Lender) and assurances as we
      may request and all procedures in connection herewith shall be subject to
      the approval, as to form and substance, by Lender and its
      counsel.

                 

              
	
                Covenants:

                 

              	
                The
      Loan Documents shall contain such financial, affirmative and negative
      covenants as are usual and customary for a credit facility of this type,
      and in any event, no less favorable to Borrower than those covenants
      contained in Borrower’s existing credit facilities.

                 

              
	
                Events
      of Default:

                 

              	
                The
      Credit Facility shall include such events of default (and, as appropriate,
      grace periods) as are usual and customary for a credit facility of this
      type, including without limitation, failure to make payments when due,
      cross-defaults under other agreements or instruments of indebtedness,
      noncompliance with covenants, breaches of representations or warranties,
      bankruptcy, judgments in excess of specified amounts, and failure to
      maintain a perfected first priority security interest in the Collateral
      (each an “Event
      of Default”).

                 

              
	
                Lien
      search:

                 

              	
                Promptly
      after execution and delivery by Borrower of this Commitment Letter, Lender
      shall obtain full lien searches (including UCC, judgment and federal and
      state tax lien searches) on Borrower, Carbon and the Collateral
      (collectively, the “Lien Search”).
      Prior to the closing of the Credit Facility, all existing liens on the
      Collateral shall be terminated to the satisfaction of Lender and its
      counsel as set forth in the conditions below.

                 

              
	
                Indemnification:

                 

              	
                Borrower
      shall (i) indemnify and hold harmless Lender, its affiliates and their
      respective directors, officers, employees, members, managers,
      stockholders, partners, agents and representatives (each, an “Indemnified
      Person”) from and against any and all losses, claims, damages,
      liabilities (or actions or other proceedings commenced or threatened in
      respect of) and expenses (including, without limitation, attorneys’ fees
      and disbursements, collectively, “Losses”),

                 

              


      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      
 

      
        	 
      	
                that
      arise out of, result from or in any way relate to this Commitment Letter
      or any transactions contemplated hereby or by the providing of the Credit
      Facility, except to the extent any such Losses are determined by a final
      judgment of a court of competent jurisdiction to have been incurred by
      reason of the gross negligence or willful misconduct of such Indemnified
      Person and (ii) reimburse each Indemnified Person, upon its demand, for
      any legal or other expenses incurred in connection with investigating,
      defending or participating in any such Losses (whether or not such
      Indemnified Person is a party to any action or proceeding out of which any
      such expenses arise).  In addition, Borrower hereby agree to
      reimburse Lender from time to time, upon demand, for Lender’s reasonable
      out-of-pocket costs and expenses paid to third parties (including, without
      limitation, reasonable out-of-pocket fees and disbursements of legal
      counsel, and reasonable printing, reproduction, document delivery, and
      communication charges paid to third parties) incurred in connection with
      the preparation, review, negotiation, execution and delivery of this
      Commitment Letter, the Loan Documents and the other documents related to
      the Credit Facility.  The obligations of Borrower under this
      paragraph shall survive any termination of this Commitment Letter and
      shall be effective regardless of whether the Loan Documents are
      executed.

                 

              
	
                Lender
      expenses:

                 

              	
                All
      fees, charges and expenses with respect to the Credit Facility including,
      without limitation:

                 

                ·     UCC
      filing fees;

                ·     Lien
      search examination costs and fees;

                ·     Lender’s
      counsel’s fees; and

                ·     such
      other usual, customary and necessary costs, fees and expenses with respect
      to this transaction;

                 

                shall
      be obligations of Borrower and shall be timely and fully paid by Borrower,
      and Borrower shall provide to Lender at or prior to the Closing Date
      evidence of payment.

                 

              
	
                Conditions
      precedent to each Loan:

                 

              	
                Subject
      to the other conditions set forth in this Commitment Letter and the Loan
      Documents, Lender shall make a Loan to Borrower upon not less than four
      (4) business days’ advance notice from Borrower to Lender (an “Loan Request
      Notice”).

                 

                The
      obligation of Lender to make a Loan requested by Borrower shall be subject
      to customary conditions for credit facilities of this type (each of any of
      which may be waived by

                 

                 

              


      

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

       

      
        	 
      	
                Lender
      in its sole discretion), including, without limitation:

                 

                (1)    The
      minimum amount of a Loan being no less than $5,000,000 and whole multiples
      of $500,000 in excess of such amount;

                 

                (2)    Absence
      of any default or Event of Default;

                 

                (3)    Absence
      of material litigation; and

                 

                (4)    Reaffirmation
      of representations and warranties made by Borrower in the Loan
      Documents.

                 

              
	
                Pre-conditions
      to Lender’s

                obligation
      to close and fund 

                  the
      initial Loan:

                

              	
                Lender’s
      obligation to close and fund the initial Loan shall be subject to the
      following additional terms and conditions:

              
	
                 

              	(1)  	Any
      and all existing liens on the Collateral must be satisfied at or prior to
      the Closing Date.  Any documents with respect to the
      satisfaction of any prior pledges must be reviewed by Lender’s counsel
      prior to the Closing Date, and must be in all respects satisfactory to
      Lender.
	 	 	 
	 	(2)	 Lender
      shall be satisfied that the pledge of the Collateral is not subject to any
      restrictions either in its organizational documents or other contractual
      obligations, including any shareholder’s agreements,  that would
      prohibit such pledge of the Collateral, render such pledge null and void,
      or provide the shareholders of Carbon with a right of first refusal or
      other similar rights with respect to the transfer of shares of Carbon
      Stock by Borrower.
	 	 	 
	 	(3)	 Lender’s
      liens on the Collateral shall be perfected.
	 	 	 
	 	(4)	 Lender
      shall have received such opinions of Borrower’s counsel, documents,
      certificates, assurances and other items as it may require in its sole
      discretion with respect to Borrower, the Credit Facility, and the
      Collateral.
	 	 	 
	 	(5)	 Lender
      shall have received Borrower’s certificate of incorporation, by-laws,
      resolutions authorizing the Credit Facility and the Loan Documents,
      including evidence that such resolutions have been passed by the
      “independent” directors of Borrower, good standing certificates and any
      other financial or legal information reasonably requested by
    Lender.


      

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      
 

      
        	 	 
	 
      	(6)	
                Other
      reasonable and customary closing conditions and documentation must also be
      satisfied, including, without limitation, (i) the absence of governmental
      investigations or other legal proceedings pending, except for any such
      governmental investigation or other legal proceeding that Lender, in its
      sole discretion, deems immaterial and (ii) the absence of any condition
      that Lender deems to be material and adverse in the business, operations,
      financial condition or prospects of the Collateral.

                 

              
	 	(7) 	Lender shall have received a certification from
      Borrower and other evidence satisfactory to Lender to the effect that
      there exists no litigation now filed, pending or threatened with respect
      to Borrower or the Collateral that individually or cumulatively could have
      a material adverse effect on Borrower’s ability to fulfill its obligations
      to Lender in a complete and timely manner.
	 	 	 
	
                Recourse:

                 

              	
                Full
      recourse to Borrower.

                 

              
	
                Closing
      Date:

                 

              	
                The
      Closing Date shall occur on such date or dates as shall be mutually
      satisfactory to Lender and Borrower, but not later than March 21, 2008,
      unless Lender shall agree to extend the date in writing.  The
      consummation of the transactions contemplated hereunder shall take place
      at the offices of Lender located in New York, New York and at a time as
      Lender may reasonably select.

                 

              
	
                Miscellaneous:

                 

              	
                If
      any payment date does not fall on a business day, payment shall be made on
      the business day immediately following, together with interest to date of
      payment.

                 

                The
      commitment hereunder (a) may not be assignable by Borrower and (b) shall
      expire in the event the consummation of the transactions contemplated
      hereunder has not taken place on or prior to March 21, 2008 (subject
      to any extensions provided by Lender in its sole
      discretion).  The terms and conditions of this Commitment Letter
      shall survive the consummation of the transactions contemplated hereunder,
      except as superseded by provisions contained in the Loan
      Documents.

                 

                Except
      as specifically provided herein, Lender shall have,

                 

              


      

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       

      
        	 
      	
                with
      regard to all matters herein that must be approved by or be acceptable or
      satisfactory to Lender, the absolute and sole discretion to determine the
      acceptability thereof to Lender.  Lender shall have the right to
      waive any conditions set forth herein that are for its
      benefit.

                 

                This
      Commitment Letter and the Loan Documents shall be governed by and
      construed in accordance with the laws of the State of New
      York.

                 

              


      

      Notwithstanding
the foregoing, the commitment of Lender to enter into the Credit Facility is
subject, in its reasonable discretion, to the following conditions: (a) there
shall not have occurred or exist any disruption or adverse change or condition,
between the date of the execution of this Commitment Letter and the Closing
Date, in the financial, banking or capital markets generally that has resulted
in any such market being closed or effectively closed on a day on which it is
normally open; and (b) Lender’s not becoming aware, after the date hereof, of
any new or inconsistent information or other matter not previously disclosed to
us relating to Borrower and which Lender, in its reasonable judgment, deems
material and adverse relative to the information or other matters disclosed to
Lender prior to the date hereof.  The Lender’s commitment is also
subject, in its reasonable discretion, to the satisfactory, negotiation,
execution and delivery of the appropriate Loan Documents.

       

      This
Commitment Letter is delivered to you upon the condition that, prior to your
acceptance of this Commitment Letter, neither the existence of this Commitment
Letter nor any of its contents shall be made publicly available except (i) as
required by applicable securities laws, (ii) as may be compelled to be disclosed
in a judicial or administrative proceeding or as otherwise required by law and
(iii) on a confidential and “need to know” basis, to your directors, officers,
employees, advisors (including accountants and legal counsel) and
agents.

       

      [signature
page follows]

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      


      Kindly
indicate your acceptance of this Commitment Letter and your agreement with the
terms and conditions set forth herein by executing the enclosed copy of this
Commitment Letter and the Fee Letter in the space provided and returning them to
Lender on or prior to February 29, 2008, whereupon, subject to the terms and
conditions set forth herein and therein, this Commitment Letter and the Fee
Letter will become a binding agreement.  This Commitment Letter may be
executed in any number of counterparts, each of which shall be an original and
all of which, when taken together, shall constitute one agreement.

       

      This
Commitment Letter is not intended to be, nor should it be construed as, an
attempt to establish all of the terms and conditions relating to the Credit
Facility.  The Loan Documents containing final terms and conditions
shall be subject to approval by Borrower and Lender.

       

      
        	 
      	 
      	
                Very
      truly yours,

              	 
      
	 	 	 	 
	 
      	 
      	
                BLACKROCK
      HOLDCO 2, INC.

              
	 
      	 
      	 
      	 
      	 
      
	 	 	 	 	 
	 
      	 
      	
                By:

              	
                /s/
      Ann Marie Petach

              	
                 

              
	 
      	 
      	
                Name:

              	
                Ann
      Marie Petach

              
	 
      	 
      	
                Title:

              	
                Managing
      Director

              


      

       

      Accepted
and agreed this

      29th day of
February, 2008

       

       

      
        	
                ANTHRACITE
      CAPITAL, INC.

              
	 
      	 
      	 
      
	 	 	 
	
                By:

              	
                /s/
      James J. Lillis

              	
                 

              	 
      
	
                Name:

              	
                James
      J. Lillis

              	 
      
	
                Title:

              	
                Chief
      Financial Officer